Jeff Gundlach’s DoubleLine Capital is going against a norm in asset management.
Instead of continuously looking to scale its size, Gundlach told Bloomberg’s Erik Schatzker that his firm may stop soliciting for new clients once its assets under management reach $US150 billion. That’s about $US40 billion more than it has today.
The goal is for funds such as the DoubleLine Total Return Bond Fund to be stoked with client money that can be used with more focus on specific parts of the market. DoubleLine has sought to attract investors to its other funds to diversify its business.
Meanwhile, DoubleLine is cutting its exposure to assets that Gundlach considers overvalued including junk bonds and emerging-market debt.
Gundlach repeated that he was betting on an imminent pickup in market volatility, describing it as his “highest-conviction trade right now.” He recently told Reuters that DoubleLine lost money on the first day it put on the trade, which involved buying five-month put options on the S&P 500. But since then, it has since earned returns that are “like free money,” Gundlach said.
However, Gundlach said the only thing that would cause a major stock market correction is if the economy started to barrel towards recession.
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