Gundlach sticks to his guns despite big drop in rival's Japan fund

DoubleLine's Jeffrey Gundlach says the Nikkei offers great long-term bets -- despite one fund's 5% hit on Monday
APR 23, 2013
Jeffrey Gundlach is standing by his call to go long Japanese stocks and short the yen. But he concedes that, over the short-term, the strategy could be painful. Mr. Gundlach, CEO of DoubleLine Capital and bond expert deluxe, first made his call in December when the Bank of Japan made clear its intentions to weaken the yen to stimulate its economy. It's worked out well for investors since then. The $5 billion WisdomTree Japan Hedged Equity ETF (DXJ), which offers exposure to Japan without the yen, is up 20% since Mr. Gundlach's mid-December prediction. The iShares MSCI Japan ETF (EWJ), which doesn't hedge away the yen, is up 12% over the same time. The problem now is, whether the yen has fallen too far too fast. After dropping 20% to the dollar from November to January, its been slowly edging its way back up. On Monday, the currency rose 1% versus the dollar, leading to a 5.4% loss in the WisdomTree Japan Hedged Equity ETF. “I love it in the long-term,” Mr. Gundlach said on a Monday night conference call to introduce the firm's new equity fund. “It's so fully extended now we don't love it in the short-term.” That doesn't mean he thinks you should try to time it though. “It's too good of a long-term strategic play to try and get cute. You usually end up being out when it get backs to the winning side if you do that,” he said. Mr. Gundlach's never managed an equity fund himself, but he has shown he knows a trend when he sees it. He famously called the financial crash at the Morningstar Investment Conference in 2007. More recently he told investors to short Apple, which was on its way from $600 to $700 a share at the time. It's now trading at $430 a share, just above his $425 a share prediction.

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