JEFFREY EDWARD GUNDLACH PH.D
THE NEW BOND KING
THE BEST BOND MANAGER IN THE WORLD
JEFF HEADS THE NATION’S BEST MORTGAGE TEAM
Jeffrey Gundlach is the founder of Doubleline Capital, an investment firm. He was formerly the head of the $12 billion TCW Total Return Bond Fund, where he finished in the top 2 percent of all funds invested in intermediate-term bonds for the 10 years that ended prior to his departure. He was fired by TCW in 2009. Barrons, in a February 2011 cover story, called him the “King of Bonds.” He is a graduate of Dartmouth College
333 South Grand Avenue Los Angeles, California 90071, United States Phone: 213-633-8200 Fax: 213-633-8398
President, Chief Investment Officer, and Director
TCW Asset Management Company
Chief Investment Officer, Lead Portfolio Manager, Director, and Head of Fixed Income The TCW Group, Inc.
Co-Founder, Chief Executive Officer, Chief Investment Officer, Portfolio Manager, Chairman of Fixed Income Asset Allocation Committee, and Director DoubleLine Capital LP
Co-Founder, Chief Executive Officer, Chief Investment Officer, Portfolio Manager, Chairman of Fixed Income Asset Allocation Committee, and Director
Litman Gregory Funds Trust – Litman Gregory Masters Alternative Strategies Fund
Former Vice Chairman and Chief Investment Officer
Apex Mortgage Capital Inc.
EXECUTIVE MANAGEMENT OF DOUBLE LINE Jeffrey E. Gundlach, CEO and CIO, Co-founder Philip A. Barach, President, Co-founder Joel A. Damiani, CFA, Principal Joseph J. Galligan, CFA, Principal Louis C. Lucido, Principal, Chief Operating Officer Ronald R. Redell, CFA, President, DoubleLine Funds Trust Cris Santa Ana III, Chief Risk Officer Joseph Sullivan, CPA, Chief Financial Officer Gregory A. Uythoven, CFA, Director, Marketing Earl Lariscy, General Counsel, Chief Compliance Officer
CHIEF INVESTMENT OFFICER, TCW GROUP INC.
Gundlach is the Chief Investment Officer and a member of the Board of Directors of the TCW Group, Inc. In addition, he oversees fixed income investments as Chairman of the TCW Multi-Strategy Fixed Income Committee and is the Co-Founder and lead portfolio manager of the Mortgage-Backed Securities group. His investment strategies have been featured in leading publications including the New York Times, the Wall Street Journal, Barrons, Forbes and Institutional Investor. In 2007, Morningstar named Gundlach “Fixed Income Fund Manager of the Year.”
Gundlach’s team of analysts at DoubleLine Total Return Bond Fund specialize in managing AAA rated mortgage-backed bonds. Senior members of this investment team have successfully managed risk together for over 20 years. Gundlach believes their focus on AAA rated mortgages gives them an edge over more diversified bond funds. Their goal remains the same: deliver superior risk-adjusted returns to clients invested in the DoubleLine Total Return Bond Fund.
Over the years he has received numerous industry awards including Morningstar’s “2006 Fixed Income Manager of The Year” and S&P 500/Business Week’s “Excellence in Fund Management Award” three years in a row.
DoubleLine Capital LP was founded in 2010. Most of the mortgage team Gundlach worked with previously at TCW elected to join him at the new firm where he serves as CEO and Chief Investment Officer. Their bond fund offers their clients generous dividend yields, reasonably priced fees and top-notch management. We continue to be pleased with the “Royal” results achieved by “The New Bond King”.
Fund Name: DoubleLine Total Return
Fund Symbol: DLTNX
> The company was established by Jeffrey Gundlach in early 2010 and is already managing about $7 billion in assets
> DoubleLine’s fixed income-asset-allocation team of portfolio managers has worked together for an average of 13 years.
> Morningstar nominated Jeff Gundlach for fixed income manager of the decade.
