Gundlach's DoubleLine Capital posts 20th month of inflows in Sept

By Jennifer Ablan

NEW YORK (Reuters) - DoubleLine Capital, whose co-founder Jeffrey Gundlach is widely followed for his investment calls, on Thursday reported $1.1 billion in net additional investments in September, the 20th consecutive month it has attracted new money.

The Los Angeles-based firm said the DoubleLine Total Return Bond Fund, its largest portfolio by assets, had $790 million of inflows in September, for a year-to-date net inflow of $8.1 billion, DoubleLine said.

"The fund continues to outperform peers while taking on lower interest rate risk. They have lower duration than peers and balance credit risk in a barbell approach. So a strong yield with less risk," said Todd Rosenbluth, director of ETF & Mutual Fund Research at S&P Capital IQ. "Investors seeking fixed income remain comfortable with the DoubleLine approach that has a long record of success."

The $49.4 billion DoubleLine Total Return, which is returning 2.81 percent so far this year, ranks in the top 1 percentile in the Morningstar intermediate-term bond category.

The DoubleLine Core Fixed Income Fund had a net inflow of $123 million last month, following a net cash withdrawal of $58.2 million in August, bringing its year-to-date net inflow to $1.15 billion.

The DoubleLine Core Fixed Income Fund is an open-end intermediate-term bond fund that invests in different sectors of the fixed-income market, including corporate securities, bank debt, emerging markets debt and Treasuries as well as mortgage-backed securities.

Last year, Gundlach correctly predicted that U.S. Treasury yields would fall, not rise as many others had forecast, because inflationary pressures were non-existent and technical factors, including aging demographics, were at play.

This year, Gundlach said the U.S. economy and risk markets cannot digest a premature Federal Reserve hike. Raising rates too early would hurt high-yield "junk" bonds and help longer-duration government bonds such as U.S. Treasuries and government-guaranteed bonds such as mortgage-backed securities (MBS). Gundlach said he would rather own cash than short-maturity bonds because short-term fixed-income securities yield almost nothing. If investors are willing to accept no yield, it would be better to hold cash and forgo the risk for virtually zero yield with short-term bonds, he said.

DoubleLine was overseeing $81 billion in assets under management as of the end of third quarter, up from $76 billion as of June 30. The assets under management includes separate accounts, hedge funds, NYSE-closed end funds, the ETF, variable annuities, UCITS, subadvised open-end mutual funds and the DoubleLine Funds open-end mutual funds.

(Reporting By Jennifer Ablan; Editing by Chris Reese and Chizu Nomniyama)

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