Gundlach to Start Flexible Fund as Investors Flee Total Return

Jan 23, 2014 8:52 am ET

Jan. 22 (Bloomberg) -- DoubleLine Capital LP’s Jeffrey Gundlach is starting a fund that will have the flexibility to invest across sectors of fixed income without being constrained by an index.

DoubleLine Flexible Income Fund will be managed solely by Gundlach and start this year, according to a regulatory filing today. The mutual fund may invest in securities from mortgage- backed debt to emerging-market bonds and floating-rate loans, including any level of the capital structure, as well as derivatives, the Los Angeles-based firm said.

Gundlach is following other money managers such as BlackRock Inc., Pacific Investment Management Co. and Western Asset Management Co. that offer bond funds that aren’t constrained by duration, strategy or region. As interest rates rise, investors are shifting assets from traditional fixed- income offerings, which are limited in how they can react in falling markets, to more flexible alternatives.

Investors pulled $6 billion from DoubleLine Total Return Bond Fund in 2013, according to estimates from research firm Morningstar Inc. The $31.2 billion fund advanced at an annual average of 6.4 percent in the three years ended Jan. 21, ahead of 93 percent of peers, according to data compiled by Bloomberg. In 2013 it gained 0.02 percent, beating 80 percent of similarly managed funds.

DoubleLine Low Duration Emerging Markets Fixed Income Fund will also start this year and be managed by Luz Padilla, Mark Christensen and Su Fei Koo, the firm said in the filing. That fund will invest in debt issued by countries as well as non- government issuers and seek an average duration of no more than three years for its holdings.

--Editors: Josh Friedman, Daniel Taub