doubleline january 2014 monthly commentary

8/12/2019 Doubleline January 2014 Monthly Commentary

1/13333 S. Grand Ave., 18th Floor ||Los Angeles, CA 90071 ||(213) 633-82

Monthly Commentary

January 2014

333 S. Grand Ave., 18th Floor ||Los Angeles, CA 90071 ||(213) 633-82


2/13

Monthly Commentary 1/31/

Overview

The beginning of the New Year meant the end to Ben

Bernanke at the helm of the Federal Reserve was

near. His last policy meeting resulted in a continuedtapering of asset purchases, matching the

announcement received at the prior meeting for an

additional cut of $10 billion in monthly bond

purchases. Ben Bernanke stepped away after guiding

policy through eight years of turbulence. Taking his

place was new Federal Reserve Chairwoman Janet

Yellen, who has to navigate the murky waters of

weaning the worlds largest economy off of the loose

monetary policies that have become the hallmark of

the post-crisis landscape. Treacherously cold weather

has largely obfuscated recent economic reports, and

large currency swings seen in countries such as

Argentina, South Africa, and Turkey further

complicate Chairwoman Yellens task. Whether the

Federal Reserve decides to include the effects these

policy changes will have on emerging economies

remains to be seen. The term Fragile Five has been

assigned to such countries which have seen large

reverberations due to the recent tapering of

purchases. Those countries include Argentina, South

Africa, Turkey, Brazil, and Indonesia. Weakness in

domestic equity markets during January can also be

partially ascribed to the ever impending slowdown in

China, an unwind of consensus bullish views on U.S.

Monthly Commentary

Equities, and in general a re-evaluation of U.S. growt

prospects.

Maybe the most surprising event in January was th

outperformance of fixed income markets relative t

equities. The 1.5% return for the Barclays U.

Aggregate Bond Index represents a clea

outperformance compared with the 3.5% total retur

loss for the S&P 500 Index during the month. Endin

the month at 2.64%, the 10-year U.S. Treasury (UST

rate fell 38 basis points (bps) on the back of fallin

deficits, falling inflation, and as mentioned

reversal of what many thought was the consensu

trade to avoid UST. Real Gross Domestic Produc

(GDP) growth during the fourth quarter came in a

3.2%, and while slower than third quarter growth o

4.1%, second half growth was the strongest half yea

of growth in a decade. Unemployment continued i

march lower to 6.6% while the broade

underemployment rate fell 0.4% to 12.7%. Th

interplay between these measurements of labo

market slack, the ability of central bankers t

continue policies of low rates, and low levels of labo

market participation continue to be hotly debate

On one side are those arguing demographic issues ar

largely the reason for the decline in the size of th

labor force and that such changes were large

structural in nature. On the other are thos

-1,500.00

-1,300.00

-1,100.00

-900.00

-700.00

-500.00

-300.00

-100.00

100.00

Fiscal Year Cumulative Federal Budget Deficit

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: U.S. Treasury,Bloomberg

55.0%

57.0%

59.0%

61.0%

63.0%

65.0%

67.0%

1/1/1948

3/1/1951

5/1/1954

7/1/1957

9/1/1960

11/1/1963

1/1/1967

3/1/1970

5/1/1973

7/1/1976

9/1/1979

11/1/1982

1/1/1986

3/1/1989

5/1/1992

7/1/1995

9/1/1998

11/1/2001

1/1/2005

3/1/2008

5/1/2011

U.S. Labor Force Participation Rate

Source: Bureau of Labor Statistics, Bloomberg

1/31/1

63.0%


3/13


suggesting even after controlling for demographic

changes in the composition of the labor force, large

cyclical effects remain, leaving large levels of slack in

the labor markets.

Monthly Commentary

0

50

100

150

200

250

300

350

Feb-1

3

Mar-1

3

Apr-1

3

May-1

3

Jun-1

3

Jul-1

3

Aug-1

3

Sep-1

3

Oct-1

3

Nov-1

3

Dec-1

3

Jan-1

4

NetPayrollAdditions(000's)

Nonfarm Private Payrolls - Net Change

BLS ADPSource: Bureau of Labor Statistics, Bloomberg, ADP

Last BLS = 113K

Last ADP = 175K


4/13


Emerging Markets Fixed Income

Volatility not seen since the summer of 2013 returned

to global markets in January, as mixed economic

reports from the U.S. combined with weak

fundamental and technical backdrops in Emerging

Markets (EM) helped to drag down investor

sentiment. U.S. equities shed nearly 3.5%, their worst

performance in over a year, while UST rallied as a

flight-to-safety bid returned to markets. Benchmark

10-year UST saw yields tumble from 3.03% to 2.64%.

