Jeffrey Gundlach, manager of the top-performing DoubleLine Total Return Bond Fund, is expanding to variable annuities by subadvising a fund modeled after his flagship for Prudential Plc’s Jackson National Life Insurance.
DoubleLine received a $450 million mandate from Jackson for the Curian/DoubleLine Total Return Fund, which plans to invest more than half its assets in mortgage-backed securities, according to a statement today from Los Angeles-based DoubleLine. The fund, to be run by DoubleLine Chief Executive Officer Gundlach and President Philip Barach, can also bet on junk bonds, bank loans and credit-default swaps.
“This mandate marks the continuing institutional interest in DoubleLine’s investment services and our channel diversification into the variable-annuity space,” Ron Redell, president of DoubleLine Funds Trust, said in the statement.
The push into variable annuities helps diversify DoubleLine’s client base amid speculation that the three-decade-long bond bull market may have ended. Gundlach has also expanded offerings by opening a floating-rate mutual fund, an equities small-cap growth fund and an income-oriented closed-end fund. DoubleLine subadvises mutual funds for firms including RiverNorth Capital Management LLC and Alma Capital Investment Management.
Gundlach’s $35.4 billion DoubleLine Total Return Bond Fund lost 0.2 percent this year through Sept. 20 to beat 89 percent of similarly managed funds and advanced 6.9 percent in the past three years to outperform 97 percent of peers, according to data compiled by Bloomberg. The fund had its third straight month of net withdrawals in August, as clients fleeing bonds pulled $1.1 billion, according to Morningstar Inc. estimates.
Variable annuities let savers invest in stocks, bonds and other assets while deferring tax payments. The products can provide a guaranteed account value or income stream. Manager options within Lansing, Michigan-based Jackson National’s platform include BlackRock Inc., Pacific Investment Management Co. and Invesco Ltd., according to a regulatory filing earlier this month.
The unit of London-based Prudential was the largest seller of individual U.S. variable annuities in the first six months of this year, according to data from industry group Limra. Newark, New Jersey-based rival Prudential Financial Inc., the top seller in the first half of 2012, fell to No. 3 this year as the company reduced some guarantees on the products to help profit margins.
MetLife Inc., the largest U.S. life insurer, has also been retreating from the savings contracts.
In Jackson’s Elite Access platform, “advisers are provided with a combination of traditional and alternative asset classes to help address individual financial goals and develop diversified retirement plans,” Alison Reed, senior vice president of product and investment management, said in the statement.