Page 16 - Investment Advisor December 2022/January 2023

PORTFOLIO PERSPECTIVES

By Jane Wollman Rusoff

Why It’s the Best Time for Bonds in Over a

Decade: Gundlach’s Deputy CIO

Short-term Treasurys and T-bills are a good refuge for nervous clients,

according to DoubleLine’s Jeffrey Sherman.

s stormy as the markets are
today, the sun’ll come out
A tomorrow — as the song goes —
though when that tomorrow comes is
pretty uncertain. Nevertheless, there are
pieces of sunny news, as suggested in
a ThinkAdvisor interview with Jeffrey
Sherman, deputy chief investment offi-
cer at DoubleLine, of which Jeffrey
Gundlach is CEO.
For one: “On a go-forward basis, we
believe that the fixed income market is
the most attractive it’s been since 2011,”
Sherman argues. He maintains that the
U.S. isn’t in a recession now but believes
“it’s increasingly likely that we’ll have
some form of recession in 2023.”
The concern is that it won’t be “nar-
rowly contained” but will “bleed over
into” other sectors of the economy.
Sherman insists, however, that “there’s
not a lot of evidence that a broad-based
recession is on the horizon.”
It’s smart to keep in mind that the
stock market “usually bottoms in the
middle of a recession,” according to
Sherman. On the brighter side of the
interest-rate increase scenario, “We’re Formerly a portfolio manager and more interest-rate risk,” he says. Here
getting closer to the end of the Fed’s quantitative analyst at TCW, he is a are excerpts from our conversation:
hiking cycle,” he says, “and [it’s] talk- chartered financial analyst overseeing
ing about a glide path” for getting there DoubleLine’s investment management What’s your forecast for the
rather than “wait[ing] for inflation to subcommittee and is lead portfolio bond market?
come down.” manager for multi-sector and deriva- On a go-forward basis, we believe that
“The market has about another 1.5% tive-based strategies. His hit interview the fixed income market is the most
of rate hikes priced in between now and podcast, “The Sherman Show,” just attractive it’s been since 2011. People
February,” he notes. When it comes to released its 126th episode. shouldn’t look at their statements to see
investments, in the interview Sherman We interviewed Sherman by phone on what’s happened with their bond port-
discusses some additional parts of the Oct. 18. Speaking from his Los Angeles folios. They need to think forward. Over
credit market that “look more attrac- office, he says DoubleLine has been a two- to four-year horizon, the best
tive” today than “putting more money adding to the Treasurys in its portfolio, predictor of return in the bond market
into equities.” a move that indicates the firm is “taking is the yield you start with.

14 INVESTMENT ADVISOR DECEMBER 2022/JANUARY 2023 | ThinkAdvisor.com