PIMCO, a recent entrant to the ETF business, has changed two popular short term bond funds to allow for longer date bond purchases. The move will allow PIMCO to earn better yields on its holdings.

PIMCO Government Limited Maturity Strategy Fund (GOVY) has been revised to allow short-dated purchases up to three years, which is a jump of a full year. The PIMCO Prime Limited Maturity Strategy Fund (PPRM) will now be able to purchase bonds out to 18 months, up from 397 days, according to a recent SEC filing.

The change suggests PIMCO will reach further into the yield curve to deliver higher returns to its investors. Yields on three year Treasury notes are 50% higher than their two year counterparts. Both funds are actively-managed.

With a low cost structure, transparency and tax efficiencies all gained from owning exchange traded funds and with more than 900 ETFs to choose from to build a diversified ETF portfolio, now more that ever it’s time to get started. If you are still not comfortable investing all your assets in ETF’s, then just get started with a small portfolio with plans to possibly add to it over time.

Your first step is to create a portfolio with an asset allocation accounting for risk and time frame. Once this bond-to-equity ratio is determined, you will build a portfolio with adequate diversification with anywhere from 5-10 ETFs, across several asset classes. You are almost done. Your last step to get started is actually buying the funds - your discount broker can help you.

Here is an easy 3 step approach to building wealth like the big endowments and wealthy families using low-cost ETFs. With that all done, you are well on your way. As the market shifts, so will your balance of stocks to bonds. Frequent rebalancing will keep your portfolio in line, an important step not to be forgotten.

In time, this passive investing strategy I hope will serve your core assets well. Discover how to build wealth using low-cost ETFs in this free report, The Secrets of the Wealthy. Click here.

Rising interest rates from the Federal Reserve are welcomed almost unanimously on Wall Street, with the exception of one major group: bond investors. Higher interest rates could mean plummeting bond prices should the Fed continue to drive rates higher.

Investors are increasingly placing bonds, which trade inversely to interest rates, on their portfolio chopping block. With analysts expecting higher rates, bond prices are sure to plummet, with the average 10 year Treasury ETF falling nearly 20% should rates rise from 3.7% to 6.5%, a move well within the range should the Fed become tough on inflation, according to the Wall Street Journal. The same Treasuries could plunge 25% should rates advance to 8%.

In preparation for higher rates, ETF investors are swapping long term debt obligations for short term ones. Recent volume on the iShares Barclays 10-20 Year Treasury Bd (TLH: Quote, Profile, Advanced Chart, News) is off by nearly 66%, while volume on the iShares Barclays 1-3 Year Treasury Bond (SHY: Quote, Profile, Advanced Chart, News) has nearly doubled.

RiverPark, already a sub-adviser for four Grail Advisors ETFs, is seeking to launch two new ETFs under its own brand. In a filing with the SEC, RiverPark contends for a piece of a quickly growing ETF pie.

Initially, RiverPark plans to launch just two exchange-traded funds, the RP Short Term High Yield Bond ETF, as well as the RP Energy ETF, according to the SEC filing. However, RiverPark has applied for exemptive relief from the SEC, and if approved, the doors will be open for the portfolio manager to build its own ETF portfolio under its own name and management.

The move is seen as a gamble in the ETF space, as each of its four sub-advised ETFs currently generates less than 2,000 shares of daily volume.

In strengthening its market niche, PIMCO has launched the third addition to its family of actively-managed bond funds. The fund will select top municipal bonds to cater to investors seeking tax-free returns.

The PIMCO Short Term Municipal Bond Strategy Fund (SMMU: Quote, Profile, Advanced Chart, News) will track the Barclays Capital 1-3 Year Municipal Bond Index, an index already in use by iShares, Van Eck, and SPDR. The fund is actively managed, however, in an effort to avoid the issue of front-running trading manipulating the market before the ETF is adjusted each day. PIMCO brought the issue to the forefront of bond ETF investing after it found bond investors were paying substantially higher costs due to the industry’s practice.

The newest ETF contains 26 different bond investments, with nearly $8 million in assets, according to the prospectus. The fund will trade for a reasonable .35% annual expense.