Jeffrey Gundlach is to use his flagship DoubleLine Total Return Bond Fund Class I (MUTF:DBLTX)’s strategy for Prudential PLC (PUK)’s Jackson National Life Insurance.
Jeffrey Gundlach, chief of DoubleLine Capital LP, has begun managing a variable annuity using his flagship’s strategy.
$450 Million Mandate
DoubleLine received a $450 million mandate from Jackson for the Curian/DoubleLine Total Return Bond Fund Class I (MUTF:DBLTX), which plans to invest more than half of its assets in mortgage-backed securities. Besides this, the fund can also invest in other asset classes including junk bonds, bank loans and credit default swaps.
The unit of London-based Prudential PLC (PUK) was the largest seller of individual U.S. variable annuities in the first six months of this year. Through Jackson’s Elite Access platform, advisers are provided with a combination of traditional and alternative asset classes to help address individual financial goals, besides developing diversified retirement plans.
Variable Annuities Offer Tax Deferment
Variable annuities are insurance products providing investors the ability to invest and accumulate retirement savings on a tax-deferred basis. Subsequently, they can use the accumulated funds to fund their lifetime retirement benefits.
Variable annuities help policy-holders to typically choose their own investments from among lists of mutual funds that the annuities provide. Such products come with high fees to buttress retirement income guarantee and the cost of investment management.
Gundlach Manages $35 Billion
According to data compiled by Bloomberg, Gundlach’s $35.4 billion DoubleLine Total Return Bond Fund lost 0.2 percent this year until September 20, beating 89 percent of similarly managed funds. However, the fund advanced 6.9 percent in the past three years to outperform 97 percent of peers.
According to Morningstar, Inc. (NASDAQ:MORN) estimates, DoubleLine Total Return Bond Fund had its third straight month of net withdrawals in August, with clients pulling out $1.1 billion from bonds.
Recently, Gundlach indicated that he expect the FED to keep buying bonds until targeted yields were achieved. However, bond management experts, including Gundlach and Bill Gross, have witnessed a decline in their funds after Ben Bernanke earlier indicated that the Federal Reserve could start pulling back its stimulus program by the end of this year. Speculations of an early tapering have pushed bond yields higher and prices lower, leading to clients withdrawing their money from funds.
Thus, DoubleLine’s recent move to expand into variable annuities by subadvising a fund modeled after its flagship product signifies their channel diversification.