Gundlach says 'excellent time' to shift into emerging markets

NEW YORK (Reuters) – The recent selloff in emerging markets has provided investment opportunities not seen in years, Jeffrey Gundlach, executive of DoubleLine Capital, said on Tuesday, and he urged moving at least some money into emerging market bonds.

FILE PHOTO: Jeffrey Gundlach, CEO of DoubleLine Capital LP, presents during the 2018 Sohn Investment Conference in New York City, U.S., April 23, 2018. REUTERS/Brendan McDermid

“I think it is excellent time – if you haven’t been in emerging market bonds or high-yield bonds – to contemplate at least a partial shift based upon the level of the dollar and valuation,” Gundlach said in an investor webcast, as he noted his bearish view on the greenback.

Gundlach, known as Wall Street’s “Bond King,” cited a sell-off stemming from Argentina, Brazil and Turkey, and said that emerging market dollar bonds are now yielding more than U.S. high-yield bonds.

U.S.-based stock funds invested in emerging markets gathered just $4.8 million during the week ended June 6, a week after the largest withdrawals in more than 18 months, while their debt counterparts posted $521 million in outflows, the most since February.

Gundlach, who oversees $120 billion at DoubleLine, said he believes the U.S. dollar will weaken again because of the “ridiculous” expansion of federal debt against the backdrop of rising interest rates. He characterized the explosion of the federal debt and the Federal Reserve’s interest-rate increase cycle as a “suicide mission.”

Gundlach said he expects oil to rise toward $80-$90 a barrel, and said he would be a buyer of gold and continues to be bullish on commodities. Overall, Gundlach said, there is “no U.S. recession in the offing,” but he does see slower global growth.

Reporting by Jennifer Ablan; editing by Jonathan Oatis and Leslie Adler

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