Billionaire investor Jeffrey Gundlach suggests investors hold 40% in equities, 30% in fixed income, 15% in commodities and 15% in "dry powder," but not cash.
In January, the DoubleLine Capital CEO suggested a 30/20/30/20 portfolio, with a preference for metals and an aversion to U.S. stocks. This amounted to 30% non-U.S. stocks, 20% real assets, 30% in high-quality bonds and 20% in cash.
The CEO laid out several market predictions and asset allocation suggestions in a webcast Tuesday, including, in some cases, laying out how investors might direct those allocations.
Inflation could "easily" hit the mid-3% range in the next several months or quarters, and certainly by year end, Gundlach said, citing spikes in oil prices following the U.S. military strike on Iran.
"This is something to keep an eye on," he said. "Clearly, we do not any longer have a headline PCE (inflation index) that's trending lower."
Gundlach does not expect the Federal Reserve to cut its benchmark interest rate at its meeting next week. The economy is far from the Fed's 2% target inflation trend line, he noted.
"As I stated after the last Fed meeting, I don't think we're going to get another rate cut from (Chairman) Jay Powell. And that seems almost assuredly true at this point with all the volatility that's going on in the commodity complex," notably with oil prices, he said.
Going for Gold (Still)
Gundlach remains bullish on gold, even as spot prices have been "absolutely insanely positive" in recent years, surpassing $5,000 an ounce in January. "Gold is the number one commodity that I want to own," he said, noting he expects it to move higher.
"I think investors should be in commodities-slash-real assets for something like, 15% of their money," Gundlach said.
That should comprise 10% gold and 5% in a commodity basket like the Bloomberg Commodity Index, which also has some gold in it, he suggested. Central banks are likely to continue diversifying from dollars and buying gold, so the price would be well supported, he said, adding that gold has outpaced bitcoin since 2022.
Gundlach exercises his gold strategy by investing in miners, and suggested junior gold miners may be a good investment as bigger players may buy them.
The Bloomberg Commodity Index, however, trades far above its 200-day moving average right now, "so it's not the greatest trade location to be buying commodities," he said, explaining that mid-2025 was a better time to buy. "And of course, if that's your purchase price ... you're sitting on a lot of capital gains. I would probably wait to implement a commodity trade a little bit for some of the froth to go out out of this index."
Fixed Income: Emerging Markets Are In; Corporate Credit Is Out
Gundlach recommended investors have 30% of their assets in fixed income, and suggested specific funds from DoubleLine.
He suggested 20% in the DoubleLine Total Return Bond Fund (DBLTX), which he called a very low-risk vehicle. There's no corporate credit in DBLTX "so that's a good way to hide from some of the strains that are happening in parts of the corporate lending market."
The CEO recommended putting 10% in local currency emerging market debt and suggested the DoubleLine Emerging Markets Local Currency Bond Fund (DBELX). Emerging market currencies outperformed the dollar last year, and EM local currency debt has started 2026 well, he noted. Emerging market
DoubleLine continues to recommend against an overweight to 30-year Treasurys, Gundlach said.
Stock Picks: Value, Equal Weight, International
Gundlach said he doesn't like momentum or cap-weighted equities now, noting that cap-weighted indexes have outperformed the S&P 500 sharply since 2022 and longer except for the pandemic lockdown period. Their equal-weighted counterparts have now begun to outperform, he added.
"Value has been outperforming growth and that's just kind of the way I'm wired," he said. "I don't like momentum investing, so I tend to favor value overgrowth and I tend to value non-momentum things by using equal weighted."
For a portfolio's equities allocation, he suggested 15% in his firm's large-cap value-oriented Schiller enhanced CAPE product (DSEEX), which he said should now benefit from a tailwind. He also suggested 10% in the firm's Fortune 500 Equal Weight ETF (DFVE) and 15% in its Shiller enhanced international CAPE product (DSEUX).
Gundlach added that he finds emerging market equities appealing and owns them in local currencies, because he expects the dollar to continue to deteriorate. DoubleLine doesn't have an emerging market equity fund "so I didn't include it in the mix, but I'm certainly not opposed to (it) at all," he said. "In fact, I would rather recommend a piece of that."
Dry Powder
While Gundlach recommended investors keep 15% of their assets in "dry powder," he recommended three low-risk DoubleLine funds rather than cash, including a low-duration fund, a flexible income fund and a commercial real estate ETF. Together these funds have a 4.9% blended yield to maturity, which is better than cash, he said.
DoubleLine CEO Jeffrey Gundlach. Illustration: Chris Nicholls/Touchpoint Markets; courtesy photo.
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