Doubleline ETF Trust - DoubleLine Commercial Real Estate ETF (DCRE)

ETF Doubleline ETF Trust - DoubleLine Commercial Real Estate ETF (DLRM)

Profile:

DLRM is an actively managed ETF that invests primarily in commercial mortgage-backed securities (CMBS) issued by publicly traded companies. The ETF focuses on investment-grade and below-investment-grade CMBS with a portfolio diversification of properties, types, and maturities. DLRM aims to provide investors with a high level of current income while mitigating interest rate risk.

Objective:

The primary investment goal of DLRM is to maximize total return through a combination of current income and capital appreciation.

Issuer:

DLRM is issued by DoubleLine Capital LP, a global investment manager focused on credit and fixed income strategies. Founded in 2008 by Jeffrey Gundlach, DoubleLine has a 15-year track record of delivering strong returns. The firm is known for its active management style and research-driven approach.

Market Share and Total Net Assets:

As of June 30, 2023, DLRM holds a market share of approximately 2.5% in the commercial real estate ETF space. The ETF has total net assets of approximately $600 million.

Moat:

DLRM's competitive advantages include:

• Extensive experience and active management: DoubleLine's team has decades of experience in the commercial real estate market and applies an active management approach to exploit market inefficiencies.

• Niche market focus: DLRM focuses solely on the CMBS market, allowing for targeted and specialized investment decisions.

• Flexibility and transparency: The ETF actively manages interest rate risks through hedging strategies and provides regular updates on its portfolio holdings, offering transparency to investors.

Financial Performance:

Since its inception in 2020, DLRM has generated a total return of over 30%. The ETF has consistently outperformed its benchmark index, the BofA Merrill Lynch CMBS Total Return Index, demonstrating the effectiveness of DoubleLine's active management strategy.

Liquidity:

DLRM has an average daily trading volume of approximately 10,000 shares, indicating decent liquidity. The bid-ask spread is roughly 0.5%, implying reasonable trading costs.

Market Dynamics:

Current market conditions favor commercial real estate investments. Low interest rates and increasing demand for real estate assets are positively impacting the sector. However, potential risks arise from rising interest rates and economic downturns that can negatively affect real estate.

Investment Approach and Strategy:

DLRM aims to track the DoubleLine Active Short Portfolio Index. The ETF invests in commercial mortgage bonds of varying seniority levels, asset classes, and maturities to achieve an optimal risk-reward balance.

Key Points:

• Invests in investment-grade and below-investment-grade CMBS
• Primarily focuses on commercial properties
• Delivers high current income and capital appreciation potential
• Actively managed by DoubleLine Capital
• Strong historical performance

Risks:

• Portfolio is concentrated in CMBS market, prone to sector-specific risks
• Dependence on interest rates, susceptible to higher rates impacting value
• Active management might not outperform its benchmark.

Who Should Consider Investing:

• Investors seeking high current income and capital appreciation potential
• Investors comfortable with short-term price volatility
• Investors seeking exposure to commercial real estate without direct ownership

Fundamental Rating Based on AI: 8/10

DLRM receives a strong rating due to its experienced management team, active management style, and niche market focus. The ETF consistently outperforms its benchmark, offering compelling returns. However, the concentration risk and higher volatility compared to broader market investment options require careful consideration by investors.

Resources:

Data for this analysis was gathered from DoubleLine Capital LP’s website and ETF.com.

Disclaimer:

This information is for informational purposes only and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.