UPDATE 2-DoubleLine launches three equity mutual funds - filing

Tue Jan 15, 2013 5:40pm EST

By Sam Forgione and Jennifer Ablan

NEW YORK Jan 15 (Reuters) - DoubleLine Capital LP, the $53 billion bond firm run by Jeffrey Gundlach, registered three stock mutual funds in a regulatory filing on Tuesday.

The firm registered The DoubleLine Equities Small Cap Growth Fund, the DoubleLine Equities Growth Fund and the DoubleLine Equities Global Technology Fund, according to a filing with the U.S. Securities and Exchange Commission.

DoubleLine, best known for its fixed-income expertise, recently announced a new division called DoubleLine Equity LP. After five years of monstrous cash inflows into the fixed-income markets, bond firms including DoubleLine are diversifying into new businesses.

Gundlach, DoubleLine's chief executive officer and chief investment officer, said in an interview in January that stock mutual fund strategies were suffering from a lack of new ideas.

"We think the equity business is ripe for creative thinking," he said.

All three funds seek long-term capital appreciation, according to the filing, and will be run by former TCW Group Inc portfolio managers Husam Nazer and Brendt Stallings.

The Small Cap Growth Fund will invest in smaller-sized companies in both U.S. and foreign markets, the filing said. The Growth Fund, meanwhile, may invest in companies of any size and may seek an unlimited number of foreign securities, including in emerging markets, and the Global Technology Fund will invest in technology-related companies around the world.

The firm said on Jan. 2 that it had hired Stallings and Nazer to expand DoubleLine Equity. The filing on Tuesday said that Nazer would manage the Small Cap Growth Fund, while Stallings and Nazer would co-manage the Equities Growth Fund and the Global Technology Fund.

Gundlach, who was bestowed the "King of Bonds" title by Barron's in 2011, said the company planned to diversify into stocks once its core bond business surpassed $50 billion in assets.

DoubleLine's equity business is launching despite heavy outflows from stock mutual funds. U.S.-based stock mutual funds had $108 billion in outflows in 2012, while bond mutual funds reaped inflows of $301 billion, according to Lipper estimates.

Gundlach said that such disfavor toward equities was one of his reasons for venturing into stock management. He has made predictions on stocks in the past, including his call on cable network CNBC last November that Apple Inc would eventually drop to $425 a share. Apple, which Gundlach began shorting at around $610, now trades at around $485 a share.

The firm's flagship DoubleLine Total Return Bond Fund earned a return of 9.2 percent last year, beating 97 percent of other U.S. mortgage-focused funds, according to Lipper.

The fund, which oversees more than $37 billion, took in $19.7 billion in new cash last year, making it the year's most popular mutual fund by asset growth.

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