The investment seeks to maximize total return. The fund invests at least 80 percent of net assets in debt securities. It intends to invest more than 50 percent of its net assets in mortgage-backed securities of any maturity or type guaranteed by, or secured by collateral that is guaranteed by, the United States government, its agencies or sponsored corporations, or privately issued
mortgage-backed securities rated at time of investment Aa3 or higher by Moody’s or AA- or higher by S&P or the equivalent by any other nationally recognized statistical rating organization. The fund may invest 33 1/3 percent of net assets in the high yield universe.
The 10-year average return shown for TGMNX/DLTNX is for the 10-year period 01/01/01 -
12/31/10. The average was calculated by adding the results for the 10 consecutive calendar years shown and dividing that result by 10.
The 10-year average return and 10 individual annual performance results are shown with all dividends and gains reinvested and are net of all fund fees. All fund expenses have already been deducted from the percentage results shown.
The 2010 return was calculated by using the TGMNX for the period 01/01/01 – 4/30/20. DLTNX was used for the period 05/01/10 – 12/31/10.
Past performance is no guarantee of future results. Actual future results will vary.
The Retirement Corporation of America (RCA) is under no obligation to use featured managers or funds and will change managers should they fail to meet our selection criteria.
Information pertaining to RCA’s advisory operations, services and fees is set forth in RCA’s current disclosure statement (copy available upon request from RCA).
ABOUT DOUBLE LINE FUND INVESTMENT STRATEGIES
Under normal circumstances, the Fund intends to invest at least 80 percent of its net assets (plus the amount of borrowings for investment purposes) in fixed income instruments. These “fixed income instruments” include but are not limited to securities issued or guaranteed by companies (including foreign hybrid securities), financial institutions and government entities in Emerging Market Countries and other securities bearing fixed or variable interest rates of any maturity. If the Fund changes this investment policy, it will notify shareholders at least 60 days in advance of the change. The Fund will generally invest in at least four Emerging Market Countries.
An Emerging Market Country is a country that, at the time the Fund invests in the related fixed income instruments, is classified as an emerging or developing economy by any supranational organization such as the World Bank or the United Nations, or related entities, or is considered an emerging market country for purposes of constructing major emerging market securities indexes.
The Fund may invest in hybrid securities relating to Emerging Market Countries. The Fund may invest, without limitation, in fixed income instruments consisting of securities that at the time of investment are unrated or rated BB+ or lower by S&P or Ba1 or lower by Moody’s or the equivalent by any other nationally recognized statistical rating organization. Fixed income instruments rated below investment grade, or unrated securities that are determined by the Adviser to be of comparable quality, are high yield, high risk bonds, commonly known as “junk bonds”.
The Fund may invest up to 20 percent of its net assets in defaulted corporate securities where the portfolio manager believes the restructured enterprise valuations or liquidation valuations may significantly exceed current market values. In addition, the Fund may invest in defaulted sovereign investments where the portfolio manager believes the expected debt sustainability of the country exceeds current market valuations.
The Fund may invest in derivatives, such as options, swaps (including credit default swaps), futures, structured investments, foreign currency futures and forward contracts. These practices may be used to hedge the Fund’s portfolio as well as for investment purposes; however, such practices sometimes may reduce returns or increase volatility. The Fund is a nondiversified fund under the Investment Company Act of 1940, as amended (“1940 Act”) and is not subject to the general limitation that it not invest more than 5 percent of its total assets in a particular issuer with respect to 75 percent of its total assets.
In allocating investments among various Emerging Market Countries, the portfolio manager attempts to analyze internal political, market and economic factors. These factors include:
1. Public finances
2. Monetary policy
3. External accounts
4. Financial markets
5. Foreign investment regulations
6. Stability of exchange rate policy; and
7. Labor conditions
In managing the Fund’s investments, under normal market conditions, the portfolio manager intends to seek to construct an investment portfolio with a weighted average effective duration of no less than two years and no more than eight years. Duration is a measure of the expected life of a fixed income instrument that is used to determine the sensitivity of a security’s price to changes in interest rates. The duration of the Fund’s investment portfolio may vary materially from its target, from time to time, and there is no assurance that the duration of the Fund’s investment portfolio will not exceed these limits.
