In a move that could shake up the clubby business of exchange-traded funds, bond giant Pacific Investment Management Co. is poised to launch its first ETF early this week.

The move by Pimco, a unit of Allianz SE co-founded by bond guru Bill Gross, marks the first time in years such a high-profile mutual-fund company has tried to muscle its way into the ETF business, long dominated by a handful of large-but-lesser-known asset managers that specialize in indexing, such as Barclays PLC and State Street Corp.

ETFs, baskets of stocks or bonds that trade on an exchange, have been rapidly gaining popularity with investors, and took in tens of billions of dollars in 2008. But many big-name mutual-fund companies have shrugged off ETFs because these offerings were traditionally just index funds with low management fees, which ensured that profit margins were measly.

Pimco’s move could re-order the ETF business. Bond offerings, Pimco’s specialty, are one of the fastest-growing areas of the business. While several other bond ETF families have opened, then closed their doors, none had anywhere near the cachet of Pimco, which manages about $760 billion.

Its first ETF will be the Pimco 1-3 Year U.S. Treasury Index Fund, focused on low-yielding short-term Treasurys. It will compete with the $7.1 billion iShares Barclays 1-3 Year Treasury Bond ETF. To woo cost-conscious financial advisers, the Pimco fund will charge investors annual fees of 0.09% of assets, according to its prospectus. That’s less than any other bond ETF tracked by fund researcher Morningstar Inc. and well below the 0.15% levy of the Barclays fund.

Other ETF firms have tried and failed to use low prices alone to win business. Because ETFs trade on exchanges like stocks, bid-ask spreads, which are the small premiums investors pay each time they buy and sell fund shares, can trump annual fees, especially for active traders. Pimco will have to lure such customers, because high trading volumes are needed to keep trading costs low for both long- and short-term holders.

A Pimco official said last year that future funds could target other assets such as stocks and commodities.

Write to Ian Salisbury at ian.salisbury@dowjones.com