Jeff Gundlach Asset Allocation Webcast – Doubleline Recap

Jeff Gundlach Asset Allocation Webcast – Doubleline Recap
Jeff Gundlach Asset Allocation Webcast - Doubleline Recap

Jeff Gundlach Asset Allocation Webcast – Doubleline Recap

Jeff Gundlach: Fixed Income Overview

  • “Bloodless Verdict of the Market”
    • Most bond income sectors have performed well this year excluding Emerging Markets (EM) denominated in local currency
    • We believe U.S. bonds offer relative value over European bonds
    • CCC-rated high yield (HY) lagged higher quality bonds; which is closely tied to the returns of the U.S. stock market which has done little this year
    • 2-year U.S. Treasury (UST) yields appear to have bottomed 4 years ago
    • Mr. Gundlach continues to monitor the 30-year UST which refuses to break below the 2.45% level. If the yield doesn’t break below that level, we may see choppiness in the bond market.
  • Relative Valuations
    • Investment Grade corporate bonds– remain historically overvalued; DoubleLine asset allocation products have minimal exposure to IG. The valuation has worsened due to the long duration characteristics of the asset class.
    • We believe HY bonds – Fairly valued; DoubleLine increased exposure across our asset allocation products after the sector cheapened from its historically high over-valuation in 2013. Mr. Gundlach remains copasetic about defaults in the corporate
    • We believe Bank Loans – slightly overvalued and less attractive than high yield; maturity profile has also been pushed out to 2020 and 2021
    • We believe Mortgage-backed securities (MBS) – At average valuation
    • Convertible bonds – currently two standard deviations rich; if this really breaks down we are likely looking at a substantial correction, which may broadly be the case across risk assets
    • We believe Emerging Markets – average valuation which is represented by an average allocation
    • We believe TIPS – fairly valued; inflation does not appear to be an issue any time soon so DoubleLine remains light on TIPS exposure
    • We believe Municipals – relatively attractive and the Core Fixed Income Fund has received a 4% allocation

The DoubleLine Core Fixed Income Fund (DBLFX/DLFNX)

  • Fund Characteristics
    • Broadly diversified with lower duration (4.60 years as of 3/31/15) than the Barclays Aggregate Bond Index (5.45 years as of 3/31/15)
    • 24% below Investment Grade with a majority of that coming from the non-Agency MBS
  • Portfolio Composition as of 2/28/2015
    • 28% MBS, 21% Government,11% IG corporates, 8% High Yield corporates, 6% Commercial MBS (CMBS) and 3% Bank Loans

The DoubleLine Flexible Income Fund (DFLEX/DLINX)

  • Fund Characteristics
    • Shorter Duration (1.15 years as of 3/31/15) than the Core Fixed Income Fund (4.60 years of 3/31/15)
  • Portfolio Composition as of 2/28/2015
    • 24.0% non-Agency MBS, 19% International Emerging Markets, 19% CLOs and 11.7% High Yield corporate
    • All U.S. Dollar denominated
    • 40% of the fund is invested in floating rate securities

Question and Answer

  • U.S. Treasuries
    • The long-end appears to be welcoming a rate hike. This idea was corroborated with a strong jobs report last month when bonds rallied.
    • Short term rates will likely have a hard time ending the year lower

See full PDF below.

David Abrams Likes Acacia, Kensico, Arbiter And Several Other Hedge Funds

Yarra Square Investing Greenhaven Road CapitalHedge fund managers are among the wealthiest people in society, and many of them choose to give back through their own foundations. David Abrams of Abrams Capital is one hedge fund manager who has his own foundation. We can get an idea about his favorite hedge funds by seeing which funds his foundation invested in. Read More


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