Concerns over U.S. growth emerged this month

following economic releases showing that certain

sectors of the U.S. economy were posting slower

growth than expected or shrinking: durable goodsorders unexpectedly contracted by a wide margin in

December; new home sales declined by a larger rate

than expected in December; the manufacturing

sector expanded at a much slower pace than

consensus expectations for the month of January; and

while the unemployment rate declined (once again,

largely due to workers leaving the workforce) to 6.6%

in January, the 113,000 increase in nonfarm payrolls

for the month was well-below consensus estimates o

185,000. Despite these weaker data points, the U.

did post fourth quarter 2013 growth of 3.2%, whic

was in-line with expectations. It remains to be see

how much of the slowdown in U.S. economic dat

may be temporarily tied to the unusually bad winte

weather over the past several months, and how muc

may be due to a fundamental slowing of th

economy.

In its last meeting under Chairman Ben Bernanke, th

U.S. Federal Open Market Committee (FOMCmaintained its pace to continue drawing down i

quantitative easing (QE) program by $10 billion pe

month. The FOMC press release dated January 29

2014 noted that through December, "labor marke

indicators were mixed but on balance showed furthe

improvement," and appeared to lack any seriou

concerns over January economic reports.

Some of the main EM headlines gripping investors

the month of January were tied to the currency an

local bond spaces, which experienced widesprea

selloffs. Argentina, struggling with inflation nearin

30%, has dwindled international reserves to defen

their currency against mounting depreciatio

pressures. When the Central Bank of Argentin

announced it planned to ease currency controls o

dollar purchases, the official foreign exchange (FX

rate devalued 13% from 6.9 to 8.0 Pesos per U.Dollar (USD). The outlook remains uncertain fo

Argentina, given the perceived lack of political will t

implement the widespread economic reforms neede

to halt the economic decline. Additional EM

currencies that sold off sharply in January include th

South African Rand, which fell 5.7%, as well as th

Turkish Lira, which declined 4.8%. South Africa ha

Monthly Commentary

Tickers January

Return

Last 3

Months

YTM Spread S&P

Ratings

EMBI JPGCCOMP -0.68% -1.88% 6.06% 360 BBB-

CEMBI JBCDCOMP 0.40% 0.13% 5.73% 347 BBB

GBI-EM JGENBDUU -3.63% -6.58% 7.04% N/A A-

Source: JP Morgan

(Past performance is no guarantee of future results.)

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14

JP Morgan Emerging Markets Bond Index

Performance (1/31/2013 through 1/31/2014)

EMBI

CEMBI

GBI-EM

Source: Barclays Live


5/13


struggled with twin deficits following widespread

strikes in its crucial mining sector, and its currency

has declined nearly 19.5% versus the USD over the

past 12 months. Turkey has seen a widespreadcorruption probe roil the embattled administration of

Prime Minister Recep Erdogan, as well as slowing

Foreign Direct Investment and a widening current

account deficit.

Two additional countries that have seen struggles

over the past year exacerbated in the last month are

Venezuela and Ukraine. Both, but perhaps most

notably Venezuela, have seen mismanaged top-down

policies making international investors wary of their

foreign-exchange and local bond markets. Despite

being oil-rich, Venezuela has been plagued by

shortages of basic goods such as rice and coffee amid

widespread capital controls and price setting by

President Nicolas Maduros Administration.

Consumer prices are rapidly increasing at one of the

fastest rates in the world, with annualized inflation of

56%. Ukraine has been shaken by major protests for

the past three months against President Viktor

Yanukovichs turn away from the West/European

Union toward closer ties with Russia, which has

responded with a gas subsidy agreement and a $15

billion debt package. Yanukovich faces pressure from

both the Kremlin and the gathering momentum of

opposition protestors, who forced him to reorganize

his cabinet. The political and economic uncertainty

has led to a sharply falling currency and decliningdollar reserves amid capital flight.

