The SPDR DoubleLine Total Return Tactical ETF (TOTL)—Jeff Gundlach's first foray into the ETF space—is launching Tuesday, Feb. 24.
TOTL invests in just about every type of debt security, including investment-grade and junk debt—both sovereign and corporate—from issuers around the globe. The portfolio management team is led by none other than Gundlach himself, and will be advised by State Street, according to the prospectus. TOTL costs a net of 55 basis points in expense ratio, or $55 per $10,000 invested, and is coming to market with $112.5 million in seed capital, according to Bloomberg data.
Gundlach, founder of Los Angeles-based DoubleLine Capital, is one of the most well-known fixed-income investors in the market today, but until now an absent presence in the quickly growing ETF market.
Partnership With SSgA
Last summer, he joined forces with State Street Global Advisors to bring to market an actively managed bond ETF that would go head-to-head with the Pimco Total Return ETF (BOND | B), which at the time was still managed by Bill Gross. Gross has since left Pimco to join Janus.
Replicating BOND's success will be no small feat, considering that BOND gathered its first $1 billion in assets in less than three months after launch, and grew to become one of the biggest active bond ETFs in the market. BOND's success was part Gross himself, part a solid track record of outperformance. TOTL has a powerhouse name behind it, but performance only time will tell.
The launch comes at a time when fixed income investors are reinventing their approaches to income, thinking more tactically as they canvass every corner of debt markets in search for yields.
High Hopes For Active Bond ETFs
Many have said that a fixed-income investor today needs to be tactical to survive, and active management is one way to do it. State Street's ETF head Jim Ross himself has told ETF.com recently there's opportunity in the active management space, particularly in fixed income.
"I think one of the most important new funds of 2015 will be the SPDR DoubleLine Total Return Tactical ETF," Matt Hougan, president of ETF.com, recently said in an outline of his top ETF picks for 2015.
"Gundlach has built a company from scratch into a $55 billion juggernaut in a few short years, and has delivered solid performance," Hougan said, pointing out that Gundlach's Core Fixed Income mutual fund has outperformed the Barclays Aggregate by an annualized 2 percent over the past three years.
"What's exciting about this launch is that it brings the best of active management to the ETF space," he added.
TOTL is part of a "master feeder" structure, in which the fund invests most of its assets in a corresponding "master fund." That master fund is a separate mutual fund that has an investment objective, investment policies and risks substantially identical to the ETF, according to the prospectus.
The portfolio strives to have at least 20 percent allocated to mortgage-backed securities, and may allocate as much as 25 percent to high yield debt at any point, and 15 percent to foreign-currency-denominated securities, according to the prospectus.