Follow Gundlach's Insight With These ETFs

Investing ideas of bond master Jeffrey Gundlach – the founder of DoubleLine Capital LP – can lead to a dream portfolio. As per an article published on Bloomberg , Gundlach appropriately predicted Donald Trump’s chances of winning the U.S. presidential election. His predictions at last year’s Sohn conference, which bids ace Wall Street investors to share their expertise, even returned 40%.

Needless to say, such an enthralling investing career and perceptive investment calls make it important to follow what Gundlach is saying now about the broader investing world. Below we highlight a few such calls and their adjoining ETF picks for investors who are a fan of Jeffrey Gundlach.

Looming Summer Market Correction?

Gundlach sees puffiness in U.S. stock valuation compared with GDP. The three-year low , this warning does make sense.

Gundlach expects the 10-year Treasury yield to scale higher in the coming days and if interest rates rise in summer, the gradual cease in cheap money inflows will likely thwart the stock market rally.

In this light, inverse S&P 500 ETFs like Direxion Daily S&P 500 Bear 1x Shares ETF Why India ETFs are Soaring in 2017 ).

Prefer Abroad to Home

Gundlach is long on emerging market (EM) equities despite “conventional wisdom that rising U.S. rates will lead to a stronger dollar” and a stellar year-to-date rally in the EM stocks. That the Fed’s rate hike policies are likely to catapult the U.S. dollar appears as a ‘myth’ to Gundlach, going by the Bloomberg article.

So, investors can play the theory by investing in the funds like iShares Core MSCI Emerging Markets French Election Soothes Sentiments: ETFs Likely to Benefit ).

Oil to Slip Further?

Gundlach also expects oil prices to slide over the longer term due to better technology for oil extraction . In any case, oil prices are reeling under pressure this year thanks to brimming shale output despite the ongoing OPEC output cut deal.

If this holds true, inverse oil and energy ETFs like ProShares UltraShort DJ-UBS Crude Oil ETF (AX:SCO) , ProShares Short Oil & Gas ETF Oil at Pre-OPEC Level: ETFs to Benefit ).

Gold to "Have Another Leg Up"?

As we all know, gold is often viewed as a safe-haven trade and performs well in equity market correction. Agreed, the metal is stressed when the dollar is rising, but Gundlach doesn’t see enormous strength in the currency in the Fed policy tightening cycle (read: Trump's First 100 Days: 5 Must See ETF Charts ).

Probably this is why Gundlach sees chances of a rebound in gold in the coming days. Investors should note that SPDRÂ Gold Shares (V:GLD) was down 4.3% in the last one month (as of May 10, 2017) as the equity market is upbeat. But investors may buy the dip if they want to follow Gundlach’s calls.

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Can Active Managers See Bright Days Ahead?

Actively managed funds emerging markets outperform the S&P 500, active is outperforming the S&P 500.” Since the border EM indices are surpassing the S&P 500, chances of outperformance are going higher for active ETFs.

If this is the case, investors can take a look at some red-hot active ETFs like ARK Innovation ETF (KW:ARKK) (up 10.4% in the last one month), First Trust RiverFront Dynamic Europe ETF DWLD (up 5.9% in the last one month).

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Written By: Zacks Investment Research