Despite these headwinds, developed markets abroad,

as well as China, were able to post economic figures

largely in-line with expectations in January. The

manufacturing sector across the eurozone expanded

at a slightly faster pace for January, edging above

consensus estimates. The unemployment rate was

reported as ticking lower in December, thought it

remains stubbornly high at 12%. China posted fourt

quarter 2013 annualized growth slightly abov

consensus at 7.7%. In January, the official report fo

the manufacturing sector showed expansion, albeit aa slower pace that was in-line with expectations.

contrast, HSBCs manufacturing Purchasing Manager

Index (PMI) showed a slight contraction in the secto

that was slightly below consensus. Late January als

witnessed the Chinese authorities stepping in t

bailout a troubled $500 million high-yield shado

banking trust product, illustrating the government

willingness to backstop the economy, though it ha

been vocal about weeding out excessive lending ancredit.

EMFI mutual funds saw continued outflows in Janua

amid the increasing headline noise: $4.8 billion le

the asset class, with $1.5 billion exiting hard currenc

funds and $3 billion from local currency funds. Whe

dissected from a sovereign/corporate bon

perspective, outflows were $3.8 billion fro

sovereign-benchmarked funds and essential

unchanged for corporate-benchmarked funds. W

still feel that the new issue pipeline remains relative

full, with pricing coming at more attractive leve

given the recent noise in the asset class. We w

continue to carefully watch the pipeline for attractiv

investment opportunities.

Monthly Commentary


6/13


Global Developed Credit

January was a mixed month for corporate credit.

Although spreads widened, the decline in interestrates helped produce solid total returns. Despite

beginning the year with a constructive tone, evidence

of slower growth in China, volatility in emerging

markets and a Federal Reserve determined to wind

down its bond buying program reversed the trend

causing risk premiums to widen. The Barclays U.S.

Credit Index ended the month 4 bps wider posting a

total return of 1.68% and underperforming duration-

matched Treasuries by 31 bps. The Barclays High

Yield Index widened by 22 bps during the month

which resulted in a total return of 70 bps and

underperformed duration-matched Treasuries by 40

bps. The Barclays U.S. High Yield Loan Index posted a

return of 61 bps during the month.

Within the investment grade universe the best-

performing sectors with respect to excess return

included Foreign Local Government (+78 bps); Other

Financial (+60 bps); Other Industrial (+52 bps);

Brokerage (+49 bps); and Building Materials (+38

bps). The worst performing sectors on a relative basis

included Sovereigns (-2.22%); Home Construction (-

1.36%); Metals (-94 bps); Wirelines (-83 bps); and O

Field Services (-80 bps). Higher rated deboutperformed lower quality issues during the mont

In the high yield space all sectors except for retaile

were up in the month of January. The top performe

in high yield were Paper (+2.49%); Brokerag

(+1.50%); Pharmaceuticals (+1.36%); Healthcar

(+1.23%); and Pipelines (+1.05%). The wor

performing sectors were Retailers (-78 bps); Othe

Finance (+19 bps); Aerospace/Defense (+30 bps

Consumer Products (+30 bps); and Electric (+34 bps

Returns were clustered by quality, with Caa-rated an

Ba-rated debt marginally outperforming single-Bs

total return. In terms of excess returns, Caa-rate

debt outperformed both Ba-rated and B-rated debt.

Fixed-rate investment grade supply for January wa

approximately $126.9 billion, versus $124.1 billio

brought to market in January 2013. Non-corporat

issuers were the most active with $61.6 billion o

investment grade supply. High yield issuers priced

total of $23.4 billion in January versus $38.3 billion

new US dollar-denominated bonds in January 201

Monthly Commentary

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Jan-14

Performance of Select Barclays Indices Last 12 Months

U.S. High Yield

U.S. Credit

U.S. Aggregate


0

20

40

60

80

100

120

140

160

180

BillionsofU.S.

Dollars

Total Fixed-Rate Investment Grade Supply



7/13


High yield mutual funds had net outflows of $223

million in January according to Lipper. Meanwhile,

loan fund inflows remained strong with an additional

$3.8 billion flowing into loan funds in January, takingthe positive streak of inflows to 85 weeks. There

were no defaults in January. Overall default activity

was modest in 2013 as both default volume and the

high yield default rate reached six-year lows. Only

$1.1 billion of high yield bonds and loans defaulted

during the fourth quarter of 2013, which represented

the lightest quarterly volume since 2007.

