Gundlach: “We Got The Bearish Signal; Stocks Are Going Down – You Can Feel It”

After nearly three consecutive years of inflows, an unheard of feat, Jeff Gundlach’s $61.6 billion DoubleLine Total Return Bond Fund finally experienced its first outflow since January 2014, as investors took out $33 million from the California fund. With that, the streak of 33 consecutive months of inflows was broken Reuters reports.

Repeating a position he has held for several months, Gundlach told Reuters that “bonds are headed toward outflow territory … rising rates mean negative returns are developing. Even DoubleLine is having ‘day’ and ‘day out’ flows. It is not an inflow day every day.” Unless, of course, the market suffers a long-overdue equity selloff, in which case the flow will be in the other direction as the debt of any kind will be immediately is seen as a “flight to safety” and the cycle will begin from scratch.

According to the new bond king, a few advisers in October made allocation and model changes away from the intermediate-term sector of the bond market, resulting in a few large redemptions in the DoubleLine TRBFwhich, however, moved into DoubleLine’s Flexible Income, Low Duration Bond and Core Fixed Income funds.

Gundlach remains skeptical on rates, and in what was – how should one put it – a humblebrag, the bond manager indirectly accused himself of causing his fund’s first outflow in just under three years:”I have been vocally bearish on Treasuries for months, and, being one of the most influential in the industry, it should not be a surprise that investor behavior is influenced by me,” Gundlach said modestly.

“Lastly, we have had terrific performance in DBLTX since rates bottomed: we are up in a meaningfully down market.”

While the TRBF saw modest redemptions, other of the firm’s investment vehicles continued to soak up cash with the $7.7 billion DoubleLine Core Fixed Income Fund enjoying inflows of $166.5 million in October, bringing its year-to-date net inflows to $2.1 billion. DoubleLine’s largest equities mutual fund, the $1.4 billion DoubleLine Shiller Enhanced CAPE fund, had net inflows of $77.3 million in October, bringing the year-to-date net inflows to $671.9 million and doubling its assets from year-end 2015.