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By Scott Burns | 09-21-2010 12:36 PM

PIMCO's Money Market Killer?

PIMCO director of ETF product management Don Suskind on how to use the shop's new MINT ETF, plus insights into the firm's strategies in active and index offerings.

Scott Burns: Talking ETFs with PIMCO. Hi there, I'm Scott Burns, Morningstar's director of ETF research, coming to you live from Morningstar's premiere ETF Invest Conference. Joining me today is Don Suskind, director of ETF product management with PIMCO.

Don, thanks for joining me.

Don Suskind: Pleasure. Good to be here.

Burns: So Don, your PIMCO is actually kind of one of the new kids on the block in the ETF space, and of course, you're known as one of the largest asset managers in the mutual fund space. What prompted PIMCO to look at the ETF wrapper and vehicle and move into that product?

Suskind: Well, the main thing we want to provide is access, investor access to what we're doing. We know that people are interested in PIMCO's views on the market, and we also know that people have strong preferences for the benefits of the ETF vehicle, whether its tax preference or if they want to get the same expense ratio as everyone in the fund or if it's the convenience of trading a listed security. Really, there is a set of investors that love ETFs, and we want to make PIMCO available to those folks through the ETF.

Burns: Well, that's great. And you guys have actually had for such an early start, a very successful start, namely in the active ETF space, and when we look at active ETF fund flows, although we're seeing traction in a lot of different products, there is one real standout, and that's your short duration active product with the ticker, MINT.

What do you think is really behind the success of MINT, which has gotten as big as $1 billion, I think, over the past few months, maybe its $800 million, but it's big, let's just call it that?

Suskind: Yes, I think it's a combination of things. I think PIMCO has a cash management expertise that underlies all of our investing strategies, so our cash desk oversees at any point in time, $200 billion to $300 billion worth of cash. So what MINT is, is an essentially an appendage to that discipline and that capability. And it again provides access to anyone with a cash allocation that maybe is frustrated with what they're getting on their money market funds and wants to take a little bit of additional risk maybe outside the money market universe and access an experienced manager that has a cash equivalent and cash management expertise.

Burns: Is MINT the money market killer?

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