Portfolio securities may be sold at any time. Sales may occur when the Fund’s portfolio manager perceives deterioration in the credit fundamentals of the issuer, the portfolio manager believes there are negative macro geo-political considerations that may affect the issuer, the portfolio manager determines to take advantage of a better investment opportunity or the individual security has reached the portfolio manager’s sell target.
THE PRINCIPAL RISKS AFFECTING THE FUND THAT CAN CAUSE A DECLINE IN VALUE
Emerging market country risk: the risk that Fund share prices will decline due to the greater degree of economic, political and social instability of Emerging Market Countries as compared to developed countries.
Foreign investing risk: The risk that Fund share prices will fluctuate with market conditions,
currencies, and the economic and political climates where investments are made.
Junk bond risk: the risk that these bonds have a higher degree of default risk and may be less liquid and subject to greater price volatility than investment grade bonds.
Derivatives risk: the risk that an insolvency of the counter-party to a derivative instrument could cause the Fund to lose all or substantially all of its investment in the derivative instrument, as well as the benefits derived therefrom.
Defaulted securities risk the risk of the uncertainty of repayment of defaulted securities and obligations of distressed issuers.
Non-diversification risk: the risk that because a relatively higher percentage of the Fund’s assets may be invested in the securities of a limited number of issuers, the Fund may be more susceptible to any single economic, political or regulatory event than a diversified fund.
Credit risk: The risk that an issuer will default in the payment of principal and/or interest on a security
Interest rate risk: The risk that debt securities will decline in value because of increases in interest rates. A fund with longer average portfolio duration will be more sensitive to changes in interest rates than a fund with shorter average portfolio duration. For example, the price of a fixed income fund with an average duration of eight years would generally be expected to fall approximately 8 percent if interest rates rose by one percentage point.
Price volatility risk: The risk that the value of the Fund’s investment portfolio will change as the prices of its investments go up or down
Liquidity risk: The risk that there may be no willing buyer of the Fund’s portfolio securities and the Fund may have to sell those securities at a lower price or may not be able to sell the securities at all each of which would have a negative effect on performance.
Market risk: the risk that returns from the securities in which the Fund invests will underperform returns from the general securities markets or other types of securities.
Litigation and investigation risk: The risk that pending litigation against the Trust and the Adviser and four employees of the Adviser or other proceedings could have a material adverse effect on shareholder returns. Alternatively, may be more expensive than anticipated, or impair
the Adviser’s ability to attract or retain talented personnel or otherwise effectively manage the Funds.
Securities selection risk: The risk that the securities held by the Fund will underperform other funds investing in the same asset class or benchmarks that are representative of the asset class because of the portfolio manager’s choice of securities.
Portfolio management risk: The risk that an investment strategy may fail to produce the intended results
DOUBLELINE INVESTMENT PHILOSOPHY
DoubleLine Capital LP was founded to offer investment services under a cardinal mandate: striving to deliver better risk-adjusted returns. This mandate includes the avoidance of risk-taking that historically has led to catastrophic principal losses.
DoubleLine emphasizes the importance of security selection, trade execution, portfolio construction, sector allocation, resourcing of the firm’s personnel and systems, and ultimately ownership structure of DoubleLine itself. Employee-ownership reinforces the stability of the investment team and its accountability: no outside decision makers stand between the team and its clients.
In fact, the name “DoubleLine” voices a cardinal mandate: like a careful motorist on a winding mountain road, the manager must not cross the double line into the oncoming lane of risk.
