PIMCO Total Return ETF (NYSEArca: TRXT) manager Bill Gross said the fund disclosing its portfolio holdings daily won’t allow traders to “front run” the ETF’s trades.

The bond fund manager told Yahoo Finance’s Breakout he doesn’t think an investor could look at the daily data and “see exactly a change in strategy or some type of nuance that would give away any of PIMCO’s secret sauce.”

PIMCO launched an ETF version of the $250 billion Total Return Fund in the beginning of March. [PIMCO Total Return ETF is Active Fund Trailblazer]

Gross said the ETF is outperforming major bond indices in the first two weeks or so of trading, adding active management definitely has its place in the ETF business.

The new fund provides a little more liquidity and ease of trading for investors, he added.

The ETF won’t be a carbon copy of Total Return Fund because it can’t use options, futures and swaps like Total Return Fund.

“Those aren’t a considerable portion of the Total Return Fund, but nonetheless, there’s going to be those minor differences in terms of the non-derivative characteristic,” Gross told Breakout.

When asked about the bond market, the manager said the Federal Reserve controls the front end of the yield curve but doesn’t have as much control over long-term Treasury bond rates, where private investors and inflation expectations are major factors.

Gross recently tweeted a warning on Treasuries. He said if investors want to own long Treasuries, buy them in TIPS form – Treasury Inflation Protected Securities. Gross said 2-3% inflation is “a minimum in future years.”

In February, Gross cut Treasury holdings in Total Return Fund, and raised the fund’s position in mortgages.

The PIMCO co-founder said even though bond yields are exceedingly and artificially low, baby boomers looking for safety will continue to buy bonds.

Gross also said investors should be careful with high-yield bonds. Defaults in the sector are low due to the Fed’s quantitative easing, but if the U.S. economy falters, defaults could rise, he said. Total Return ETF can buy high-yield bonds but doesn’t have many of them, he added.

TRXT usually trades between 100,000 and 200,000 shares a day so far. The ETF has already gathered assets of about $184 million.

PIMCO Total Return ETF