CORRECTED-UPDATE 1-Pimco grabs BOND ticker for Total Return ETF

Wed Mar 28, 2012 3:30pm EDT

* Unknown company released ticker for use

* ETF has outperformed fund by 1.5 percent

By Jessica Toonkel

March 28 (Reuters) - Pacific Investment Management Co is getting a new ticker for its closely-watched Total Return Exchange Traded Fund: BOND.

The Newport Beach-based asset manager decided to change the ticker from "TRXT" to "BOND" to make it easier for investors to find the fund, a spokesman said.

"With ETFs, the ticker often becomes the most recognizable name for the fund; in some ways it becomes the personality or character of an ETF," the spokesman said. "The ticker BOND will be easy for investors to remember, and it feels very natural in this case."

The BOND ticker had been reserved by another company when Pimco first filed to launch the ETF last year, and thus PIMCO could not use it. A company can reserve a ticker for two years.

But a few weeks ago, New York Stock Exchange officials asked that company if it would release the ticker, and the company agreed, said Laura Morrison, a senior vice president with the NYSE. She declined to name the company that had reserved the ticker.

The new ticker will take effect April 4 on the New York Stock Exchange's Arca platform.

Pimco's Total Return ETF is an ETF clone of the firm's $252 billion Total Return Fund. Financial advisers and asset managers have been closely watching the ETF since it launched on March 1 to see if it would take off, .

The ticker change is a great marketing move that should help the ETF gather assets, observers said. In January, Bill Gross, co-chief investment officer of Pimco and manager of the mutual fund and ETF, said he expected the ETF to eventually become one of the biggest ones available.

The fund started out on March 1 with $100 million in seed money, according to IndexUniverse LLC. It now has close to $257 million in assets under management.

"This is on track to be one of the biggest ETF launches in history," said Dave Nadig, director of research at IndexUniverse, which tracks ETFs. "A usual good fund launch is $50 million in the first month."

On top of having the Bill Gross name attached to it, the Total Return ETF so far has proven to perform better than its mutual fund counterpart, which may account for why investors are rushing into the ETF despite it being so new.

Since its launch the ETF has returned 1.62 percent, while institutional-shares of the fund have returned 0.17 percent.

The ETF is able to move in and out of positions quickly since the fund is much smaller than the behemoth $252 billion mutual fund.

The ETF also has 75 percent invested in mortgage-backed securities; the fund had 52 percent as of the end of February.

One reason the ETF may own more mortgage backed securities than the mutual fund is because unlike the mutual fund, it cannot use derivatives

The fund's ability to own so much in mortgages does raise some questions about whether it is appropriate for the ETF to bear the BOND ticker, Nadig said.

"The idea that this becomes the household name of bond exposure is slightly dangerous given that this is an active fund and not necessarily representative of the broader bond market," he said.

Even before Wednesday's announcement, investors have been asking about the ETF, which is pretty rare, said Rich Romey, president of ETF Portfolio Partners Inc, a registered investment adviser.

Within the first several days of its launch, Romey had received 15 calls from clients, he said.

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