PIMCO’s new ETF: A step beyond cash

Note: This video was recorded on the 10th of March 2026.

If there’s a silver lining to the RBA’s back-to-back hikes in the official cash rate, it’s that the return you can generate from your cash holdings is starting to look more attractive.

Cash plays an important role in portfolios, offering flexibility while also providing income. Against a backdrop of geopolitical uncertainty and volatile markets, Kanish Chugh, Head of ETF Sales at PIMCO, says cash has increasingly become a tactical allocation for both institutional and advised investors.

PIMCO, one of the world’s leading fixed income managers, is now looking to build on that allocation. The firm has spent decades managing institutional money and is increasingly bringing those capabilities to a broader audience through listed vehicles. Its latest ASX listing is the PIMCO Short Term Active Yield Active ETF (ASX: EARN).

At its core, EARN is designed to deliver a modest uplift on cash without giving up the characteristics that make cash attractive in the first place.

“What we wanted to offer was an alternative… something that sits above cash, but still delivers capital preservation and liquidity.”

A step beyond cash - not a leap into risk

EARN targets a return of around 0.75% to 1.25% above the RBA cash rate, positioning it as a middle ground between traditional cash and longer-duration fixed income.

It’s not trying to take big swings on interest rates or credit. Instead, the strategy is deliberately conservative and focused on high-quality, investment-grade assets. As at February, the portfolio carried an average credit rating of AA, with duration sitting at just 0.3 years and capped at one year.

With central banks diverging and rate expectations shifting, taking on duration risk can quickly cut both ways. EARN largely sidesteps that by keeping its exposure short and floating in nature.

While EARN is built for Australian investors, it draws on PIMCO’s global platform. The firm manages around US$2 trillion in assets, including more than US$140 billion in short-term strategies, giving it access to opportunities across regions and markets.

At the same time, the portfolio is managed locally, ensuring it remains grounded in Australian conditions with at least 50% allocated to Australian dollar-denominated assets.

The ETF wrapper is what makes this accessible. Investors can trade EARN on the ASX like any listed security, bringing institutional-style exposure into a format that fits neatly within portfolios.