Gundlach’s DoubleLine Launches Real Estate and Mortgage ETFs at Tricky Time

DoubleLine Capital LP’s next pair of exchange-traded funds are setting sail into a rocky real estate market.

The DoubleLine Commercial Real Estate ETF (ticker DCMB) and the DoubleLine Mortgage ETF (DMBS) launched Tuesday, according to a press release. DCMB invests in investment-grade commercial mortgage-backed securities, while DMBS — whose management team includes DoubleLine founder Jeffrey Gundlach — holds high-quality residential mortgage-backed securities. 

The new funds land at a potentially perilous time. The outlook for commercial real estate has darkened as remote work boosts office vacancies and higher borrowing costs loom for those looking to refinance in the coming year. Meanwhile, though still sitting on gains for the year, MBS underperformed long-dated Treasuries over the past month amid the banking sector turmoil that erupted with the collapse of Silicon Valley Bank and Signature Bank early last month. 

But that turbulence creates a potential opening for DoubleLine: Launching into a volatile market can provide a vehicle for investors looking to ride the rebound, according to Bloomberg Intelligence. 

Jeffrey Gundlach, co-founder and chief executive officer of DoubleLine Capital LP, speaks during the Sohn Investment Conference in New York, U.S., on Monday, May 6, 2019. The conference gathers top investors from around the globe for a day of fresh market insights. (Bloomberg)

“While most ETFs tend to get launched after a run-up in the strategy or asset class, it can be actually be better to launch after a rough patch as it gives the ETF room to run down the road,” said Bloomberg Intelligence senior ETF analyst Eric Balchunas. “These should have success given how much advisors look for active management in fixed income — especially from a brand name for a relatively low fee.”

DCMB has an annual expense ratio of 0.39%, while DMBS charges 0.49%. Both funds are actively managed. The average fee for active ETFs is about 68 basis points, versus 47 basis points for passive funds.

The new funds arrive just a year after DoubleLine debuted its inaugural ETFs. The DoubleLine Opportunistic Bond ETF (ticker DBND) and the DoubleLine Shiller CAPE US Equities ETF (CAPE), which have accumulated $133 million and $243 million of assets, respectively. Overall, DoubleLine managed $92 billion at the end of 2022, according to the release. 

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