The first month of 2014 also saw a tough start fordeveloped market equities given the notable negative

swing in sentiment brought about by the turbulence

in of emerging markets. Despite the fact that the

Federal Reserve has started to taper its QE Program,

the 10-year UST yield declined 38 bps during the

month helping corporate credit to produce positive

returns despite indices which generally experienced

spread widening. Investment grade outperformed

high yield in the sell-off but credit held in reasonably

well considering some of the issues occurring

elsewhere on the globe. The default backdrop

remains benign and corporate borrowers continue to

maintain relatively healthy balance sheets which, in

some instances, are laden with cash given the market

-friendly levels of interest rates which have fueled

record levels of debt issuance over the past year.

Monthly Commentary


8/13


Agency Mortgage-Backed Securities

The U.S. Agency MBS sleeve of the Barclays U.S.

Aggregate Bond Index had a return of 1.56% for the

month of January, outpacing the overall return of the

Index. This is somewhat unusual as historically the

MBS sleeve has underperformed the overall Index

during a period of falling interest rates. What

occurred was the duration of the Barclays U.S. MBS

Index extended to an all-time high during this period,

and with that longer duration comes some ability for

these assets to go up in price more when interest

rates fall. With the decline in interest rates and rise inMBS prices over the month of January, the duration

came off its all-time level to stand at 5.3 years as of

month-end. As expected, the lower coupon

mortgages appreciated in price more than the higher

coupon mortgages. An example of this is 30-year

3.00% Fannie Mae (FNMA) mortgages which were u

more than 2 points in January. Higher coupo

mortgages, such as mortgages with a 5.00% or 5.50

coupon, were up to 1 points for the month.

Prepayment speeds were down in January for th

seventh time in eight months. The only month in th

past eight months that experienced an increase

these speeds was December 2013. FNM

prepayment speeds are currently 30% of where the

were at the start of 2013. Freddie Mac (FHLMCprepayment speeds are 32% relative to the start o

2013, while Ginnie Mae (GNMA) prepayment speed

are 41% of where they were at the beginning of 201

These speeds are the lowest seen by the mortgag

market since 2009 (also known as the subprim

crisis). If mortgage rates stay at current levels, w

expect prepayment speeds to pick over the next fe

months.

The mortgage market heard what the Treasury wa

thinking in regards to mortgages at the Structure

Finance Industry Group (SFIG) conference held in La

Vegas in late January. Dr. Michael Stegman from th

U.S. Treasury Department spoke at the conferenc

about certain matters on the forefront of investor

minds pertaining to mortgages and mortgag

Monthly Commentary

Conditional Prepayment Rates (CPR)

2013 Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan

FNMA 24.4 24.4 24.0 25.1 22.7 20.5 16.2 12.2 11.5 10.4 10.6 8.7

FHLMC 26.0 25.9 25.3 25.5 23.4 21.5 17.1 13.1 12.0 10.8 11.1 9.1

GNMA 21.9 21.8 23.0 22.2 19.4 18.2 14.9 12.2 12.1 11.2 11.2 9.7

Barclays Capital U.S.

MBS Index 11/29/2013 12/31/2013 1/31/2014 Change

Average Dollar Price 103.68 102.91 104.26 1.35

Duration 5.56 5.62 5.31 -0.31

Barclays Capital U.S.

Index Returns 11/29/2013 12/31/2013 1/31/2014

Aggregate -0.37% -0.57% 1.48%

MBS -0.62% -0.47% 1.56%

Corporate -0.27% -0.25% 1.68%

Treasury -0.33% -0.91% 1.36%

source: eMBS, Barclays Capital

1/31/2014

5.3

0.00

1.00

2.00

3.00

4.00

5.00

6.00

06/08 12/08 06/09 12/09 06/10 12/10 06/11 12/11 06/12 12/12 06/13 12/13

Duration of Barclays U.S. MBS Bond Index



9/13


end of 2014. We also continue to notice that th

supply side of the market continues to change wit

the recent rise in rates. Gross issuance in January wa

around $65 billion which save for one month in 201

was the lowest gross issuance total since March 200

We do not expect to see issuance numbers ge

substantially bigger anytime soon unless the marke

experiences a meaningful drop in rates.

Monthly Commentary

securitization. Dr. Stegman addressed several

important points, including the following highlights:

He does not think that the Home Affordable

Refinance Program (HARP) should be extended.

