Jeffrey Gundlach’s DoubleLine Capital announced that it will launch its first two exchange traded funds. The Tampa-based firm will make its splash on Apr. 5, when it will hit the market with a bond and an equity fund, both of which to be actively managed.
DoubleLine’s two ETFs that will come to market are the DoubleLine Shiller CAPE U.S. Equities ETF (DCPE) and the DoubleLine Opportunistic Bond ETF (DBND).
DCPE aims to identify undervalued sectors based on a modified CAPE “Cyclically Adjusted Price Earnings” ratio. This strategy, made popular by Dr. Robert Shiller, looks to use a momentum factor to mitigate the effects of potential value traps.
The ETF plans to invest in stocks that correspond to the four “cheapest” sectors of the U.S. large-cap equity market and will also rebalance itself monthly.
DBND aims to maximize current income and total returns by investing in a grouping of fixed income instruments that include U.S. government securities, agency mortgage-backed securities, non-agency MBS, commercial MBS, global developed credit, international fixed income instruments, and emerging markets fixed income instruments.
Commenting on the launch, founder and CEO Jeffrey Gundlach stated: "After four decades of debt-financed deficits throughout the developed world, fixed income markets stand on the cusp of a sovereign default disaster, an episode that will pose great challenges in risk management but also commensurate opportunities."
"Already we are seeing forerunners of the next era," he added. "These include the reversal of benign interest-rate and inflation regimes, the reordering of productive economic leadership in favor of economies outside the G-7, and notwithstanding the recent strength of the U.S. dollar, mounting challenges to its primacy as reserve currency."
For additional information and understanding around DCPE and DBND see DoubleLine Capital’s press release.