BRINKER'S NEW BOND FUND RECOMMENDATION
May 15, 2011
Honeybee here: The symbol for Double Line Total Return Fund, managed by Jeffrey Gundlach, is (DLTNX). The duration of the fund reported on their website is 3.79. Brinker did not add this fund to any of his official Marketimer model portfolios. It was only added to the "fixed-income portfolio, now knows as the income portfolio.
* Caller Bill from Wisconsin said: "In your last issue of Marketimer, you made a change in the income portfolio, going to a brand new fund. Double Line Total Return and it looks to me like....."
Brinker interrupted: "Bill did you read page 3 of that issue? ....I've explained in there why I selected that fund. It's right there."
Bill continued: "Yes, I have it right it front of me. Let me ask a couple of questions that aren't there. One, it's a very short life fund. It's only been around a year or less, and it has a higher expense ratio. And I assume the rating isn't as good as the funds that it replaces. And I question what the duration would be on that fund."
Brinker replied: "Now this is a change that was made in the income portfolio. Now if you check that data that I published in the letter, you will see that I published the duration. Did you see that?"
Bill: "I looked for it."
Brinker: "No, it's published....it's published in the eh, eh, eh..."
Bill: "On page three?"
Brinker: "You don't see any information on the duration?"
Bill: "No sir."
(Honey EC: Apparently, someone quickly got this information to Brinker, as his prior questions clearly show that he believed the duration rate was in the newsletter Bill was reading from.) Brinker said: "That's because it was effective on the 10th of May. Let me explain why you didn't find the duration, and you will find the duration. The duration is in the table on page 7, but that table does not include the fund because the change wasn't made on April 30th. Everything in the newsletter for May is as of April 30. So what I've done is, I've stated in that recommendation to make those changes in the income portfolio in page 7 ..... that those changes take place on the close May 10th. So they happened last Tuesday....We implemented those changes..... for performance purposes......So when we publish the June investment letter, on page 7, you will see the duration of that fund in there........
Now as to why I selected that fund. I selected that fund because I really like that manager. I think that manager has really outstanding talent. Actually, I stipulate that on page 3 of the newsletter, that I like the manager. And that was the reason that I selected that fund. Now although what you said is true that it's a relatively new fund. It started in the spring of 2010, its done very well its first year out there. Now here's the thing, that manager had a long-term track record at his prior fund. A record of over ten years of excellence in income management at his prior fund. I looked at that record, looked at what he's done the first year in his new fund since he's gone out on his own, and was very pleased at the data I was looking at. And that was the reason that I selected it.....Remember though, if you see a recommendation that doesn't work with you investment, don't buy it...... But I have to go with what I believe in the investment letter because of performance tracking.....and that was the analysis that I based that recommendation on. Good call, Bill. I appreciate it. This is Moneytalk."
The funds that caller-Bill mentioned above that Brinker replaced with Double Line Total Return Fund were Vanguard Ginnie Mae Fund (VFIIX) and Vanguard Short-term Investment Grade Fund (VFSTX). Brinker sold 10% of each, bringing each weighting down to 15%. He took that 20% and put it into Double Line Total Return Fund.
Brinker says he chose Double-Line Total Return Fund because he "liked the manager." Beware, this has happened before and was very costly to those who bought TEFQX because Brinker "liked" the fund manager.
Marketimer, February 2000, Bob Brinker said: "We believe e-commerce fund manager Kevin landis brings a high level of stock selection talent to the fund."And be aware that in spite of what he said about "performance tracking" the Marketimer "income portfolio" is off-the-books, and he does not include that portfolio's performance in his official record. Additionally, Mark Hulbert's Hulbert Financial Digest uses only the three Marketimer model portfolios for ranking Brinker's performance against other newsletters -- not the "income portfolio."
Here is a link to an article about Jeffrey Gundlach's background. Reuters: Ex-star manager Gundlach sued over stealing, drugs, porn
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