June 8, 2018 / 7:01 PM / a year ago

DoubleLine Strategic Commodity Fund attracts 11th month of inflows

NEW YORK, June 8 (Reuters) - The DoubleLine Strategic Commodity Fund attracted $58 million of net new cash in May, extending its streak of inflows for the past 11 months with more demand projected following a ratings boost from Morningstar Inc.

This week, Morningstar awarded the DoubleLine Strategic Commodity Fund, overseen by Jeffrey Sherman, five stars for its three-year risk-adjusted performance.

"We try to pick managers who can manage risk – that manages risk through a full cycle with success," said John Krambeer, CEO and founder of Camden Capital, a national RIA firm. "It’s been spectacular," he said about Camden's investment in DoubleLine's commodity fund. Assets of the DoubleLine Strategic Commodity Fund, launched in May 2015, have grown from around $30 million as recently as last December to the current $433 million.

The Morningstar Rating, popularly known as the Star rating, is a measure of a fund's risk-adjusted return, relative to similar funds. Funds are rated from 1 to 5 stars, with the best performers receiving 5 stars and the worst performers receiving a single star.

In an interview this week, Sherman said there is more room for steady returns in commodities despite the drop in oil prices. "I do like the industrial metals, particularly copper," he said. Sherman said there has been massive under-investment in new mines in copper. "The 'deflationary and disinflationary mindset' has eroded. Getting out of that mindset is quite helpful to commodities," he added.

Indeed, strong jobs data last week and signs that inflation is nearing the Federal Reserve's 2 percent sweetspot mean Fed chairman Jerome Powell and his Federal Open Market Committee are in a good position to lift rates again despite the angst over U.S. President Donald Trump's trade tariffs. The Fed looks all set to raise U.S. interest rates on Wednesday for a second time this year and the seventh since December 2015.

Major money managers DoubleLine and Pacific Investment Management Co (Pimco) have expressed their bullishness around commodities in recent months.

In a Dec. 5 webcast, DoubleLine chief executive Jeffrey Gundlach, known as Wall Street’s Bond King, told investors that commodities were attractive relative to U.S. stocks, which have been in a multiyear bull market.

Mihir Worah, Pimco’s CIO of asset allocation and real return, has said "we know historically commodities do well in the late stages of an expansion as supply bottlenecks fail to keep up with demand growth." (Reporting By Jennifer Ablan Editing by Chizu Nomiyama)

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