From Tyler Durden: After nearly three consecutive years of inflows, an unheard of feat, Jeff Gundlach’s $61.6 billion DoubleLine Total Return Bond Fund finally experienced its first outflow since January 2014, as investors took out $33 million from the California fund.
With that the streak of 33 consecutive months of inflows was broken Reuters reports.
Repeating a position he has held for several months, Gundlach told Reuters that “bonds are headed toward outflow territory … rising rates mean negative returns are developing. Even DoubleLine is having ‘day in’ and ‘day out’ flows. It is not an inflow day every day.” Unless, of course, the market suffers a long-loverdue equity selloff, in which case the flow will be in the other direction as debt of any kind will be immediately is seen as a “flight to safety” and the cycle will begin from scratch.
According to the new bond king, a few advisers in October made allocation and model changes away from the intermediate-term sector of the bond market, resulting in a few large redemptions in the DoubleLine TRBF which however moved into DoubleLine’s Flexible Income, Low Duration Bond and Core Fixed Income funds.
Gundlach remains skeptical on rates, and in what was – how should one put it – a humblebrag, the bond manager indirectly accusedhimself of causing his fund’s first outflow in just under three years: “I have been vocally bearish on Treasuries for months, and, being one of the most influential in the industry, it should not be a surprise that investor behavior is influenced by me,” Gundlach said modestly.
“Lastly, we have had terrific performance in DBLTX since rates bottomed: we are up in a meaningfully down market.”
While the TRBF saw modest redemptions, other of the firm’s investment vehicles continued to soak up cash with the $7.7 billion DoubleLine Core Fixed Income Fund enjoying inflows of $166.5 million in October, bringing its year-to-date net inflows to $2.1 billion. DoubleLine’s largest equities mutual fund, the $1.4 billion DoubleLine Shiller Enhanced CAPE fund, had net inflows of $77.3 million in October, bringing the year-to-date net inflows to $671.9 million and doubling its assets from year-end 2015.
However, just as Gundlach “accused” himself of causing bond fund outflows, he may also point the finger at himself should equity outflows pick up next month as his equity bearishness is rising:
“We got the bearish signal,” Gundlach said about the S&P 500 dropping below 2,130 on Monday and the previous trading day. “It is more noteworthy and reinforces the bear signal that the market is down a lot today. The dam is breaking, you can feel it.” Gundlach expected another 5-10% drop in the S&P 500, which closed at 2,111.72 on Tuesday.
Gundlach said he will look to scoop up some equity-correlated securities “because they are going down.”
Gundlach, who as we first reported in April, was probably the first asset manager to predict a Trump victory, was also one of the first money managers to warn investors to get defensive and brace for volatility ahead of the elections. He may get his wish.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell $0.36 (-0.20%) to $179.76 in premarket trading Wednesday.. Year-to-date, the only ETF that tracks the DJIA has risen 3.52%.
This article is brought to you courtesy of ZeroHedge.