PIMCO Expands Suite of ETFs, Launches New Preferred and Capital Securities Fund

Fixed income specialist PIMCO has launched a new actively managed ETF targeting opportunities within the preferred and capital securities market.

The PIMCO Preferred and Capital Securities Active ETF (PRFD) has been listed on NYSE Arca with an expense ratio of 0.69%, according to the fund’s prospectus. The fund has come to market with $50 million in initial assets.

PRFD aims to find opportunities where investments may offer equity-like total returns with significantly less volatility, less than half, historically, compared with the traditional equity market.

In addition, most preferred dividends are considered qualified dividend income (QDI) rather than regular income, which can provide a more favorable tax treatment for investors.

The firm notes that the fund’s investment thesis is based on a longer investment horizon designed to minimize trading volume compared with other similar PIMCO-advised funds.

Preferred securities are instruments that typically have both debt and equity characteristics. They generally pay fixed or adjustable-rate distributions to investors and have preference over common stock in the payment of distributions and the liquidation of a company’s assets; however, they are generally junior to all forms of company debt.

The ETF will be managed by Philippe Bodereau, Managing Director, Portfolio Manager and Head of the Credit Research in Europe; Amit Arora, Executive Vice President and Portfolio Manager; Tanuj Dora, Vice President and Portfolio Manager; and Matthieu Loriferne, Executive Vice President and Portfolio Manager.