DoubleLine Total Return Bond Fund Commentary – Q4 2021
Thesis
DBLTX (yielding 3.24%) utilizes a top-down, bottom-up process that focuses on MBS and Agency bonds. When compared to the benchmark (Barclays U.S. AGG), the holdings have lower duration and exposure to corporate bonds, reducing their sensitivity to interest rate movements and credit spreads. We expect attractive risk-adjusted return characteristics over the long term from DBLTX, especially during periods when corporate bonds’ spread increase and the yield curve steepens.
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Overview
In the fourth quarter of 2021, DBLTX outperformed the benchmark (Barclays U.S. AGG) by 19bps, largely due to the fund’s shorter duration – Fed monetary policy expectations caused the curve to begin to flatten: 2-year rates began to rise, and 30-year rates slightly dropped. A strong housing market and floating-rate coupons contributed to performance, though.
Q4 2021 Summary
- DBLTX returned (0.18%), while the U.S. AGG returned 0.01%
- Quarter-end effective duration for DBLTX was 4.82 and 6.60 for the U.S. AGG
- Top performing sectors included non-Agency residential mortgage-backed securities and CLOs
- Worst performing sectors included non-Agency commercial mortgage-backed securities, asset-backed securities, and Agency MBS
2021 Performance Comparison
[Category Mutual Fund Commentary]
Micah Weinstein
Research Analyst
Direct: 617.226.0032
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109