doubleline monthly commentary · 2019. 11. 30. · 2 monthly ommentary november 2019 monthly...

Monthly Commentary November 30, 2019

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Monthly Commentary November 2019

Monthly Commentary - November 30, 2019

Financial markets were broadly higher in November, with the S&P 500 Index gaining 3.6% during the month and finishing November up 27.6% year-to-date (YTD), on track for its best calendar year performance since 2013. November also marked the end of the third quarter earnings season, with 75% of companies in the S&P 500 exceeding earning per share (EPS) estimates. Companies in the Index reported a 2.2% decline in earnings, marking the third straight quarter of year-over-year (YoY) declines.1 Dovish Central Bank policy has provided a tailwind for risk assets YTD, but the market will look for new catalysts as the Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of Japan (BoJ) have moved to a wait-and-see approach. Optimism surrounding a U.S. and China phase one trade deal has also helped buoy financial markets, even though the deadline for tariffs to increase on December 15 remains a risk.

U.S. manufacturing data during the month remained in contractionary territory with the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) registering 48.3, which was below estimates, as of October month-end. Meanwhile, the Conference Board Leading Economic Index (LEI) printed at 0.3% YoY in November and remains a warning signal for the economy. Not all domestic data was weak, however, as housing data improved markedly in the U.S., with new housing permits reaching their highest level since 2007 and mortgage delinquency rates reaching their lowest level since 1995. Consumer spending bounced back from last month, posting a 0.3% month-over-month (MoM) increase in retail sales.

In Europe, Christine Lagarde officially succeeded Mario Draghi as President of the ECB. Economic data was broadly more positive for the Eurozone during the period, albeit most indicators remain at low levels. The Bank of England (BoE) left interest rates unchanged at its November meeting while awaiting the outcome of the upcoming election, and ultimately Brexit. Third quarter gross domestic product (GDP) growth for the United Kingdom (U.K.) came in below consensus expectations.

November also marked the start of the official impeachment hearings for President Trump in the U.S. House of Representatives. Growing political unrest dominated headlines globally with escalating protests in Chile, Ecuador, Peru, and Colombia. In Hong Kong, where months of protests have been punctuated by violence, local elections were held in November with pro-Democracy candidates winning nearly 60% of the votes. This led the U.S. Congress to pass a bill expressing support for Hong Kong’s protestors, which President Trump signed into law, aggravating China’s leaders and possibly widening the existing rift over trade.

Overview

1 Earnings Insight: Q3 ’19 by the numbers, John Butters, November 21, 2019 (https://insight.factset.com/earnings-insight-q319-by-the-numbers-infographic)

Equities Fixed Income Foreign Exchange Commodities

Source: Bloomberg, DoubleLine. *Indicates returns in U.S. dollars

One-Month Performance of Asset Classes November 1, 2019 - November 30, 2019

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The Bloomberg Barclays U.S. Treasury Index posted a loss of 0.3% in November, reducing the YTD gain to 7.5%.

A strong labor market, expanding service sector, and robust retail sales continue to be the cornerstones supporting U.S. economic growth. Strong nonfarm payroll increases and solid average hourly earnings are drawing more people into the labor force and boosting household income and spending. Consumer sentiment continues to be strong and small business sentiment remains optimistic. On the other hand, the ISM manufacturing survey is falling, industrial production is lower than expected, and trade uncertainty combined with slow growth in Europe and Asia remain risks to U.S. growth. We believe the risk of imminent recession risk has fallen and hold a cautious stance on interest rate risk.

The ups and downs in the U.S. and China trade talks were the biggest driver of market sentiment in November. Despite the belief at the end of October that a phase one deal would be signed shortly, November slipped by with the prospect of a deal becoming murkier. It had been the market's consensus that the December 15 tariff would be off the table as part of the phase one deal. However, as that date approaches, this belief is being challenged and the outcome of trade negotiations is still uncertain.

