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DoubleLine the fund founded and managed by Jeff Gundlach has just filed paperwork to launch the DoubleLine Flexible Income Fund, an unconstrained-style bond fund. What is an unconstrained style fund?
CNN Money says: Unlike core bond funds, which own U.S. investment-grade bonds, these funds give their managers a free hand to buy almost any kind of bond. That could mean emerging-markets, junk, munis … whatever. The funds may also use complex hedging strategies, such as buying derivatives or shorting — betting that particular bonds will fall in value.
Unconstrained funds are controversial because, by their definition, they don’t give a nod toward a benchmark index, they’re wildly different from one another — which makes choosing one tricky, especially for inexperienced investors.
Michael Aneiro at Barron’s says: “It’s nearly impossible to compare them with each other, since their holdings and strategies vary so widely. Even looking at their own historical performance — what little of it there is — isn’t very helpful, since a manager’s approach can (and arguably should) change on a dime.”
The move comes at a crucial time for Gundlach, whose flagship DoubleLine Total Return Fund (DLTNX) suffered $2.08 billion of outflows in December, despite being one of the top performing funds in the sector according to Morningstar data. It seems bonds are not at the top of many investors lists right now. A problem Gundlach is hoping this new fund will solve.
Reuters: – White House not considering Puerto Rico bailout, official says. – The White House is not considering a financial bailout for Puerto Rico, where chronic fiscal challenges have raised the specter of a Detroit-like bankruptcy, an Obama administration official said on Wednesday.
ETF Strategy: – Market Vectors launches short duration high-yield municipal bond ETF. – Market Vectors, the exchange-traded funds brand of Van Eck, has announced the launch of the Market Vectors Short High-Yield Municipal Index ETF, an NYSE Arca-listed ETF providing exposure to the shorter end of the municipal yield curve.
FT: – Banks pitch possible Puerto Rico bond offers. – Banks including Morgan Stanley and Barclays are pitching potential bond offerings for Puerto Rico as the debt-laden US commonwealth seeks to raise funds and avoid a credit-rating downgrade, according to people close to the situation.
Morningstar: – Puerto Rico muni bonds: The good, the bad, and the ugly. – As the credit picture for Puerto Rico continues to evolve, we believe that it is more important than ever for investors to be attuned to this $70 billion slice of the municipal bond market. Here’s what’s to like and not to like about Puerto Rico bonds.
LearnBonds: – Disinflation and deflation are on the table. – Over the past two weeks or so, the words deflation and disinflation have popped up quite frequently in the news. Deflation is a situation in which prices are falling in absolute terms. Disinflation is a situation in which prices are rising but the rate at which they rise, the rate of inflation, is falling.
Investors Chronicle: – Back to bond basics. – The relentless focus on credit risk in the bond market can be a bit abstruse for ordinary investors, who generally prefer the tales of fabulous growth to come that tends to dominate the discourse around equities. However, the bond market this year will probably be the object of greatest interest because the expected shift in yields, and the consequent release of cash, will profoundly affect the overall market.
Investors.com: – Treasury yields rise amid more tapering speculation. – Treasuries fell, with benchmark 10-year yields climbing from almost a six-week low, as signs the U.S. recovery is accelerating boosted speculation the Federal Reserve will keep reducing its debt-purchase program.
BusinessWeek: – General Mills sells debt; relative yields least since July ’07. – General Mills Inc. sold its first dollar-denominated bonds in about a year as relative yields on investment-grade securities in the U.S. fell to the lowest level since before the start of the credit crisis in 2007. A measure of U.S. company credit risk increased.
BusinessWeek: – Hard-to-sell junk debt lures Oaktree to JPMorgan. – Bond investors are losing their aversion to difficult-to-trade corporate debt that handed them some of the biggest losses in the credit crisis.
IFR: – EM bond issuance gets off to a flying start. – Emerging markets bond issuance has got off to a roaring start with supply for the month on course to beat last January’s new year spree.
CNN Money: – Bonds: Where to find higher yields. – To temper your rate risk and earn more than the 2% your core bond fund is paying, peel off a small portion — say 20% or so — and redirect it to other pockets of the bond world, here’s some ideas where to look.
Gary Jakacky: – Leveraged bond ETFs: No evidence of volatility drag. – In previous articles I have analyzed leveraged and inverse stock ETFs to examine how well they tracked their underlying index. Since these articles appeared over 15 months ago, I will update some of this analysis in the near future.
FT: – Turning back to the Great Rotation theme. – Michael Hartnett, Bank of America Merrill Lynch’s chief investment strategist, remains “committed to the Great Rotation theme”.
Philly.com: – Daily Money Tip: A healthy bond market for 2014, says strategist. – Should bond investors expect as much Federal Reserve bank influence in 2014? Not so much. And that signals a healthy bond market.
Don Dion: – Should Bill Gross leave Allianz’s Pimco and practice yoga full time? – Investors need to ask themselves if the wrong Co-Chief Investment Officer resigned in sunny Newport Beach, California. We believe performance counts.
Minyanville: – Signals from bonds and currencies remain mixed. – What will that mean for all of the asset classes in the short term? Here, a look at bonds and the dollar as well as the biggest influence on the greenback.
Journal Sentinel: – Turn your tax refund into savings. – Millions of Americans get a refund on their taxes each year. If you are one of them, why not use part of your refund to save for the future with a Series I Savings Bond from the U.S. Department of the Treasury? You can invest as little as $50 in this affordable, safe and convenient savings option, which can help you meet your long-term savings goals and build a brighter future.
TheStreet: – These balanced mutual funds stay afloat even when bonds sink. – The difficult fixed-income markets hurt balanced mutual funds, which typically hold a mix of stocks and high-quality bonds. But some balanced mutual funds proved relatively resistant. The winners diversified their fixed-income holdings, including such assets as cash, high-yield bonds or convertibles. Those stayed in the black.
Gross: Almost all currencies weakening against Dollar and Euro. Imbalances point towards de-risking globally.
— PIMCO (@PIMCO) January 23, 2014
But who will buy all of the treasuries? — David Schawel (@DavidSchawel) January 23, 2014
Treasury Floating Rate Note details: $15bln, 2yr maturity, Jan 29 sale, & yield indexed to 3-mo t-bill. Marginal yield spread to 3mo.
— AnthonyValeri (@Anthony_Valeri) January 23, 2014