A new SEC regulatory filing last week revealed that famed fixed-income investor Jeffrey Gundlach is teaming up with State Street Global Advisors on an actively managed bond ETF. The new fund has been dubbed The SPDR DoubleLine Total Return Tactical ETF.
Gundlach is well-known for his core and strategic fixed-income portfolios that have been primarily offered in mutual fund, closed-end fund and hedge fund formats to date. His firm, Doubleline Capital LP, oversees approximately $50 billion in fixed-income assets.
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This first foray into the ETF world will be another opportunity for him to showcase his strengths in security selection and risk management. Particularly at a time where many income investors are fearful of rising interest rates and high yield bubbles.
The new fund will be offered by State Street (NYSE: STT), which is currently the number two ETF provider in the country. Doubleline Capital LP will be the sub-adviser to the ETF, with primary investment direction shared by Gundlach and Philip Barach.
This strategy of pairing up with “best of breed” partners has been a successful recipe for Doubleline in the past. It offers the ability to leverage each company’s strengths in portfolio management, marketing and logistics while sharing costs and profit. Doubleline has ongoing partnerships on several mutual funds with RiverNorth, Altegris and Litman Gregory.
The new SPDR Doubleline actively managed ETF will compete with Bill Gross’ popular PIMCO Total Return Bond ETF (NYSE: BOND) for fixed-income assets. However, the underlying portfolio strategies will likely be very different.
The “tactical” reference in this new ETF offering may allow the manager additional flexibility to seek out global opportunities that BOND would typically shy away from.
According to the regulatory filing, the Doubleline ETF will be able to invest up to 25 percent of its assets in corporate and high yield securities and up to 40 percent in mortgage backed securities. In addition, it can invest up to 15 percent in foreign currencies and up to 25 percent in emerging market countries.
The ALPS RiverFront Strategic Income ETF (NYSE: RIGS) is another actively managed ETF with similar flexibility to parse its portfolio in nearly any area of fixed-income the manager sees fit.
It’s also worth noting that PIMCO is set to release several more actively managed ETFs this year that will provide income investors with additional options when comparing passively managed funds.
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