He believes that there are still many borrowers

who can benefit from the existing program but a

change to the problem would affect borrowers

whose purchase happened after the real estate

crash and therefore they are not in need of

financial support. Premium mortgages improved

with the help of this news as the market viewed itas a lessening of odds of faster prepayments for

higher coupon mortgages.

He does not approve of the Eminent Domain

concept with regards to underwater mortgages.

Instead he favors refinancing legislation to help

these borrowers.

He mentioned the Government Sponsored

Enterprises (GSEs) and suggested the UST prefers

a single securitization provider. He believes it is

important for this provider have a strong TBA

market to help the liquidity and efficiency of the

mortgage process. The concept of full faith and

credit came up in addition to the mention of a

privately held first-loss piece.

These decisions, however, would come about from

what the Federal Housing Finance Agency (FHFA),

headed by Mel Watt, decides as well as what happens

to the Corker-Warner Bill or any other policy that will

determine the fate of the GSEs. In other words, there

are many more factors to consider.

The market received another round of Fed tapering in

January as expected. We continue to believe the

market has priced in the tapering or end to QE by the


10/13


dollar settlement to borrowers for allege

mistreatment. Additionally, there have been rumo

that several large investment institutions are als

considering their own lawsuit against Ocwen for the

loan servicing practices. The record JP Morga

settlement at the end of 2013 seems to have acted a

a catalyst for servicer litigation and our expectation

are that future lawsuits against mortgage service

are likely.

Monthly Commentary

Non-Agency Mortgage-Backed Securities

This year began with a sluggish start in the non-

Agency MBS market, mainly due to the lack of

volume. Despite the limited activity, the rally that

started in the third quarter of 2013 continued

through January. Bid list activity was not evenly

distributed with much of the volume being attributed

to the liquidation of the second segment of the ING

portfolio. This accounted for $4.6 billion of current

face, and was concentrated primarily in Alt-A and

prime non-Agency MBS. Insurance companies

continued to be the big players with money managersalso winning their share of bonds. Hedge funds and

other fast money accounts have been fairly quiet on

these lists as many of the bonds were higher dollar

price bonds that were higher in the capital structure.

Yields moved in slightly tighter across all sectors of

the market. Prime bonds are trading at 4% yields to

loss adjusted scenarios, Alt-A bonds at 4.5% and

subprime bonds in the low 5% range.

Fundamentally, January remittance data was very

stable with both prepayment speeds and the pace of

loan liquidations slowing slightly. Prime, Alt-A and

subprime prepays speeds slowed by 1.3 CPR

(Conditional Prepayment Rate), 0.6 CPR and 0.1 CPR,

respectively. Liquidation rates, on average, fell by 0.8

CDR (Conditional Default Rate), 0.2 CDR, and 0.1 CDR

for the same markets. Loan modification rates were

similar to December with 1,958 loans being modified

during the month with the average rate modification

of 2.78%.

News of litigation against loan servicers continues to

grab the headlines. Most recently it was announced

that Ocwen Financial was ordered to pay a $2 billion

86

91

96

101

106

111

116 PrimeX Prices

PrimeX FRM.1

PrimeX FRM.2

Source: MarkIt via Morgan Stanley

3035

40

45

50

55

60

65

70

75

80

/

/

/

/

ABX Prices

ABX 2006-2 AAA

ABX 2007-1 AAA

Source: MarkIt via Morgan Stanley


11/13


Markets Index, increased 2.6% in December 201

while the other subindex, the Non-Major Marke

Index, was up 2.0%. January loan loss severitie

averaged 59% over $1 billion of loans liquidate

according to Trepp Analytics.

Monthly Commentary

Commercial Mortgage-Backed Securities

New issuance activity began the year strong in

January with a total of 7 deals priced equating to

approximately $6 billion in issuance, including three

conduit deals totaling $4 billion. February is teeing up

to be another month of substantial issuance as well.

Still, this strong start trails that of January 2013 which

totaled $11 billion. Despite month-end broader

market de-risking, CMBS generically performed better

than expected as both legacy and new issue market

spreads held in, some of which is attributed to the

stronger investor base as seen in recent months withthe insurance and money manager community

stepping in. For the month, legacy AAA spreads

widened by 11 bps to 112 bps over swaps, while on

the new issuance side AAAs recently priced at 95 bps

over swaps with BBBs at 365 bps. The CMBS portion

of the Barclays U.S. Aggregate Bond Index returned

+0.82% in January.

