NEW YORK (Reuters) - Jeffrey Gundlach, chief executive of DoubleLine Capital, said on Friday his firm sold all of its European equities holdings before the market closed on Thursday, following a strong rally in global stocks.
Gundlach, who oversees $100 billion at Los Angeles-based DoubleLine, said the firm bought beaten-down European stocks a week ago and exited its position late Thursday because “basically I thought it was free money when I bought them and we sold into the huge rally Thursday.”
MSCI’s 46-country All World index rose 1.36 percent on Thursday to a two-week high.
On Friday, however, world stocks fell than $2 trillion in value as Britain’s vote to leave the European Union triggered 5 percent to 10 percent declines across Europe’s biggest bourses and a record plunge for sterling.
Gundlach, who insisted for months that Britain would “Bremain” in the European Union, said about the Brexit vote: “Yes, I am surprised. It suggests the public mood for change is even greater than I thought.”
Gundlach, who manages the $60.3 billion DoubleLine Total Return Bond Fund (DBLTX.O), had asserted that polls reflect people’s complaints and frustrations rather than the actions they will actually take. “When it comes up for a vote, I think it will fail,” he said last week.
All told, Gundlach said about his purchase last week of European equities: “That was the shortest hold of my life.”
The DoubleLine Total Return has returned 2.53 percent year-to-date, trailing the benchmark Barclays Aggregate, which has posted returns of 4.15 percent for the same period.
The fund has a much lower duration than the Treasury-heavy Barclays Aggregate, so it has not benefited as much as many other funds this year from the rally in Treasuries. Additionally, corporate bonds have been very strong relative performers this year, and DoubleLine Total Return holds no corporate debt.
DoubleLine Core Fixed Income Fund DBLFX.O, which invests in a wider selection of fixed income sectors, has returned 4.28 percent year to date.
Reporting By Jennifer Ablan; Editing by Bernadette Baum and Steve Orlofsky