The benchmark 10-year U.S. Treasury yield moved higher at the beginning of the month based on trade deal optimism and the possibility of tariff roll-backs. The yield move reversed later when uncertainties reemerged, as the two sides struggled to send out consistent signals. The passage of the Hong Kong Human Rights & Democracy bill further complicated the relationship between the U.S. and China.

Yields ended higher across the curve in comparison to October. The intermediate part of the curve (3- to 7-year Treasuries) was the worst performer, with yields rising more than 9 basis points (bps). The yields on Treasury Bills increased approximately 4 bps. Treasury Inflation-Protected Securities (TIPS) breakeven inflation rates moved up across the curve as well, with the 2-year rate moving the most with a 12 bps rise.

Agency Mortgage-Backed Securities

The overall prepayments of conventional Uniform Mortgage-Backed Securities (MBS) fell in November by approximately 18%, slowing from a conditional prepayment rate (CPR) of 20.2 to 16.5 across the entire coupon stack. Lower speeds resulted from a combination of shorter day counts, higher mortgage rates, and lower seasonal turnover during the relevant November refinance window.

During the month, gross issuance of Agency MBS increased by $4 billion to $171 billion and net issuance increased from $14 billion to $41 billion.

The Treasury yield curve shifted upward with 2-, 5-, 10-, and 30-year yields increasing 9 bps, 11 bps, 9 bps, and 3 bps, respectively. The Mortgage Bankers Association (MBA) Refinance Index (Seasonally Adjusted) decreased by 7% in November, falling to the lowest level since July.

Agency MBS total return for the month was 0.08% while excess return, relative to maturity matched Treasuries, was 0.19%, as both measured by the Bloomberg Barclays U.S. MBS Index.

The duration of the Bloomberg Barclays U.S. MBS Index lengthened from 2.78 to 2.96 in November.

U.S. Government Securities

U.S. Treasury Yield Curve

Source: Bloomberg

10/31/2019 11/30/2019 Change

3 Month 1.52% 1.57% 0.05%

6 Month 1.55% 1.60% 0.05%

1 Year 1.49% 1.59% 0.10%

2 Year 1.52% 1.61% 0.09%

3 Year 1.52% 1.61% 0.09%

5 Year 1.52% 1.63% 0.11%

10 Year 1.69% 1.78% 0.09%

30 Year 2.18% 2.21% 0.03%

Agency Mortgage-Backed Securities

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Agency Mortgage-Backed Securities (cont’d)

Source: eMBS, Barclays Capital. FHLMC Commitment Rate Source: Bloomberg

120.00

140.00

160.00

180.00

200.00

220.00

240.00

260.00

280.00

300.00

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Source: Bloomberg. Base = 100 on March 16, 1990. Non-Seasonally Adjusted Source: Bloomberg. MBA has re-benchmarked the Index values as of January 14, 2011. Seasonally Adjusted.

11/22/2019 2,282.2

11/22/2019 267.1

MBA Purchase Index As of November 22, 2019

MBA Refinance Index As of November 22, 2019

Conditional Prepayment Rates (CPR)

2018-2019 December January February March April May June July August September October November

Fannie Mae (FNMA) 7.4 6.9 7.4 9.2 11.2 13.0 12.6 15.9 16.8 18.4 20.2 16.5

Ginnie Mae (GNMA) 9.1 8.6 9.8 11.7 14.3 16.9 17.1 20.9 22.3 22.8 24.4 22

Freddie Mac (FHLMC) 7.2 6.8 7.3 8.9 11.3 13.4 12.6 16.2 17.2 19.1 20.6 16.7

Bloomberg Barclays

U.S. MBS Index 9/30/2019 10/31/2019 11/29/2019 Change

Average Dollar Price 104.22 104.34 104.17 -0.17

Duration 2.73 2.86 3.05 0.19

Bloomberg Barclays

U.S. Index Returns 9/30/2019 10/31/2019 11/29/2019

Aggregate -0.53% 0.30% -0.05%

MBS 0.07% 0.33% 0.08%

Corporate -0.65% 0.61% 0.25%

Treasury -0.85% 0.07% -0.30%

Conditional Prepayment Rates (CPR)

