Bond rout continues

Jeffrey Gundlach's DoubleLine Total Return Bond Fund (DBLTX), which has beaten 97% of rivals over the past three years, had its biggest net withdrawals as investors continued to flee bonds for the fourth straight month. Clients pulled an estimated $2.1 billion from the $35.1 billion fund in September, according to Morningstar Inc. Investors removed $1.2 billion in June, the first withdrawals from the fund since it opened in April 2010, $580 million in July and $1.1 billion in August, Morningstar said.

BERNANKE STARTED IT

Bond fund withdrawals were triggered by Federal Reserve Chairman Ben Bernanke, who told Congress on May 22 that the central bank could start reducing its bond purchases and is prepared to begin phasing out its unprecedented easing program this year. The central bank unexpectedly refrained from tapering its $85 billion in monthly bond purchases at the Sept. 17-18 policy meeting, saying it needed more evidence of lasting improvement in the economy. Investors pulled about $118 billion from U.S. bond funds from May 31 through Sept. 18, according to estimates from the Investment Company Institute. Mr. Gundlach said last month that the Fed won't reduce its monthly asset purchases until a new chairman takes over at the central bank at the end of January. “DoubleLine is sharing in the outflows we're seeing throughout the fixed-income world,” said Loren Fleckenstein, an analyst at DoubleLine Capital. “With the investment mood becoming more cautious with regard to fixed income, seeing DoubleLine go from a high-growth phase to a period of consolidation was to be expected.”

DBLTX RETURNS 0.3%

The DoubleLine Total Return Bond Fund has returned 0.3% this year, ahead of 92% of similarly managed funds, and has advanced 6.8% annually over the past three years to beat 97% of peers, according to data compiled by Bloomberg. Morningstar estimates deposits or withdrawals for mutual funds by computing the change in assets on a monthly basis that isn't accounted for by performance. The fund's actual withdrawals or deposits may differ from Morningstar's estimates because of the timing of purchases and redemptions or dividend distributions.