Star manager Jeffrey Gundlach has said he may cap assets at DoubleLine Capital at $150 billion and had already turned away money from institutional investors.
In an interview with Bloomberg, the DoubleLine chief executive and chief investment officer said he wanted a diversified business and that the Los Angeles-based shop, which currently has $110 billion, may stop marketing when it hits $150 million.
'I don’t want to manage $500 billion. I don’t really want to manage $200 billion,' he told Bloomberg.
Gundlach said he did not want to be a one-fund shop and the firm's flagship $53.9 billion Total Return Bond fund had turned down institutional money.
'We can’t do $100 billion in the Total Return Bond fund,' he said. 'The market isn’t big enough for our style, the things we invest in.'
‘I don’t want one $150 billion fund, I want 10 $15 billion funds. A diversified business. We lose business because our fees are too high and I say, "Fine, that’s a way of regulating growth."'
Gundlach also repeated warnings about where he sees dangers in the market.
The manager has been reducing positions in junk bonds and emerging market debt, which he believes are risky and overvalued.
Instead, he has shifted DoubleLine funds’ exposure to higher-quality credits with less sensitivity to rising interest rates, even though doing so might affect near-term gains.
Gundlach also said he recently bought five-and eight-month put options on the S&P 500, which could generate returns of 400% if the index drops by enough.
'Volatility is about to go up,' Gundlach said in the Bloomberg interview. 'That’s my highest-conviction trade right now.'