Gundlach's Total Return Bond Fund Hit With 9th Straight Month Of Outflows

Tyler Durden's picture

While Jeff Gundlach has been engaging in an odd subtweeting campaign on Twitter over the past week with an unnamed media outlet that is allegedly being used by a similarly unnamed Doubleline competitor to accuse Gundlach's fund of doing poorly and is suffering outflows, something the "bond king" has said is a "false narrative"...

... he has done everything in his power to publicize that DoubleLine is in no way in peril, or in need of funding. Just yesterday, in an interview with Bloomberg's Erik Shatzker, Gundlach said that he is content with the size of his fund, which he does not want growing too large, and may soon turn new money away:

“Gundlach is taking a similarly conservative approach to building his eight-year-old firm. While some competitors embrace the mantra “size matters,” he believes there’s a limit to how much DoubleLine can manage well and says the firm may stop marketing altogether once assets reach $150 billion, up from about $110 billion today.

 

‘I’ve actually been turning money away in our institutional business,’ Gundlach said. ‘I don’t want to manage $500 billion. I don’t really want to manage $200 billion.’... “I don’t want one $150 billion fund, I want 10 $15 billion funds. A diversified business,” Gundlach said in the interview. “We lose business because our fees are too high and I say, ‘Fine, that’s a way of regulating growth.’”

 

“Bill Gross once managed a single fund with $293 billion in assets, the Pimco Total Return Fund. By comparison, Gundlach, who co-founded DoubleLine in 2009, said he’s debated whether to close the $54 billion DoubleLine Total Return Bond Fund, the firm’s largest, to new money.”

The statement echoed what Gundlach said in a tweet from August 2: "DoubleLine Facts: All time high AUM, revenue, headcount. Returns good-to great across funds. CEO never berates employees. Boycott fake news!"

It now appears that the reason for the recent din over DoubleLine - or rather Total Return Bond Fund - AUM is that Gundlach was anticipating the latest Morningstar fund flow data, reported by Reuters, according to which investors pulled another $200 million from Jeffrey
Gundlach's flagship Total Return Bond Fund in July, extending the outflow streak that began in November to nine consecutive months. So far this year, the fund has posted outflows of $3.6 billion, leaving it with $53.6 billion in AUM as of the end of
July.

As Reuters writes, "the withdrawals are notable given that other bond funds are swimming in new cash from investors and at a time when the DoubleLine fund's performance has been strong.

Some $203 billion flowed into bond funds in the first half of 2017, and bond funds overall have not recorded a single week of outflows all year, according to the Investment Company Institute, a trade group.

The outflows are odd in the context of TRF's YTD outperformance: "DoubleLine Total Return Bond Fund's lower-cost institutional shares were up 3.2 percent this year through Tuesday, beating its benchmark, according to data from Thomson Reuters' Lipper research unit." Preempting the news, Gundlach in a tweet early Wednesday said that DoubleLine is a top-ranked fund company by net cash inflows this year through July.

Sure enough, while TRF is seeing outflows, the broader DoubleLine continues to take in cash: overall, the firm pulled $253 million into its mutual funds and ETFs during July and $2.5 billion this year, ranking 24th of 405 fund families, according to Morningstar data. A recent interview with Reuters may explain this discrepancy: Gundlach said DoubleLine was "trying to focus on our strategy: growing our other funds." He was referring to the SPDR DoubleLine Total Return Tactical ETF, DoubleLine Core Fixed Income Fund, DoubleLine Shiller Enhanced CAPE, DoubleLine Low Duration Bond Fund, DoubleLine Infrastructure Income Fund and DoubleLine Flexible Income Fund. Those six funds have attracted $5.8 billion this year, according to Morningstar.

"We are marketing our other funds and not DBLTX," Gundlach said. "We are accomplishing exactly what we planned."

Perhaps Gundlach is one of the few managers who actually means it when he says he does not want his fund to end up being too big: he has said repeatedly that he did not want to grow DoubleLine into a monstrous firm. He told Reuters in 2014, when DoubleLine crossed $60 billion in assets under management, that "most people think the definition of success is more. It's gotta be more all the time. There's a quality-of-life aspect and a way of maximizing the probability of success." He repeated the same again this week to Bloomberg.

It remains to be seen if there is anything more structural within DoubleLine to explain the outflows, or the explanation for Gundlach's recent odd tweeting behavior.

In other news, Gundlach sounded a bearish tone and told Reuters, Bloomberg and CNBC that he expects volatility to spike, his "highest conviction trade", and gold prices to rise. He also said on Tuesday said he initiated an options trade designed to profit if market volatility ramped up. His timing may have been good: both the VIX and gold have been rising in recent days, although it is unclear if the trend will continue, considering the S&P closed unchanged despite the growing sound of war drums.

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wisehiney's picture

They have trotted out EVERY single one of these jackasses this past couple of weeks to inform us that treasury bond rates are going to the moon.

I will/have taken the other side of that bet.

Again.

junction's picture

As the fund managers' yachts disappear from sight on their way to great warm vacation spots this winter, stakeholders who believed the happy talk will be left with their awful statements showing that the good times have stopped rolling along.

MozartIII's picture

Good choice! They BS narative they spin to save face is sad. Their pocket books are looking sad as well!!

Yen Cross's picture

   Everyone has their day in the barrel. "Trust Me" .

 

MozartIII's picture

Been there Yen! Something about pride cometh before a fall.......

Yen Cross's picture

What he said ^

  I've NEVER in my life, seen such complacency.

   Printing fake money and buying overvalued assets doesn't end well.

  The central banks aren't " Omnipotent"!!!

    I'll be sharing some examples in the near future.

shizzledizzle's picture

LOL, What did I tell you. Not a member of the tribe.