DOUBLELINE INVESTMENT PROCESS
DoubleLine follows the same general investment philosophy, including sector-focused strategies, such as Mortgage-Backed Securities, Global Developed Credit and Emerging Markets Fixed Income, including Fixed Income Asset Allocation and Multi-Asset Growth Strategies. While investment processes vary in adaptation to the particulars of asset class and strategy, the following general principles are embedded across investment groups:
> DoubleLine Capital believes that all investments need to start with risk analysis, not the traditionally taught benchmark comparisons. In their view, it is not how investments compare to benchmarks, but how their risks relate to each other across a portfolio. Risk integration techniques enable DoubleLine to build what is believe are more successful portfolio foundations.
> Investment ideas must offer an asymmetric, positively skewed risk-reward profile. In other words, selected securities and, in Core-type portfolios, sector overweights must appear, through careful analysis, to offer to greater potential payoff than potential loss.
> Portfolios must be constructed with an aim to outperform under a range of future scenarios. In other words, DoubleLine shuns risk-taking based on unidirectional forecasts regarding interest rates, default rates or other variables that drive return.
> No one can consistently predict changes in the level, direction or term structure of interest rates. DoubleLine does not manage portfolios based on attempts to anticipate changes in rates.
> Securities are to be selected for the potential to build par value. Never chase incremental income at the expense of the potential to build par value.
> Portfolio managers actively head trading operations. By definition, portfolio managers are the most seasoned traders. Their experience is irreplaceable in the stoppage of trading leakages as well as rapid vetting of time-sensitive market opportunities.
JEFFREY GUNDLACH QUOTES
1. Perhaps a better explanatory factor, however, is that loads of money is being plowed into taxable bond funds.SOURCE: Bloomberg.com 2012-03-01 22:31:00
2. Pimco Total Return’s rebound in flows isn’t surprising given the fund’s recovery in performance and the fading memory of Bill Gross’s missed call on Treasuries in 2011.SOURCE: Bloomberg.com 2012-03-01 22:31:00
3. Investors have never refused to give modifications or principal reductions where it was in the best interest of the consumer. Nevertheless, if you are going to use private label securities to pay the fine, we look to see a cap put on that. SOURCE: Reuters Mobile 2012-03-01 22:26:00
4. Congress can be persuasive in terms of oversight and what happens next … It is all about the continuing impact on bondholders and borrowers. SOURCE: Reuters Mobile 2012-03-01 22:26:00
5. We want to make clear to all what the investor wants..SOURCE: Reuters Mobile 2012-03-01 22:26:00
6. No one is trying to scuttle this. SOURCE: Reuters Mobile 2012-03-01 22:26:00
7. It is a very easy decision right now to not be making further investments in risk assets. SOURCE: NewsMax 2012-02-29 08:21:00
8. I think crude is going to have to reach at least $150 or $160-$170 a barrel in order to see
$5 a gallon gasoline. SOURCE: NewsMax 2012-02-29 08:21:00
9. However, everyone you speak to say the Israelis will have a go at striking at Iranian nuclear sites. The day that happens, you have to believe the Iranians throw a few mines in the Strait of Hormuz and, for a few hours at least or maybe more, I cannot see a scenario where prices would not be at that sort of level [$150].SOURCE: NewsMax 2012-02-29 08:21:00
10. I used to think this would never happen. SOURCE: NewsMax 2012-02-29 08:21:00
11. If these [Mideast] fears become more fervent, on either a real or a perceived basis, then crude oil prices could jump again. SOURCE: NewsMax 2012-02-29 08:21:00
12. The West’s determination to prevent Iran from acquiring nuclear weapons is coming at a price — a price that might include a second global recession triggered by an oil shock. SOURCE: NewsMax 2012-02-29 08:21:00
