Tips From A Bond Guru Jeffrey Gundlach

DoubleLine’s Jeffrey Gundlach is the fixed-income guru you’ve probably never heard of. But you should listen to what he says.

- Nellie S. Huang

When Jeffrey Gundlach talks, people listen. The colorful and dynamic fund manager isn’t a household name, but to the cognoscenti of the fixed-income world his word is gold, and they tune in to his regular webcasts to hear Gundlach’s view of the markets and the economy. // Why? Because he’s a brilliant bond investor. Gundlach called the subprime mortgage market an “unmitigated disaster” in June 2007, more than a year before the worst losses of the financial crisis hit. In mid 2016, he correctly predicted that 10-year Treasury interest rates would begin to rise, while others expected them to fall. And he’s steered his most popular funds, DoubleLine Total Return Bond (a longtime Kiplinger 25 member) and DoubleLine Core Fixed Income, to the top of the charts, posting five-year annualized returns that beat 90% of their peers and the bond benchmark, the Bloomberg Barclays U.S. Aggregate Bond index.

But Gundlach, a DoubleLine founder and its chief executive and chief investment officer, is a good listener, too.

Every month, 40 investment team members gather in the so-called Warhol room in DoubleLine’s downtown Los Angeles office (an Andy Warhol original hangs there). It’s the firm’s biggest conference room, but at these meetings, it’s standing room only. The team, led by Gundlach, is there to discuss how the firm’s money will be best put to work in the bond market.

The meeting is a window on the strategy of an actively managed fund shop that, for the most part, is beating its benchmarks—a rarity in the investing world. Of the six DoubleLine funds with five-year track records, four portfolios—Core Fixed Income, Low Duration Bond, Shiller Enhanced CAPE and Total Return Bond—outpaced their bogeys over the past five years on an annualized basis.