NEW YORK (Reuters) – Jeffrey Gundlach, chief investment officer and chief executive of DoubleLine Capital LP, said Monday that another “lost decade” in stocks is unlikely and that lower yields on 10-year Treasury notes have made them less attractive.
Gundlach, whose firm manages over $53 billion, said on an investor conference call that a “lost decade” in stocks is “extraordinarily unlikely” and that investors should hope that stocks will outperform bonds over the next 10-15 years.
Gundlach added that 10-year Treasuries, which he currently owns in his flagship DoubleLine Total Return Bond Fund, have become somewhat less attractive since yields have hovered around 1.8 percent.
Gundlach purchased 10-year Treasury notes when they popped above 2 percent in February. The T-note was up in price to yield 1.84 percent at the close of trading on Monday.
“I certainly like them a lot less,” Gundlach said, adding that he is still “comfortable” owning them given the Federal Reserve’s purchases of $45 billion in Treasuries per month.
DoubleLine hosted the investor call to mark the launch of the DoubleLine Equities Small Cap Growth Fund under its equity management division, DoubleLine Equity LP. The firm, which manages mostly fixed income assets, announced the new division on January 2.
Brendt Stallings, one of the lead portfolio managers of the equity division, said that the firm’s move into stocks is a “reasonable bet” given stocks’ protection against inflation and the potential for corporate growth.
“We think we’re getting paid to take the additional risk of equities,” Stallings said. “It doesn’t mean it’ll pay off in the next three months or twelve months,” he added.
As of the end of February, the fund had about 25 percent of its portfolio in technology companies, 20 percent in healthcare companies, and 14 percent of its holdings in industrial companies.
Stallings said that the technology sector offers the most growth and the most new business among all stock sectors.
(Reporting by Sam Forgione- editing by Carol Bishopric, Jennifer Ablan and David Gregorio)