UPDATE 2-DoubleLine suffers first-ever monthly outflows from U.S. funds in June

Tue Jul 9, 2013 2:30pm EDT

By Sam Forgione

NEW YORK, July 9 (Reuters) - DoubleLine Capital LP, the Los Angeles-based firm run by Jeffrey Gundlach, suffered its first-ever monthly outflows across U.S. mutual funds of roughly $1.45 billion in June, Morningstar said on Tuesday.

The outflows from the firm came as a selloff swept the bond market on fears the U.S. Federal Reserve might cut its $85 billion in monthly purchases of Treasuries and agency mortgage securities later this year. The yield on the 10-year Treasury note has surged 100 basis points since its close of 1.62 percent on May 2. As yields rise, prices fall.

The investor withdrawals from DoubleLine included $1.2 billion from the flagship DoubleLine Total Return Bond Fund last month, its first-ever monthly outflows since inception in April 2010, according to Morningstar.

Gundlach founded DoubleLine in December 2009 after a split from TCW, where he was fired as chief investment officer. The firm, which has roughly $57 billion in assets, launched its first open-end funds in April.

Gundlach, DoubleLine's chief executive and chief investment officer, said in an investor webcast on June 27 that he had kept cash on hand in his flagship fund partly in anticipation of investor withdrawals.

"One of the reasons to have cash is, after months and months and months of bond inflows, it has always occurred to me that there would probably be some reversal of that at least for a short-term period," Gundlach said.

Fed Chairman Ben Bernanke triggered the selloff in the bond market and widespread outflows from bond funds when he told Congress on May 22 that the central bank might reduce its bond-buying stimulus later this year if the U.S. economy looked strong enough.

The DoubleLine Total Return Bond Fund had 15 percent of its assets in cash as of the end of May, according to the firm's website. Bond mutual funds attracted $257.8 billion in assets last year, the most since 2009, according to Lipper. So far this year, the funds have gained a total of $71.7 billion.

The DoubleLine Total Return Bond Fund was down 1.74 percent in June, marking its weakest performance since inception but still putting it ahead of 72 percent of peers, according to Morningstar. The fund is down 0.98 percent so far this year, ahead of 95 percent of peers, the Chicago-based investment research firm said.

TCW, another Los Angeles-based investment firm, suffered outflows of $2.12 billion from its U.S. mutual funds last month, the most since December 2009, when investors pulled $5.3 billion from the firm following Gundlach's departure.

TCW had $130.7 billion in assets at the end of March, according to the firm's website.

Investors pulled $745 million from the TCW Total Return Bond Fund last month, also marking its biggest monthly outflow since December 2009. The fund was down 2.075 percent in June, its weakest performance since February 1996. The fund is down 1.24 percent so far this year, ahead of 94 percent of peers, Morningstar said.

Pimco, which suffered outflows of about $14.5 billion from its U.S. funds in June, saw roughly $21.25 million leave its Pimco Total Return Exchange-Traded Fund in the first week of July, Morningstar added. The fund, which suffered its first monthly outflows in May, suffered a total of roughly $619 million in investor withdrawals over May and June.

Pacific Investment Management Co., a unit of European financial services company Allianz SE, had $2.04 trillion in assets at the end of March, according to the firm's website

The actively-managed ETF is designed to mimic the strategy of the flagship Pimco Total Return Fund, the world's largest bond fund. Investors withdrew $9.6 billion from the flagship fund last month, the most during any month on record according to Morningstar.

The Pimco Total Return Fund, run by Pimco founder and co-chief investment officer Bill Gross, was down 2.64 percent in June, marking its weakest monthly performance since September 2008, Morningstar said. The fund is down 3.69 percent so far this year, ahead of just 17 percent of peers.

In June alone, investors pulled a record $79.8 billion from bond mutual funds and exchange-traded funds, according to TrimTabs Investment Research. That data does not include losses incurred by hedge funds.

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