2016 Just Markets
Please join us for a live webcast titled "Just Markets" hosted by:
Jeffrey Gundlach
Mr. Gundlach will be discussing the economy, the markets and his outlook for what he believes may be the best investment strategies and sector allocations 2015.
Tuesday, January 12, 2016
1:15 pm PT/4:15 pm ET/3:15 pm CT
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https://event.webcasts.com/starthere.jsp?ei=1084870Gundlach on unconstrained bond fundsJan 6, 2016 @ 12:17 pm Investment Insights: The Blog
By Jeff Benjamin
Jeffrey Gundlach doesn't see a bright future for unconstrained bond funds, with the notable exception of his own DoubleLine Flexible Income Fund (DFLEX), which he doesn't really identify as unconstrained.
“The category is something of a gimmick, because the strategy sounds nimble, but the allure is really the hope that they will be able to avoid interest-rate risk,” the founder of DoubleLine Capital told InvestmentNews in a phone interview.
On the category's lagging the Barclays index in 2014 and 2015:
...“The hope is that these funds will be positive through a variety of movements, or positive all the time. But those of us who are experienced know that it's impossible to do things perfectly, or even close to perfect, all the time. Just because you can be nimble doesn't mean you can always be positive.”
“Rising interest rates lead to losses across the bond category. It's not like these funds are going to have some super-secret bond allocation in credit that goes up when everything else is falling.
...“Nothing works all the time, but unconstrained funds give this kind of false promise that they might work all the time. It's not like it's risk-free. It has to be managed almost perfectly.”
On DoubleLine's joining the category with the April 2014 launch of its “flexible” fund that intentionally avoids being described as unconstrained:
“It was my feeling that those unconstrained funds would eventually get a bad name. Our flexible fund is spoken about to investors as trying to navigate the bond market and stay positive.
...“When you're running funds, there's a lot to consider, including what investors are looking for. It is clear that investors don't want rate risk right now. There will be a time when we will go on the offensive in our flex fund, and we will probably go to a very high duration someday.”
On what the appeal of unconstrained funds says about active management:
“In the equity markets people don't seem to believe in active management anymore, and yet in their bond portfolios they believe in uber-active management. So they go toward strategies that are as nimble as possible, so that must mean active management is great.
“It goes back to the active-passive pendulum. In 2015 you did better in an ordinary index fund than you did in an unconstrained bond fund. The category won't go away completely, but most of the funds are shrinking.”
http://www.investmentnews.com/article/20160106/BLOG12/160109970?template=printartNontraditional Bond: Total Returnshttp://news.morningstar.com/fund-category-returns/nontraditional-bond/$FOCA$NT.aspx 