13. Basically, growth has flatlined.SOURCE: NewsMax 2012-02-29 08:21:00
14. Now that we have several months of definitive hard data, this is not a forecast.SOURCE: NewsMax 2012-02-29 08:21:00
15. I’ve been at this game for about 30 years, what I’ve learned is that in the world of finance you tend to make money slowly and lose money quickly, and the idea is to not be there when you have potential for downside movement. SOURCE: Reuters Mobile 2012-02-24 21:53:00
16. You might also at some point have a well-meaning attempt to address this absurd amount of government borrowing to fund the spending outlays. If you do that, you will go into a recession immediately. SOURCE: Reuters Mobile 2012-02-24 21:53:00
17. When you see volume decline and you see insider selling at a high level, you’re already seeing the market showing cracks, and it’s already there. SOURCE: Reuters Mobile 2012-02-24 21:53:00
18. That’s usually about as negative as the consensus gets, and usually I warn my clients that when you start hearing a predominance of that method of thinking it’s about as close as you’re going to come to a sell signal..SOURCE: Reuters Mobile 2012-02-24 21:53:00
19. I’d say that’s because the great majority of money managers never say, ‘take money out’..SOURCE: Reuters Mobile 2012-02-24 21:53:00
20. When I look at the pricing in the market today, I see a good chance of downside movement of some significance. SOURCE: Reuters Mobile 2012-02-24 21:53:00
21. The pricing of the market has returned to the levels prior to the scales falling from investors’ eyes regarding the global financial crisis, and I really don’t think that’s appropriate. SOURCE: Reuters Mobile 2012-02-24 21:53:00
22. It is an awfully easy decision right now to not be making further investments in risk assets. SOURCE: Reuters Mobile 2012-02-24 21:53:00
23. We have to pass the health care bill to see what is in it. SOURCE: Mish’s Global Economic Trend Analysis 2012-02-24 13:39:00
24. There is a belief among fund families that they have to be everything to everybody. SOURCE: Smartmoney.com 2012-02-22 19:34:00
25. strong global liquidity, continued loose monetary policy, favorable global PMI and U.S. unemployment data, expectations of a second round of LTRO at the end of January for the Eurozone (€500 billion to €1 trillion) and a lack of bad news coming out of Europe..SOURCE: International Business Times 2012-02-22 15:15:00
26. The fact that the RiverNorth/DoubleLine Strategic Income Fund has reached its capacity in just over one year is quite an accomplishment, especially in the current market
environment … We are committed to ensuring that our fund’s assets don’t exceed a level where they would alter or impact the Fund’s investment strategy, which was our primary driver in deciding to soft-close the fund. SOURCE: PR Newswire 2012-02-22 14:49:00
27. The fact that the RiverNorth/DoubleLine Strategic Income Fund has reached its capacity in just over one year is quite an accomplishment, especially in the current market environment … We are committed to ensuring that our fund’s assets don’t exceed a level where they would alter or impact the Fund’s investment strategy, which was our primary driver in deciding to soft-close the fund..SOURCE: iStockAnalyst 2012-02-22 14:46:00
28. There’s a belief among fund families that they have to be everything to everybody. SOURCE: Smartmoney.com 2012-02-21 20:12:00
29. To believe that this time we are really out of the woods and the prices will not drop again is dangerous. People made that argument a year ago. SOURCE: For What It’s Worth 2012-02-19 15:09:00
30. As a money manager, you can’t close your eyes to that potential outcome. SOURCE: For What It’s Worth 2012-02-19 15:09:00
JEFFREY GUNDLACH IN NEWS
1. Bond Battle Ends With a Whimper
2. Gundlach and TCW Settle Spat
3. Bondholders Criticize $25 Billion Mortgage Settlement
4. Jeffrey Gundlach: ‘We’re in a Recession Now’
5. Jeff Gundlach: Europe Has Already Crashed, Recession Has Already Begun http://blogs.wsj.com/marketbeat/2011/09/28/jeff-gundlach-europe-has-already-crashed- recession-has-already-begun/
