Gundlach Avoiding Investment Grade Bonds on Valuations

DoubleLine Capital’s Jeffrey Gundlach said he is largely avoiding investment grade corporate bonds because of high valuations.

Gundlach, who was speaking during an investment webcast on Tuesday, said he likes municipal bonds because of their high yields relative to other parts of the fixed income market and views high-yield bonds as fairly valued. He said while the U.S. dollar might not go up over the next few weeks, the currency will rise over the long term.

DoubleLine, co-founded by Gundlach in 2009, manages about $73 billion in a mix of mutual funds, closed-end funds, separate accounts and limited partnerships. Apart from the top-performing $45.9 billion DoubleLine Total Return Bond Fund, Gundlach manages the Flexible Income Fund and the Core Fixed Income Fund.

Gundlach said he did not see opportunities in either energy stocks or high yield bonds issued by energy companies, even after a 40 percent decline in crude oil prices over the past six months. Crude oil prices in New York on Tuesday climbed to the highest level this year to almost $54 a barrel.

“Too many people are trying to make a distressed play on energy,” Gundlach said. “There is too much belief that oil will bounce back to $90 by year-end.”

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