One of the closed-end funds that seems to be a recurrent favorite on our watch list is the DoubleLine Opportunistic Credit Fund (DBL), run by Jeffrey Gundlach of DoubleLine Capital. This unique actively managed portfolio was the first of its kind to debut from DoubleLine back in 2012 and has developed a cult following among CEF investors.
DBL primarily invests in a mixed basket of mortgage backed securities, collateralized loan obligations and other asset backed securities. The fund has just over $325 million in total assets with a relatively tame 16% leverage ratio to boost its net exposure. It currently yields over 8% annually and income is paid monthly to shareholders. Read more
I’ve always been a big fan of actively managed bond funds as a way for investors to access risk managed or alpha-generating strategies. Unlike active stock pickers, the best managers from the likes of PIMCO, DoubleLine, Guggenheim, and Loomis Sayles have proven track records of adding value for their investors versus a passive benchmark. Fixed-income is still one of those asset classes where sector positioning, duration targeting, and credit selection can make a huge impact on net returns.
Look back through my blog and you will see numerous references to some of my favorite funds like the DoubleLine Total Return Bond Fund (DBLTX) or the PIMCO Income Fund (PONDX). We have owned both for our clients and in our own accounts for years. Read more
This month’s video takes an in-depth look at the closed-end fund marketplace. Charts include both diversified CEF indexes and single fund names. Overall the trend remains solid, however we are starting to see stretched premiums and tight discounts across the entire spectrum. Risk is high and caution should be warranted at this stage of the cycle. Video recorded after the market close on February 8, 2017.
A reader recently sent me a question asking why you would own a bond fund when interest rates are on the move higher. This type of sentiment is more than likely on the minds of many investors as they prepare for 2017 and evaluate adjustments to their asset allocation.
The short answer is that every diversified portfolio should have bond exposure to balance out the risk of other asset classes – i.e. stocks and commodities. Bonds have historically provided a shock absorber for the equity side of the portfolio and have not shown any signs of relinquishing that trait. Simply letting go of all your bond exposure will unnecessarily tilt your risks and returns towards a single outcome. Read more
Investors like to stick with what they know and that is often demonstrated in the use of a single fund company for all their wealth. I see it quite frequently when I review portfolios for prospective clients. “I’m a Vanguard guy.” “I love Fidelity funds.” “All my money is at American Funds or PIMCO or T. Rowe Price.” Read more