Bond king Jeffrey Gundlach’s DoubleLine smart beta stock fund bucks the outflow trend

Jeffrey Gundlach

The DoubleLine Shiller Enhanced CAPE fund had a net inflow of $117.07 million in July, its largest ever.

DoubleLine, the fund company started by bond king Jeffrey Gundlach, said it had net inflows of $833.78 million in July — and a chunk of that was to a stock fund.

The DoubleLine Shiller Enhanced CAPE fund (DSEEX) had a net inflow of $117.07 million in July, its largest ever. Previously, the fund’s largest monthly net inflow was $81.99 million in January of this year. The fund has gained 13.21% this year, versus 7.66% for the Standard and Poor’s 500 stock index and 7.38% for the average large-cap value fund.

The flow of cash into the DoubleLine fund comes at a particularly wretched time for stock fund inflows. Investors have sold an estimated net $61.9 billion in open-ended stock funds and stock exchanged-traded funds this year through July 27, according to the Investment Company Institute, the funds’ trade group.

The fund is a hybrid smart beta fund. Part of the fund’s portfolio is in fixed income, which DoubleLine manages. The equity portion is the rule-based smart beta portion. It follows the Shiller Barclay’s CAPE U.S. Sector Total Return Index, which is built around Yale University economics professor and Nobel Laureate Robert Shiller’s cyclically adjusted price-earnings ratio. The fund avoids the most expensive stock sectors relative to their 10-year trailing average PE ratio and purchases the least expensive ones. (It boots the cheapest sector with the worst 12-month total return to avoid value traps.) According to DoubleLine’s web site, the four sectors in the fund’s portfolio are healthcare, technology, consumer technology and industrials.

Not surprisingly, DoubleLine’s largest fund, the $61.3 billion DoubleLine Total Return Bond Fund (DBLTX), took in the most money in July, with $263.42 million. The fund’s 12-month record places it in the 85th percentile of intermediate-term bond funds, according to Morningstar, although its three- and five-year returns are among the best in the category.

The $324.6 million DoubleLine Low Duration Emerging Markets Fixed Income Fund (DBLLX) had a net inflow of $124.47 million in July. Its previous largest monthly net inflow was $59.10 million in November 2014. Currently, DoubleLine manages about $110 billion.