UPDATE 3-Gundlach's DoubleLine Funds see 6th straight month of inflows

Fri Aug 1, 2014 4:56pm EDT

(Adds analyst comment and performance of rival fund)

By Jennifer Ablan

NEW YORK Aug 1 (Reuters) - Jeffrey Gundlach's DoubleLine Funds had net inflows of $603 million in July, with its flagship DoubleLine Total Return Bond Fund attracting net inflows of $375 million.

DoubleLine Capital, based in Los Angeles, said on Friday its DoubleLine Total Return Bond Fund ended July with net inflows totaling $1.9 billion so far this year, and more than $2.7 billion of net inflows into DoubleLine open-end funds.

The DoubleLine Total Return Bond Fund is posting returns of 4.46 percent year-to-date, surpassing the benchmark Barclays U.S. Aggregate Bond Index which is returning 3.66 percent. The DoubleLine fund is surpassing 77 percent of its peer category so far this year, according to Morningstar data.

The sixth straight month of net inflows into DoubleLine open-end funds and the DoubleLine Total Return Bond Fund "are a product of two things - the general move by investors back into fixed-income funds and good risk-adjusted returns provided by our managers," said Loren Fleckenstein, an analyst at DoubleLine.

Gundlach, who as co-founder and chief investment officer at DoubleLine helps oversee $52 billion in assets, is widely followed for his investment calls including a bet earlier this year that Treasuries were undervalued relative to other sectors.

The yield on the 10-year Treasury note was 2.51 percent on Friday, down from around 3 percent at the start of the year. Bond yields move inversely to their prices.

In June, in an investor webcast, Gundlach said the 10-year U.S. Treasury note will likely yield 2.20 percent to 2.80 percent during the second half of the year.

Gundlach said U.S. Treasuries are "something of a high-yielding" security relative to European sovereign bonds.

Gundlach also said U.S. Treasuries are worth a look by investors as they are yielding in the upper half of his projected trading range.

"They've outperformed due to strong performance of non government-backed mortgages and exposure to longer duration government-backed mortgages," said David Schawel, vice president and portfolio manager of Square 1 Financial. "DoubleLine hasn't seen any hiccups since opening up shop and I think investors realize they've been shrewd at deciding when and where to take risk."

One of DoubleLine's main rivals, the Pimco Total Return Fund, has been facing underperformance and net outflows.

The Pimco Total Return Fund was down 0.52 percent in July, lagging 90 percent of its peers, and behind 77 percent of its peers so far this year with returns of 3.16 percent.

But the Pimco Total Return Fund, run by Bill Gross, is still the world's biggest bond fund with assets under management of $225 billion while DoubleLine's Total Return Bond Fund has assets under management of $33.9 billion. (Reporting by Jennifer Ablan; Editing by James Dalgleish and Richard Chang)