Bond investor Jeffrey Gundlach thinks risky assets like emerging markets and high-yield debt are overvalued, according to reports.
In an interview with Bloomberg, chief executive of DoubleLine Capital Gundlach said he was reducing those positions in his funds and investing in more higher-quality credits that are less sensitive to rising interest rates.
He added that he was willing to give up performance for a while despite not knowing exactly what will trigger a change in investor sentiment.
Los Angeles-based Gundlach told Bloomberg: ‘If you’re waiting for the catalyst to show itself, you’re going to be selling at a lower price. This is not the time period where you say, “I can buy anything and not worry about the risk of it.” The time to do that was 18 months ago.’
Gundlach manages the $54 billion DoubleLine Total Return fund, which is available to non-US investors through the $2.2 billion Nordea 1 - US Total Return Bond fund.
He said that as DoubleLine’s total assets approach $150 billion, the firm has been turning away money from its institutional business and has debated whether to close its US-based total return bond fund to new money.
‘I don’t want one $150 billion fund, I want 10 $15 billion funds. A diversified business,’ Gundlach said in the interview. ‘We lose business because our fees are too high and I say, “Fine, that’s a way of regulating growth”.’