Jackson National to Replace Pimco Total Return With DoubleLine CoreJackson National to Replace Pimco Total Return With DoubleLine Core

By Jennifer Ablan

NEW YORK, June 6 (Reuters) - Jackson National, the largestU.S. provider of variable annuities, said in a filing on Tuesdayit plans to remove Pimco's Total Return Bond investment strategyfrom Jackson National's product line-up and assign management ofthe $3.5 billion in that fund offering to Jeffrey Gundlach'sDoubleLine Capital.

The move would end Jackson National's nearly two decades ofusing Pimco's flagship Total Return investment strategy,although Jackson still offers the JNL/Pimco Income Fund and theJNL/Pimco Real Return Fund. The Jackson National introduced theJNL/Pimco Total Return Bond as a sub-account option in itsvariable annuity product line in 1998. The investment option isto be renamed the JNL/DoubleLine Core Fixed Income.

The $3.5 billion mandate would considerably increase assetsin portfolios run under DoubleLine's core-related fixed-incomestrategies. Core-type assets totaled $12 billion of $105 billionin assets under management at DoubleLine as of March 31.

Pimco and DoubleLine declined to comment. Calls to JacksonNational were not returned.

It remains to be seen how many investors would stay onceJNL/DoubleLine Core Fixed Income - an intermediate-term bondfund that invests in different sectors of the fixed-incomemarkets, including corporate securities, emerging markets debtand MBS - gets up and running.

Legendary bond investor Bill Gross left Pimco in September2014, eight months after second-in-command Mohamed El-Erian quitafter the two clashed over how to run the Newport Beach,California-based Pimco. Gross now runs the $2 billion JanusGlobal Unconstrained Bond Fund.

"Institutional investors tend to be more patient thanretail, but in the nearly three years since the Bill Grossdeparture from Pimco, the Total Return fund’s performancerelative to its Lipper peers has stabilized," said ToddRosenbluth, director of ETF & Mutual Fund Research at CFRA.

"However, fund assets remain significantly lower as the firmhas not been able to win back investor attention. DoubleLine’sfixed income products have performed well under unchangedmanagement over the last five years."

Although much smaller in asset size, the $8.8 billionDoubleLine Core Fixed Income Fund has been growing stronglywhereas its much larger Pimco Total Return counterpart, with$73.8 billion in assets, has only recently shown signs ofstabilization after outflows reduced its size to a quarter ofits all-time high of $293 billion in mid-2003.(Editing by Matthew Lewis)