Ignacio Sosa joins DoubleLine as Director of newly established Product Solutions Group
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Week of June 30, 2014 - Collateralized Loan Obligations (CLOs)
As credit spreads continue to trade tighter across most fixed income markets, DoubleLine has been finding relative value in the Collateralized Loan Obligation (CLO) market. Recently, DoubleLine's Fixed Income Asset Allocation (FIAA) Committee agreed to increase the allocation to US CLOs. With US high grade corporate bonds tightening 30-40 basis points (bps) for most of 2013, longer duration (7 year) US CLO AAA-rated securities seem to offer a better relative value by providing investors 20-30 bps in excess spread in addition to being higher quality.
In addition to excess yield, new CLO 2.0 issues continue to look attractive as the underlying portfolio credit composition has improved over recent months. The CLOs purchased for some of the asset allocation strategies are primarily "floating rate" which helps minimize the interest rate risk in the portfolio while providing an attractive yield for investors.
Meanwhile, DoubleLine continues to monitor the regulatory environment surrounding the CLO market which began the year under pressure due to fear of the Volcker Rule. The Volcker Rule would restrict dealers from holding non-compliant CLO tranches which will likely lead to lower demand and issuance across the market. It appears that the likelihood of additional regulatory relief has diminished with regulatory action not expected sometime well into 2015 at the earliest. As market participants get comfortable with owning CLOs again, issuance has continued to pick up steam with $60 billion issued year-to-date (YTD) 2014. Market issuance is on pace for the highest primary volume on record and may have been a key factor to wider spreads in recent months.
Jeffrey Gundlach - DoubleLine Overview
Bank Loans vs. High Yield
Fixed Income Asset Allocation
Global Developed Credit - Floating Rate
Low Duration Emerging Markets
Mortgage-Backed Securities - Total Return
Shiller Enhanced CAPE®
US Housing Market
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8-15-14 CNBC "DoubleLine's Gundlach: Could see U.S. 10-year yields go to 2.2%"
Click here to view video
02-12-14 "Gundlach: QE will not end in 2014"
02-12-14 "Gundlach: Market has discounted tapering" http://video.cnbc.com/gallery/?video=3000245506
04-14-14 "Housing Finance Reform"
Information presented was current as of the date the material was prepared by an outside party. DoubleLine assumes no duty to update this information.
Documents and Commentary
- 2Q Economic Update – Multi-Assset Growth Strategy
- Beyond the Mirage of Benchmarks: A Better Investment Framework for Emerging Markets Debt
- The Blind Leading the Blind – Multi-Asset Growth Strategy
- 10 Frequently Asked Questions about DoubeLine Shiller Enhanced CAPE®
- Taper, U.S. Rates and Emerging Market Currencies: Can U.S. Economic Growth Weather the Storm?
Tuesday, January 8, 2013
Jeffrey Gundlach "2013 Market Outlook: Year of the Snake"
Click here for Webcast Recap (pdf)