Speaking before the results of the presidential election were known, Jeffrey Gundlach commended Donald Trump for his campaign and the results he achieved. Gundlach did not, however, reiterate his prediction that Trump would win and, as in the past, he neither endorsed Trump nor said that he would vote for him.
Gundlach is the founder and chief investment officer of Los Angeles-based DoubleLine Capital. He spoke to investors via a conference call at 4:15pm on Election Day, November 8. The focus of his talk was DoubleLine’s closed-end funds, DBL and DSL.
“I went on record when Trump was a 500-to-1 shot,” Gundlach said. “I didn’t think he would go this far.”
Gundlach said that Trump “massively outperformed expectations” and thanked him for “all of the effort he put in.”
Gundlach said he has never met Trump, but acknowledged the challenges of a presidential campaign. It must be “grueling and a horror show,” he said, to put up with the barrage of criticisms from opponents and the media.
“He should be commended for going all the way to the goal line,” Gundlach said.
In lieu of predicting the presidential winner, Gundlach said, “We’ll find out later tonight.”
DoubleLine’s closed-end funds
The bulk of Gundlach’s comments were about the risks and opportunities in the firm’s closed-end fund.
Gundlach said he was “not terribly fond of interest-rate risk,” which he contrasted with his position in May, when he was bullish on rates. Of the two funds, he said DSL is better positioned relative to interest-rate risk, and he advised investors to sell DBL and buy DSL.
He said DBL has an 8.3% yield (net of fees), versus the Barclay’s Aggregate index (AGG), which has a 2.1% yield (less fees). He described DBL as a “riskier version of DBLTX [the firm’s flagship total return fund] with prepayment and credit risk.” Indeed, he said DBL has triple the risk of DBLTX, although its performance has been two- to three-times that of DBLTX, giving the two roughly the same risk-adjusted results.
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