DoubleLine CEO Jeffrey Gundlach predicted Donald Trump victory

One of the few prominent money managers who correctly predicted the next president of the U.S. also pretty much nailed this year's bottom for Treasuries
NOV 11, 2016
DoubleLine Chief Executive Jeffrey Gundlach called it. He was one of the few prominent money managers who correctly predicted that Donald Trump would be elected president of the U.S. He also pretty much nailed this year's bottom for Treasury yields. He said Los Angeles-based DoubleLine went "maximum negative" on the debt on July 6, when 10-year yields dropped to 1.32%. Since then, they have risen to 2.1%. "The yield on the 10-year yield may reverse and go lower again, but I am not interested," Mr. Gundlach said in July. "You don't make any money. The risk-reward is horrific." This seems especially prescient now. Since Tuesday, the day Trump was, indeed, chosen to lead the world's biggest economy, yields on 10-year Treasuries plunged at first then surged at the fastest pace in history on a percentage basis. “The markets did what I said on the news," Mr. Gundlach wrote in an email. "Bonds tanked and stocks crashed temporarily, which proved to be a buying opportunity,” according to a Bloomberg article. (More: Gundlach takes Fed to task, compares Trump to unconstrained bond funds) One would expect DoubleLine's main open-ended bond fund, its $60.9 billion Total Return strategy, to be crushing its competitors given Mr. Gundlach's contrarian and accurate view. But since July, while its return is better than its benchmark index and many other comparable bond funds, it still posted a loss. In the last month, it's ranked in the 15th percentile of comparable funds, according to Bloomberg data. For the year, the fund is ranked in the 70th percentile for performance year to date, which isn't bad but isn't the screaming victory investors might expect for a portfolio manager who called the market so accurately in recent months. Still, over the past five years the fund ranks in the 92nd percentile. Lisa Abramowicz is a Bloomberg Gadfly columnist covering the debt markets.

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