PIMCO Intermediate Municipal Bond Strategy Fund in Focus
Tuesday, June 29th, 2010Shishir Nigam submits:
PIMCO’s Intermediate Municipal Bond Strategy Fund (MUNI) was launched in Nov. 2009 as the first actively-managed ETF to focus on the $2.7 trillion municipal bond market. This was followed up by a launch from Grail Advisors called the Grail McDonnell Intermediate Municipal Bond Fund (GMMB). MUNI is managed by EVP and municipal bond desk head John Cummings, who also manages the shorter maturity SMMU provided by PIMCO.
MUNI has gained traction and assets slowly and steadily since March 2010 when it had $23 million in assets versus about $43 million now. The strategy should appeal to investors in higher tax brackets that can take advantage of the tax-exempt income available from municipal bonds. The main value proposition for the actively-managed ETF is ability to avoid owning bonds of issuers that managers feel have poor credit characteristics, especially in an environment where many US municipalities are stretched financially. The ETF has not been as quick to grow as PIMCO’s money-market offering, the Enhanced Short Maturity Strategy (MINT) and many industry watchers are looking to MUNI for confirmation that PIMCO’s success was not one-off with MINT.
