October 1, 2014 / 6:53 PM / 3 years ago

UPDATE 3-Jeffrey Gundlach's DoubleLine Funds see jump in inflows

(Adds quote from the president of DoubleLine)

By Jennifer Ablan and Luciana Lopez

NEW YORK, Oct 1 (Reuters) - Jeffrey Gundlach's DoubleLine Funds, an investment firm that has been a major rival of Pimco, reported an eighth consecutive month of inflows in September, with net inflows of $1.65 billion, more than double the amount of the previous month.

DoubleLine Capital, based in Los Angeles, said on Wednesday its flagship DoubleLine Total Return Bond Fund ended September with net inflows of $1.32 billion, compared with $562 million in August, bringing the fund's net inflow to $3.79 billion so far this year.

DoubleLine's overall inflow of net $1.65 billion in September compares with net inflows of $697 million in August, DoubleLine said in a press release, and brings DoubleLine's net inflow total to $5.07 billion.

The DoubleLine Total Return Bond Fund is posting returns of 5.3 percent year-to-date, surpassing 90 percent of those in its peer category, according to preliminary Morningstar data.

The eighth straight month of net inflows into DoubleLine open-end funds and the DoubleLine Total Return Bond Fund stem from the firm's track record of good risk-adjusted returns, said David Schawel, vice president and fixed-income portfolio manager of Square 1 Financial.

"I think mutual fund flows are largely driven by trust and performance," Schawel said. "Right now investors are attracted to the strong relative and absolute performance and are also saying that they trust Gundlach to navigate these markets."

Gundlach, who helps oversee $56 billion in assets as co-founder and chief investment officer at DoubleLine, is widely followed for his investment calls, including a bet earlier this year that Treasuries were undervalued relative to other sectors and that the selling pressure on the dollar was likely over.

The DoubleLine Core Fixed Income Fund, which can invest in mortgage-backed securities, corporate bonds and loans as well as emerging market debt and Treasuries, had a net inflow of $189 million in September, bringing its net inflow to $473 million year-to-date. The DoubleLine Core Fixed Income Fund is an intermediate-term, open-end mutual fund that invests in different sectors of the fixed income universe.

Bill Gross, the bond market's most renowned investor, quit Pimco for distant rival Janus Capital Group Inc on Friday, the day before he was expected to be fired from the huge investment firm he co-founded more than 40 years ago.

The move sent shock waves through global markets. DoubleLine Capital saw between $400 million and $500 million of net inflows on Friday in the wake of Gross' departure, Gundlach said earlier this week.

Ron Redell, president of DoubleLine Funds, told Reuters: "There has been a significant amount of fixed income assets in motion based on recent news. We believe DoubleLine, as well as other asset managers, are receiving an increase in interest."

The separate departures of both co-chief investment officer Mohamed El-Erian and Gross have prompted the placement of Pimco on several watch lists among institutional investors. (Reporting by Jennifer Ablan and Luciana Lopez; Editing by Diane Craft, Steve Orlofsky and Chizu Nomiyama)

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