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Gundlach's First ETF Is A Smash Hit, Tops $1 Billion In Assets

August 13, 2015 1:41 pm
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The SPDR DoubleLine Total Return Tactical ETF (NYSE: TOTL) is bond king Jeffrey Gundlach's first foray into the world of exchange traded funds. Given TOTL's rapid success, perhaps the only lingering questions are “What took him so long to get involved with ETFs?” and “When is a follow-up to TOTL coming?”

At this point, what is clear is that TOTL is an undeniable success as the ETF's ascent to $1 billion in assets under management proves. TOTL debuted on February 23, meaning the fund has need just about six months of trading to hit $1 billion.

TOTL's success is all the more impressive when considering some key factors. First, 2015 has been a trick year for bond funds, including ETFs, because financial markets have all but accepted that the Federal Reserve will be raising interest rates this year. Many advisors and investors have accepted the fact that a Fed rate hike is a “when not if” scenario.

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Second, actively managed ETFs, of which TOTL is one, still represent a scant percentage of overall ETF assets. Last month, combined assets under management for the world's ETPs eclipsed the assets held by hedge funds. The more than 5,800 exchange traded products listed around the world have a combined $2.971 trillion in assets under management, just ahead of combine AUM of $2.969 trillion for hedge funds, according to ETF Trends.

However, for the week ended August 7, actively managed ETFs listed in the U.S. had just about $20.8 billion in combined assets, according to AdvisorShares data.

Said another way, with the entire universe of U.S. active ETFs having $20.8 billion in assets, TOTL on its own is 4.8 percent of that total. TOTL is a partnership between State Street Global Advisors, the third-largest U.S. ETF issuer, and Gundlach’s Los Angeles-based DoubleLine Capital.

TOTL is now within striking distance of toppling the First Trust North American Energy Infrastructure Fund (NYSE: EMLP) for the third spot among actively managed ETFs. The PIMCO Enhanced Short Maturity Active ETF (NYSE: MINT) and the PIMCO Total Return Active ETF (NYSE: BOND), a direct rival to TOTL, are the two largest actively managed ETFs.

While BOND is inflow positive for 2015, amid regulatory controversy at PIMCO, investors have pulled $10.6 million from the ETF in the current quarter while adding almost $254.6 million to TOTL over the same span.

TOTL currently allocates about 54.7 percent of its weight to mortgage-backed securities with emerging markets bonds and bank loans combining for another 19.5 percent of the ETF's weight, according to State Street data.

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