In December 2010, RiverNorth Capital Management launched the RiverNorth/Double Line Strategic Income fund (RNDLX/RNSIX), an open-end mutual fund that combined the fixed income and mortgage-backed expertise of Jeffrey Gundlach and DoubleLine Capital with RiverNorth’s closed-end fund expertise. On Wednesday, RiverNorth announced that the fund will close to new investors on March 30, 2012.
In a statement, Patrick Galley, CIO of RiverNorth, said the decision was made to ensure that the fund’s assets “don’t exceed a level where they would alter or impact the Fund’s investment strategy.”
In an interview Wednesday, RiverNorth CEO Brian Schmucker pointed out that existing investors in the fund and advisors who have allocated to the fund on behalf of their clients may still continue to purchase shares after March 30.
In the statement, Galley noted that during the Strategic Income fund’s first year of operation, the Fund raised $675 million and that RNDLX/RNSIX‘s assets had grown to $887 million as of Feb. 21, 2012. Schmucker said the plan had always been to close the fund as it neared the $1 billion in assets mark, which he said would likely happen by the March 30 close. “We soft close a fund when not doing so would hinder performance,” he said.
Last November, Schmucker spoke about RiverNorth’s collaboration with Gundlach on the Strategic Income fund and closed-end funds in a video interview during the 2011 Schwab Impact conference. At that time, he signaled that RiverNorth was considering a soft close as the fund continued to attract assets at a very healthy clip.
“We could manage more money than that,” said Schmucker in the most recent interview, but there were capacity constraints on both RiverNorth’s end in the closed-end space, which by its nature has limited trading, and on DoubleLine’s end, particularly in its “opportunistic income” sleeve, which he characterized as “Gundlach’s best ideas.” Beyond those constraints, Schmucker said that RiverNorth wanted to “preserve its investor base,” which he called “a pretty sophisticated base; they’re familiar with closed end funds, and we didn’t want to shut them out.”