Gundlach, RiverNorth team to offer 'alternative' fixed-income fund

Gundlach, RiverNorth team to offer 'alternative' fixed-income fund
Plenty of moving parts in Strategic Income Fund; targeting 6% yield
MAY 03, 2011
Alternative is possibly the best way to sum up the RiverNorth DoubleLine Strategic Income Fund Ticker:(RNSIX). Launched in December and jointly managed by RiverNorth Capital Management LLC and DoubleLine Capital LP, the fund has flexibility and a broad mandate, along with a targeted 6% yield after expenses. “The fund is designed to capitalize on market inefficiencies in both closed-end funds and the fixed-income markets in partnership with one of the best fixed-income managers in the business,” said RiverNorth chief investment officer Patrick Galley, who is co-managing the fund with DoubleLine founder Jeffrey Gundlach. The technical description of the strategy is something along the lines of a flexible strategic-income multisector-bond fund. But more precisely, the fund starts with a 25% allocation to RiverNorth, which will navigate the discount spreads on fixed-income closed-end funds. When Mr. Galley sees attractive opportunities in the specific closed-end space, he will be able to build up his piece of the portfolio by trimming the fixed-income core allocation of the portfolio, which he described as the “dry powder.” The core allocation, which represents about half the portfolio, is managed by DoubleLine's co-founder. Mr. Gundlach is also responsible for the opportunistic slice of the portfolio, which is a 25% allocation to some of the mortgage-backed securities he also owns in his hedge fund strategy. According to the fund's March 31 filing, 39% of the portfolio is allocated to investment-grade bonds, 22% in below-investment-grade debt, 15% cash, 13% agency bonds and 11% government bonds. By sector, the filing shows a 24% allocation to government debt, 19% investment-grade corporate, 18% mortgage-backed securities, 15% high-yield bonds, 15% cash, 7% foreign bonds, 1% bank loans and 1% preferred. Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

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