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Investing Specialists

Model ETF Portfolios Get a Fixed-Income Overhaul

Impending changes at PIMCO Total Return ETF prompt changes in these portfolios' bond stakes.

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 PIMCO Total Return Active ETF (BOND) is one of the largest actively managed ETFs, and it has been the largest bond holding in my ETF model "bucket" portfolios as well. But recent changes to its investment guidelines have prompted me to swap the fund for a more plain-vanilla index ETF.

I've also made some changes to the portfolios' smaller, noncore fixed-income positions, to better align them with our ETF analysts' current take on the best options within categories like bank loans and junk bonds. (Spoiler alert: The "best" options aren't always ETFs--even for my ETF portfolios.) While the portfolios' original holdings are still reasonable, the fact that Morningstar's team of passive researchers is constantly conducting new research and bringing new ETFs under coverage makes it worthwhile to review the portfolios' exposures, and suggest changes, on an ongoing basis.

Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.