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ETF Specialist

An Active ETF Managed by Morningstar's Fixed-Income Fund Manager of the Year

This fund seeks to thread the needle between money markets and traditional ultrashort-bond funds.

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The mutual fund industry has long offered and promoted ultrashort portfolios with floating net asset values as alternatives to money market funds, and PIMCO has its own,  PIMCO Short-Term (PTSHX). But even that fund, which has been among the most conservative of the ultrashort-bond Morningstar Category in terms of credit risk, arguably isn't really a perfect match for investors who want to take a very short step outside of the money market world. PIMCO identified that as a potentially ripe segment of investors to court following the implementation of tighter money market rules in the wake of the 2008 financial crisis and launched the  PIMCO Enhanced Short Maturity Active ETF (MINT).

With their mandates so close together--both this exchange-traded fund and PIMCO Short-Term keep their interest-rate sensitivity quite muted, and thus their durations typically stay under one year--it would be easy to look at them as interchangeable. They are in fact run by the same team at PIMCO, including lead manager Jerome Schneider, who was recently named as the 2015 Morningstar Fixed-Income Fund Manager of the Year for his work on PIMCO Short-Term. Notably, though, MINT lacks exposure to or has smaller allocations to sectors that have been key drivers behind keeping PIMCO Short-Term as competitive as it has been. As of October 2015, for example, PIMCO Short-Term had a 9.5% allocation to high-yield and a non-U.S. developed-markets stake that stood at roughly 23%; neither sector was present in the MINT portfolio. And while MINT did have a 4.1% allocation to emerging markets, that was less than half the weighting in PIMCO Short-Term.

Eric Jacobson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.