DoubleLine has launched two actively managed fixed income ETFs, the DoubleLine Mortgage ETF (NYSE Arca: DMBS) and the DoubleLine Commercial Real Estate ETF (NYSE Arca: DCMB), on the NYSE Arca Exchange.
DMBS seeks a total return that exceeds that of the Bloomberg US Mortgage-Backed Securities Index over a full market cycle. The fund invests primarily in high-quality residential mortgage-backed securities (RMBS), allocating between government-backed agency mortgage-backed securities (MBS) and non-agency MBS.
Although DMBS intends to invest primarily in investment-grade residential mortgage securities, the fund may also invest in other fixed income securities, including derivatives, U.S. government securities, and other cash, and cash equivalents.
DoubleLine has broad discretion to manage the fund’s portfolio duration. However, the investment team expects normally to construct an investment portfolio with a U.S. dollar-weighted average effective duration within two years (plus or minus) of the benchmark.
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“Thirty years ago, thinking about the relative risks and rewards of fixed income sectors, I realized that agency mortgage-backed securities offered superior characteristics versus U.S. Treasury bonds or corporate securities,” said DoubleLine’s founder, CEO, and CIO Jeffrey Gundlach. “Through active management, the MBS team and I have worked to make the most of those advantages.”
Added Gundlach: “As the mortgage market evolved, we developed loan-level analysis to refine security selection and dynamic allocation within and between agency and non-agency MBS. The aim of these integrated tools is to manage risk through interest rate and credit cycles and to enhance returns."
DCMB, meanwhile, invests in senior commercial real estate debt through investment-grade commercial mortgage-backed securities (CMBS) and employs active management through security selection across commercial real estate (CRE) property types and subsectors while maintaining a low level of interest rate risk. The investment universe includes high-quality CRE debt across agency CMBS, non-agency CMBS, and commercial real estate collateralized loan obligations (CRE CLOs).
Under normal market conditions, the portfolio managers for DCMB seek to construct an investment portfolio with a dollar-weighted average effective duration of three years or less.
“The commercial mortgage-backed securities market has adapted over the past decade with the evolution of underlying commercial real estate trends and government regulation. In more recent years, commercial real estate finance investments have repriced,” said DCMB portfolio manager Morris Chen.
Chen, who heads DoubleLine’s commercial mortgage-backed securities and commercial real estate debt team, added: “This asset class diversifies from corporate credit and has structural enhancements that provide attractive relative values. The team employs granular underwriting of loan, borrower, property, and market fundamentals while incorporating DoubleLine’s macroeconomic views into portfolio construction.”
“DoubleLine had been a subadvisor for ETFs for years but entered with its own products a year ago. It’s great to see them tap into their active management expertise for additional fixed income ETF investment styles as they have deep experience,” said Todd Rosenbluth, head of research at VettaFi.
More information on the DoubleLine ETFs can be found online.
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