2018-2019 December January February March April May June July August September October November

Fannie Mae (FNMA) 7.4 6.9 7.4 9.2 11.2 13.0 12.6 15.9 16.8 18.4 20.2 16.5

Ginnie Mae (GNMA) 9.1 8.6 9.8 11.7 14.3 16.9 17.1 20.9 22.3 22.8 24.4 22

Freddie Mac (FHLMC) 7.2 6.8 7.3 8.9 11.3 13.4 12.6 16.2 17.2 19.1 20.6 16.7

Bloomberg Barclays

U.S. MBS Index 9/30/2019 10/31/2019 11/29/2019 Change

Average Dollar Price 104.22 104.34 104.17 -0.17

Duration 2.73 2.86 3.05 0.19

Bloomberg Barclays

U.S. Index Returns 9/30/2019 10/31/2019 11/29/2019

Aggregate -0.53% 0.30% -0.05%

MBS 0.07% 0.33% 0.08%

Corporate -0.65% 0.61% 0.25%

Treasury -0.85% 0.07% -0.30%

Duration of Barclays U.S. MBS Bond Index As of November 29, 2019

Freddie Mac Commitment Rate—30 Year As of November 28, 2019

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

3.00

3.50

4.00

4.50

5.00

5.50

Source: Bloomberg, DoubleLine

11/29/2019 3.05


11/28/2019 3.68

Years %

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Non-Agency Residential Mortgage-Backed Securities

Non-Agency Residential Mortgage-Backed Securities (RMBS) performed modestly during the month given the backdrop of elevated voluntary prepayments. Spreads were marginally wider due to strong issuance, with the exception of legacy bonds, which were flat MoM. Voluntary prepayments (and expectations) continue to remain elevated but have leveled off, as mortgage rates hover near their three-month lows. The Fed affirmed its position of maintaining their key policy rate at current levels.

There was approximately $16.8 billion in new issuance priced2 over the month, with non-performing loans (NPLs) and re-performing loans (RPLs) as the largest sector, followed by non-qualifying mortgages (non-QMs). The total outstanding Non-Agency RMBS market has grown to approximately $588 billion3 as new issuance has grown due to increased non-QM volumes.

Home prices increased 2.1% YoY,4 increasing 10 bps from October. Notably, this is the first increase in the growth rate since March 2018. Existing home sales5 increased 1.9% in November, as continuing job creation, higher weekly earnings, and low mortgage rates increase the affordability of housing. The 30-year mortgage rate5 finished the month at 3.68%, down 10 bps from October.

Commercial Mortgage-Backed Securities

Private-label Commercial MBS (CMBS) issuance set a post-crisis record in November with $16.2 billion of deals issued, approximately 17% above 2018 on a YTD basis. Nine conduit deals totaling $8.4 billion, eight single asset single borrower (SASB) deals totaling $4.6 billion, and four Commercial Real Estate Collateralized Loan Obligations (CRE CLOs) totaling $2.5 billion priced during the month. Mindful of the volatility experienced towards the end of 2018, issuers generally made a concerted effort to market as many deals during the month. While spreads for conduit AAA last cash flows (LCFs) were modestly wider in November, they were surprisingly resilient in light of the record-setting month. Credit tiering remains prominent, with non-bank collateral conduit deals pricing 6-8 bps wider.

The RCA Commercial Property Price Index (RCA CPPI) posted a 0.81% increase in October, the highest increase this year, and is now up 6.9% YTD and up 7.5% YoY. The industrial sector again posted one of the highest monthly increases in October at 0.82%, and is up 10.4% YTD and 12.4% YoY. The multifamily sector posted the largest monthly gain at 0.89%, and is up 8.2% YTD and 8.7% YoY, the highest seen since early 2019. Although completions have slowed for multifamily products at the national level, new completions continue to outpace net absorption. Nevertheless, multifamily prices have increased over the past few months after decelerating in the middle of 2018. Secondary market prices increased by 0.77% in October, again outpacing major markets alongside a broader market risk-on sentiment. CRE fundamentals continue to outperform in cities including population growth, job growth, and a lower cost of living. While CRE fundamentals generally remain stable, cautionary signs continue with decelerating performance and muted transaction volume.

