Morningstar Snubs Gundlach
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Monday, December 12, 2011

Morningstar Snubs Gundlach

Despite offering one of the top performing fixed-income funds of the year, DoubleLine's Jeffrey Gundlach failed to make the nominee short list for Morningstar's Fixed-Income Manager of the Year award. Famed bond investor Bill Gross from Pimco also failed to make the cut after suffering an apology-worthy year.

Yet there are two Pimco PMs in the running for award, along with more than one nominee from Fidelity.

Eric Jacobson, Morningstar director of fixed income research, writes that:
This year's nominees for fixed income are an unusual group While our past nominees and winners have frequently featured core intermediate-term bond offerings such as Bill Gross' PIMCO Total Return (PTTRX), neither Gross nor many of his direct competitors found 2011's bond markets hospitable.
Jacobson also explains why Gundlach is missing from the nominee list, despite his DoubleLine Total Return Fund being one of the standouts in the intermediate-term bond group.
There were some standouts (in the intermediate-term bond group), such as Jeffrey Gundlach, the manager of DoubleLine Total Return Bond (DBLTX), which smoked its competitors with a 9% gain through Dec. 6. But while that fund and Gundlach clearly deserve an honorable mention, the fund's fat returns were fueled by atypically large stakes in nonagency and exotic mortgage-backed securities. Those allocations gave it a much more aggressive risk profile than that of most rivals and could make the fund perform quite differently than most investors would expect from a more conventional core bond offering.
Tuesday, Morningstar plans to reveal the domestic-stock fund manager nominees and name nominees in the international-stock category on Thursday. Winners will be announced first week of January.

The full list of fixed income manager nominees was released by Morningstar on Monday. It includes:

  • John Carlson, Fidelity New Markets Income (FNMIX)
  • Bill Irving, Franco Castagliuolo, and Fidelity's Taxable-Bond Management Team, Fidelity GNMA (FGMNX)
  • Scott Mather and PIMCO's Global Portfolio Management Team, PIMCO Global Bond (USD-Hedged) (PGBIX), PIMCO Global Bond (Unhedged) (PIGLX), PIMCO Foreign Bond (USD-Hedged) (PFORX), and PIMCO Foreign Bond (Unhedged) (PFUIX)
  • Jamie Pagliocco and Fidelity's Municipal-Bond Management Team, Fidelity Tax-Free Bond (FTABX)
  • Scott Simon and PIMCO's Mortgage Team, PIMCO GNMA (PDMIX)

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