Bond guru Jeffrey Gundlach stood out in 2011 for going long on U.S. Treasurys and for being cautious on the financial stocks, when consensus opinion on both was to do the opposite.
And investors who heeded his advice on Bank of America profited handsomely, as he was the lone dissenter when everyone else was bullish on the stock.
Therefore, this is a voice investors may want to listen to as we begin 2012.
Gundlach is the CEO and CIO of the fixed-income investment management firm DoubleLine Capital, which manages $22 billion in mutual funds, hedge funds and institutional accounts.
Gundlach’s five key factors that investors should consider in the New Year:
- Stay at your maximum financial asset allocation to US dollar based investments.
- Focus on ridding your portfolio of counterparty risk.
- Suspend purchases of Mortgage REITs (Real Estate Investment Trust), for the time being.
- Expect the nearly universal underperformance by active bond managers in 2011 to prompt a widespread move toward indexation in 2012.
- Keep your eye on the Shanghai Composite Index because it’s persistently weak.
The Doubleline Core Fixed Income Fund was named the top bond mutual bond fund for 2011 by Fortune magazine and The Financial Times.