The overall U.S. CMBS delinquency rate continued itsdecline in January, dropping 18 bps to 7.25%

according to Trepp Analytics. The 30+ day

delinquency rate by property sector was mixed with

Lodging posting a 56 bps improvement to 7.35%,

Office improving by 33 bps to 7.80%, and the

Multifamily Delinquency Rate dropping by 19 bps to

10.67%. The Industrial and Retail Delinquency Rates

both increased, however, to 10.59% (+13 bps) and6.13% (+7 bps), respectively. We expect to continue

to see declining delinquency rates stemming from

improving market fundamentals, low interest rates

and increased levels of CMBS special servicer loan

liquidations. Mirroring this improvement, the

Moodys/Real Capital Analytics (RCA) Commercial

Property Price Indices (CPPI) subindex, the Major


12/13


falling interest rate environment resulted in a highe

return. Likewise, the municipal bond marke

combined stable relative value with a long averag

duration to produce a 1.95% return for January.

Monthly Commentary

U.S. Government Securities

The U.S. Treasury market started 2014 on a positive

note. The 10-year UST note reached its highest yield

of 2013 on December 31 at 3.03%. It fell on January

2nd

and continued to fall though the remainder of the

month, ending January at 2.64%. The Barclays U.S.

Government Index returned 1.31% for the month.

Trading activity had the hallmarks of a short squeeze.

A broad spectrum of investors ended 2013 expecting

higher rates. Portfolios were positioned accordingly,

with reduced duration and increased credit risk.

Disappointing U.S. economic data, most notably the

employment report on January 10th

and heightened

emerging market jitters prompted short covering and

flight-to-quality Treasury buying. This buying helped

to provide an ongoing bid for intermediate and long

U.S. Treasuries.

Short Treasuries were lackluster performers. The two

-year note fell 4 bps in yield and returned 0.17% on

the month. The five-year note was a stronger

performer, falling 23 bps in yield and returning 1.35%.The 30-year bond yield fell 35 bps, generating a

return of 6.20%.

Treasury Inflation-Protected Securities (TIPS) returned

1.98% in January. TIPS generally underperformed

comparable duration conventional UST, but the

longer average duration of the TIPS market in the

12/31/2013 1/31/2014 Change

3 month 0.07 0.02 -0.05

6 month 0.09 0.05 -0.04

1 year 0.11 0.09 -0.02

2 year 0.38 0.33 -0.05

3 year 0.77 0.67 -0.10

5 year 1.74 1.49 -0.25

10 year 3.03 2.65 -0.38

30 year 3.97 3.60 -0.37

Source: Bloomberg

Yield Curve


13/13

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of portfolio diversification implies that certain holdings and sectors in a client's portfolio may be rising in price while others are falling; or, that some issues and secto

are outperforming while others are underperforming. Such out or underperformance can be the result of many factors, such as but not limited to duration/interest ra

exposure, yield curve exposure, bond sector exposure, or news or rumors specific to a single name.

DoubleLine is an active manager and will adjust the composition of clients portfolios consistent with our investment teams judgment concerning market conditions a

any particular security. The construction of DoubleLine portfolios may differ substantially from the construction of any of a variety of bond market indices. As such,

DoubleLine portfolio has the potential to underperform or outperform a bond market index. Since markets can remain inefficiently priced for long periods, DoubleLin

performance is properly assessed over a full multi-year market cycle.

Important Information Regarding Client Responsibilities

Clients are requested to carefully review all portfolio holdings and strategies, including by comparing the custodial statement to any statements received fro

DoubleLine. Clients should promptly inform DoubleLine of any potential or perceived policy or guideline inconsistencies. In particular, DoubleLine understands th

guideline enabling language is subject to interpretation and DoubleLine strongly encourages clients to express any contrasting interpretation as soon as practical. Clien

are also requested to notify DoubleLine of any updates to Clients organization, such as (but not limited to) adding affiliat es (including broker dealer affiliates), issui

additional securities, name changes, mergers or other alterations to Clients legal structure.

DoubleLine is a registered trademark of DoubleLine Capital LP.

2014 DoubleLine Capital LP

Disclaime

doubleline january 2014 monthly commentary

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