6. Jury Finds for TCW as Well as Gundlach
7. No Plea from Kweku Adoboli
8. Jury Finds Jeffrey Gundlach Stole Trade Secrets
9. Quashing the Jeffrey Gundlach for Bill Gross Trade
10. Latest News from the Nasty Gundlach Trial
11. Bond Star Jeffrey Gundlach to Launch New Fund
12. Latest Twist in the Bonds, Drugs and Porn Litigation
13. Bills Draw another Interested Buyer
14. Forget Gold; How About Gemstones?
15. Twist in Gundlach-TCW Case
JEFFREY GUNDLACH IN ARTICLES
1. Going Where Others Fear to Tread
2. Jeff Gundlach — the New Bond King
3. Jeffrey Gundlach- His Latest Contrarian Thoughts http://www.zerohedge.com/article/its-gundlach-jeffrey-gundlach-and-his-latest-contrarian-thoughts
4. Jeffrey Gundlach Is Your Average Stoner, Only More Motivated http://nymag.com/daily/intel/2010/03/jeffrey_gundlach_loves_bonds_p.html
5. A Must-Listen Conference Call
6. Jeff Gundlach’s Controversial Dollar Call Has Worked Out Brilliantly http://articles.businessinsider.com/2012-01-07/markets/30601102_1_doubleline-jeffrey-gundlach-dxy
7. Sex, Lies and Snazzy Investment Returns
8. Bill Gross Still Likes Annaly Capital and So Should You http://seekingalpha.com/article/315556-bill-gross-still-likes-annaly-capital-and-so-should-you
9. Jeff Gundlach: Get Ready For the Taxes-Are-Too-Damn-Low Party http://www.fa-mag.com/component/content/article/29-evan-simonoff-fa-blog/7212-jeff-gundlach-get-ready-for-the-taxes-are-too-damn-low-party.html
10. Degrees of Difficulty
11. Jeffrey Gundlach’s DoubleLine partners with Oaktree Capital Management http://www.hedgetracker.com/article/Jeffrey-Gundlachs-DoubleLine-partners-with-Oaktree-Capital-Management
12. Jeffrey Gundlach of Doubleline Funds Investor Presentation: “To Have and Have Not”
13. Another Awesome Jeff Gundlach Presentation On The Market, And How He’s Investing In It Now
14. Jeff Gundlach Introduces DoubleLine Multi-Asset Growth Fund http://www.advisorone.com/2011/03/15/jeff-gundlach-introduces-doubleline-multiasset-gro
15. Forget Bill Gross, Listen to Jeffrey Gundlach
JEFFREY GUNDLACH IN VIDEOS
1. Meredith Whitney’s Massive Gift to Jeff Gundlach http://articles.businessinsider.com/2011-02-20/markets/30074122_1_muni-bond-market-star-bond-manager-defaults
2. Gundlach: Treasuries Could Keep Rallying
3. Jeffrey Gundlach on CNBC
4. DoubleLine’s Jeff Gundlach Returns to CNBC, Joins Chrorus Warning on Muni Bonds – Loosely Compares the Situation to Subprime Bonds http://www.mrswing.com/articles/Video_Doubleline_s_Jeff_Gundlach_Returns_to_CNBC_J.html
5. Jeffrey Gundlach
9. EXCLUSIVE INTERVIEW with Jeffrey Gundlach, the Best Bond Manager in the World
10. Jeffrey Gundlach’s Views on 2012
11. Jeff Gundlach On What’s Better Than Gold if Financial Armageddon Strikes http://www.polycapitalist.com/2011/06/vide-jeff-gundlach-on-whats-better-than.html
12. Jeffrey Gundlach Says Treasuries Could Keep Rallying http://www.5min.com/Video/Jeffrey-Gundlach-Says-Treasuries-Could-Keep-Rallying-517141248
13. Gundlach on ‘Too Big to Fail’ Asset Managers
14. Jeffrey Gundlach Expresses Interest in Purchasing Buffalo Bills http://www.buffalorising.com/2011/05/jeffrey-gundlach-expresses-interest-in-purchasing-buffalo-bills.html#SlideFrame_0
15. Morningstar Interviews Bond Guru Jeffrey Gundlach http://www.ibtimes.com/articles/195788/20110810/video-morningstar-interviews-bond-guru-jeffrey-gundlach.htm