Since launching at year-end 2010, the RiverNorth-DoubleLine Strategic Income mutual fund (RNDLX) has attracted about $50 million in assets, according to Patrick Galley, CIO of Chicago-based RiverNorth.
In an interview on Wednesday, Galley (left) said RNDLX was designed to complement the RiverNorth Core Opportunity Fund, using a core and explore strategy where the core is fixed income provided by RiverNorth’s closed-end fund expertise and a bond portfolio managed by DoubleLine’s Jeffrey Gundlach, with “opportunistic income” provided by a mortgage-backed portfolio managed by Gundlach, formerly of TCW fame.
“Thirty-five percent of the fund are closed-end funds managed by RIverNorth,” Galley said, where his firm can take advantage of finding “excess returns that come from a structural inefficiency in the closed-end fund space," while 25% is the Gundlach mortgage-backeds, a strategy that Galley said is normally available only through a Gundlach hedge fund, “and then a core portfolio managed by Jeff” that follows the Barclays aggregate bond index.
Galley, who writes a regular blog for AdvisorOne on the closed-end fund universe, said that while Gundlach was at TCW he ran a closed-end fund in which RiverNorth had invested, and after Gundlach left TCW, RiverNorth approached the sometimes controversial money manager to see if the two firms could partner.
“RiverNorth had always wanted to launch a fund with lower volatility but that was focused on providing income,” to complement the RiverNorth Open Opportunity fund. That fund, profiled in Investment Advisor last year, is now approaching a soft close, Galley said, and has posted nearly “9% annualized returns” since its 2006 launch.
In October 2010 the partnership between DoubleLine and RiverNorth was announced and the registration statement for the fund was filed with the SEC. Galley, Stephen O’Neill, RiverNorth portfolio manager, and Gundlach, CEO and CIO of DoubleLine, manage the RiverNorth-DoubleLine Strategic Income fund.