How Bad's the Blood Between M* and DoubleLine? It's Not Ratable
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Friday, July 18, 2014

How Bad's the Blood Between M* and DoubleLine? It's Not Ratable

It's like they've been married thirty years, or maybe divorcing after thirty years. Or something.

The feud between Jeffrey Gundlach's DoubleLine and has reached its latest, and perhaps inevitable, level of histrionics.

In a report published yesterday, Morningstar downgraded the forward-looking analyst rating of the Total Return Bond Fund from "Neutral" to "Not Ratable," as noted by Bloomberg.

In the report about the downgrading, analyst Sarah Bush had this to write:

DoubleLine has declined to answer Morningstar’s due-diligence questions. Without more detail on portfolio construction and attribution, risk controls and the team backing Gundlach, Morningstar has determined that this fund is not ratable.

DoubleLine analyst Loren Fleckenstein told MFWire this about the relations between his firm and the analyst website.

From the day TCW fired Jeffrey Gundlach,'s fund writers actively sided with TCW in its dispute with our team. For two years, fund writers made false statements about DoubleLine and our fund, and mischaracterized our fund. So, in 2012, we finally threw in the towel and decided to have no further communication with

For those new to the history of the founding of DoubleLine and past squabbles Gundlach had with former employer TCW, read here.

Now, it's important to remember that there are two ratings Morningstar assigns to each fund or fund family.

There is the Morningstar Star Rating system, which objectively rates past risk-adjusted performance. Within this system, the Total Return Bond Fund has held 5-stars since it was first eligible for a star rating.

Then there is the Morningstar Analyst Rating system, which is forward-looking and meant to be more of a deep institutional-style research dive into the fund firm.

Morningstar spokesperson Nadine Youssef told MFWire that in the Analyst Rating methodology, the scale for ratings is: Gold, Silver, Bronze, Neutral, and Negative, as well as Not Ratable. More on their methodology can be found here.

Youssef went on to explain that " A Not Ratable designation means either that a fund has failed to provide sufficient transparency to determine a rating, or that we are providing information on a new strategy where investors require guidance as to suitability, but there is not yet sufficient information to rate the fund."

"We’ve assigned Not Ratable to other funds in the past," she said.

The feud between the fund firm and the analyst website dates back at least as far as December 2011, when Morningstar snubbed Gundlach in the nominations for the Fixed Income Manager of the Year award.

Fund firms have become increasingly cranky with Morningstar's ratings on a number of fronts. For example, one area of growing contention is how Morningstar rates alternative strategies, with a number of experts suggesting new paradigms for approaching these products.

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