May 5, 2014 / 6:02 PM / 4 years ago

UPDATE 1-DoubleLine's Gundlach recommends shorting homebuilders ETF

(Adds more Gundlach comments, fund performance)

NEW YORK, May 5 (Reuters) - Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, said on Monday that investors should bet against the SPDR S&P Homebuilders ETF because he does not see the expected rebound in single-family housing occurring.

Gundlach, speaking at the Sohn Investment Conference in New York, said that problems dogging the housing market included expected rises in mortgage rates and the amount of student loan debt carried by young adults, which makes saving for a down payment more challenging.

Gundlach said renting had become “massively more appealing” while home ownership would continue to decline. He said there was a “generational” preference for renting and that young people in particular were “shocked and scarred” by the housing collapse.

If mortgage financiers Fannie Mae and Freddie Mac were wound down by the government, mortgage rates would rise, he said.

The Los Angeles-based DoubleLine Capital oversees roughly $49 billion in assets. Gundlach’s $32 billion DoubleLine Total Return Bond Fund is up 3.39 percent this year, beating 69 percent of peers, according to Morningstar. (Reporting by Sam Forgione; Editing by Leslie Adler and Bernadette Baum)

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