VIDEO: ETF of the Week: MINT

Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week!

Yes, this is the ETF of the Week, where we get the latest take from Todd Rosenbluth, the head of research at VettaFi. And if you go to VettaFi.com, you’ll find all the tools you need to be a savvier, smarter ETF investor, and to get more details on the new newsworthy, trending and timely ETFs that we talk about here.

Todd Rosenbluth. Great to chat with you again. 

Todd Rosenbluth:  It’s great to be back.

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The PIMCO Enhanced Short Maturity Active ETF, ticker MINT. Mint.

Chuck Jaffe: Mint! MINT, the PIMCO Enhanced Short Maturity Active ETF. Now, you know Todd, last week we were talking about a Bitcoin-tied fund with a massive yield, et cetera. 

This could not be really more on the other end of the spectrum. I mean, it is actively managed, but it’s short maturity bonds. This is a very conservative pick. Why this pick now?

Todd Rosenbluth: Well, you said ‘new, newsworthy’. Actually, no. This is a 15-year old ETF. That is probably as boring as one could get, in a good way. So PIMCO, this ETF from PIMCO, MINT has been around. It’s the oldest of those actively managed fixed income ETFs. We got indications from the Federal Reserve that rate cutting is likely to occur in September.

We think that could help spur people to move money off the sidelines. There’s roughly $7 trillion of money sitting in money market funds when it could be earning much more from an actively managed ETF like this one. We wanted to spotlight this. I believe this has been ETF of the Week in the past, but we think it’s a good time to talk about it again.

Chuck Jaffe: The question that I have with this fund. It’s a great parking place, and it has proven itself. And by the way, it is newsworthy, because it’s a decision that you’re making relative to the change in interest rates. But, some people would have said, if you’re going to have rate cuts, you want to lock in longer maturities. In this case, you’re basically saying, I’m going to keep getting whatever payout I can and I’ll shorten maturities.

So why the short maturity play when rates are being cut?

Todd Rosenbluth: Well, it matters where you’re coming from. So, if you’re sitting in cash, in actual cash, in a money market fund, you’re not going to be earning as much as the Fed begins to or continues to cut interest rates. They’ve done it in the past, in the recent past, but they were on pause for a period of time. So, for people who are looking to move off the sidelines and put a little bit of money to work and earn a 4.5% yield, this is a good way of going.

There are other ETFs — maybe we’ll talk about them in subsequent weeks — that take on much more interest rate sensitivity and a longer term focus. This, as you noted, is an ultra short bond ETF that is going to protect you. But if you’re not in the market and you’re just sitting in cash, this is a better alternative and you’re going to benefit from the experts from PIMCO.

Jerome Schneider and team have been running this fund for years. They’ve got a proven track record. PIMCO has been a leader within the active fixed income suite. They’re a firm I think many people turn to [in order] to get exposure to the ETF world through active management.

Chuck Jaffe: I think, Todd, you may be selling this one just a little short when you said the yield is four and a half. Because the last time I checked, the yield here was closer to 4.9%, which puts it just under 5%. And for some perspective on why that’s important, if somebody goes to check out the best high yield savings accounts, the best they’re going to find is about 4.3%.

If they’re going to money market funds. According to Crane Data, the best money market funds are yielding also about 4.3%, maybe up to 4.4%. So, this is above that. When we see rate cuts, this is likely to stay above that. I mean, every penny counts doesn’t it?

Todd Rosenbluth: Every penny does count, and you’re going to get the benefits of active management to navigate through this environment. So, this fund is investing across the fixed income spectrum. Investment grade corporates, again, short term securitized debt, It’ll have some exposure to government bonds, but not entirely. So, you’re taking on a little bit of credit risk but not a lot, and certainly… You can benefit from the experts at PIMCO.

Chuck Jaffe: As for where this fund fits in, there are plenty of people who have bond funds. Some allocation to bond funds. If they’ve got a short allocation, they’re not really — you’re not really making an allocation call. So, they don’t need this fund if they’ve got one in there already, do they?

Todd Rosenbluth: Well, I guess it matters how conservative or aggressive they want to be. So, my angle initially was if you’re sitting in cash or a money market fund, as you know and the data shows that this ETF, MINT, offers you a higher yield and a higher, in my opinion, total return potential. Modest at best, but still total return potential.

If you’ve taken on more risk than you’re comfortable [with] because you see the volatility ahead in the marketplace… The stock market has done very well and you’re looking to pull some money off the table. MINT can be a good way for you to take some profits and earn some income along the way. So, this can serve multiple purposes, either from a parking standpoint, as you mentioned, or moving out of cash and taking on a little bit more risk for a little bit higher income.

Chuck Jaffe: Every now and again, you and I talk about what others think of a certain fund that we’ve made ETF of the Week. And one of the things that’s interesting to me about this fund is that from the standpoint of Morningstar and Lipper, it’s kind of middle of the pack. It’s a three-star fund for Morningstar. It gets threes in every Lipper category, except for preservation of capital, where it does get a Lipper leaders mark.

So I guess I’m curious. You know, this is the old and stodgy pick at a time when we do ETF of the Week. Is this the most exciting of the ultra shorts, or is this the one that you think everybody’s going to be comfortable with?

Todd Rosenbluth: Well, so let me cover what others think in a moment. But money has been going into this ETF. About $500 million in the last three months. So, for investors that are looking for an active ultra short bond ETF, PIMCO’s MINT has been a beneficiary. There’s a lot of tools, a lot of products that are out there.

Nobody [has] a 15-year track record as an ETF the way that PIMCO has. I would note that the category is probably pretty narrow in terms of the highs and the lows, in terms of performance record. You’re not looking for an ETF like this to be an outperformer in the up market. And we’ve been in an up market for much of the last three years.

So, I think a three-star rating is reasonable. I would imagine many of the difference between a three and a four [star rating] and a three and a two [star rating] is probably a basis point difference in terms of performance. 

And yeah, that capital preservation that Lipper is noting. I think that is important for people who are buying an ultra short bond ETF. You kind of want that. You want stability in this, but you want some potential for upside, because of the active management capabilities. I think with PIMCO’s MINT, you get that in spades.

Chuck Jaffe: Yeah. And I think it’s a really important lesson that, like, don’t be so caught up in the ratings that you go, ‘Wait, hold it. I could do better,’ when you can’t really do much better when it comes to the actual payouts you’re going to be getting. You’re talking about de minimis amounts, et cetera. I think that’s a really good lesson to teach.

And it’s one more lesson we take out of MINT, the PIMCO Enhanced Short Maturity Active ETF, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff. We’ll see you again next week!

Todd Rosenbluth: Yeah, and go Blue! It’s the kickoff for college football season for Michigan.

Chuck Jaffe: Absolutely! Well, for everyone, good luck out there. But for Michigan especially. The ETF of the Week is not brought to you by Michigan football. It’s a joint production of VettaFi and Money Life with Chuck Jaffe. It’s just that Todd and I are both Michigan grads. I am Chuck Jaffe. You can find out about my show at MoneyLifeShow.com, or by going to your favorite podcast app.

And if you want to learn more about your favorite ETF, no better place for you to go to than VettaFi.com where they’ve got a full suite of tools. It’s going to help you check out the funds that you are interested in, if you want to add to your portfolio, or maybe that you want to stay away from. They are on X at @Vetta_Fi, and Todd Rosenbluth, my guest, their head of research, he’s on X too. He’s at @ToddRosenbluth. 

The ETF of the Week is here for you every Thursday. Make sure you don’t miss one by following along on your favorite podcast app. We’ll be back with another intriguing ETF for you to consider next week. Until then, happy investing everybody!

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