CMBS secondary market cash spreads widened in November, a result of both a record-setting new issue calendar and heavy secondary conduit supply. AAA LCFs widened by 4 bps to swaps +92-96, while BBBs widened by 15-20 bps to swaps +265-365. Notwithstanding, supply/demand technicals remain positive for seasoned non-risk retention paper coupled with the roll-down effect and cash flow seasoning. Subordinate, floating-rate SASB securities remained well bid throughout the month as investors continued to source yield down the capital stack. The CMBX Index was tighter in November alongside broader market indices, with AAA 2012-2016 reference indices tightening by an average of 1 bp and BBBs by an average of 18 bps.

Non-Agency Residential Mortgage-Backed Securities

2 Bloomberg 3 J.P. Morgan Research 4 S&P Corelogic Case-Shiller 20-City Home Price Composite 5 National Association of Realtors Existing Home Sale Index 6 Freddie Mac Primary Mortgage Market Survey

Commercial Mortgage-Backed Securities

6



ABS

Asset-Backed Securities (ABS) performed roughly in line with the Bloomberg Barclays U.S. Aggregate Bond Index return of -0.05% for November. Yields on the 2- and 5-year portions of the Treasury curve increased by 8.8 bps and 10.6 bps, respectively, which hindered ABS price performance while heavy new issuance weighed on spread performance.

Gross supply for ABS in November totaled approximately $21 billion, bringing the YTD total up to $245 billion, which is on pace with the comparable 2018 period. Esoteric sectors such as Aircraft ABS, Whole Business Securitizations, and Unsecured Consumer Loans each priced over $1 billion in new deals during the month.

Underlying credit performance for consumer-related ABS sectors is generally better than most news headlines would suggest. While delinquencies and cumulative net loss rates on subprime Autos ABS are elevated, they remain below their 2017 peaks and the most recent vintages (2018 and 2019 originations) are outperforming their 2016 and 2017 cohorts.

Looking ahead to 2020, supply forecasts are calling for approximately $230 to $240 billion in gross ABS issuance for the year. Low financing costs and low levels of unemployment are expected to support growth in most sectors, but investors will continue to be on alert for any deteriorations in credit trends.

Investment Grade Credit

November saw a rally in risk assets with the Bloomberg Barclays U.S. Credit Index tightening by 5 bps to 100 bps, outperforming duration-matched Treasuries by 55 bps. Total return for the month was 0.19%, bringing YTD total return to 13.47%.

The best performing sectors for the month on a total return basis were Supermarkets, Tobacco, Health Insurance, Cable Satellite, and Wirelines. The worst performing sectors on a total return basis were Midstream, Foreign Agency, Foreign Local Governments, Consumer Cyclical Services, and Supranationals.

Lower rated segments outperformed. BBBs posted a total return of 0.33% versus 0.15% for single-As, and a total return of -0.08% for AAs.

Additionally, across the curve, long-duration credit outperformed with a total return of 0.53% versus 0.01% for intermediate-duration and 0.07% for short-duration credits.

U.S. Dollar (USD) Investment Grade (IG) new issuance in November was $102.5 billion in gross supply and $40.6 billion in net supply. The Industrial sector led the way with $67.6 billion of gross issuance and $41.9 billion of net new issuance, driven mainly by the fourth largest deal on record (ABBV $30 billion).

IG fund flows continued to be robust, with $17.2 billion in inflows, bringing YTD inflows to $272.9 billion.

Asset-Backed Securities

Investment Grade Credit

Performance of Select Barclays Indices Last 12 Months

Source: Barclays Live Source: Barclays Live

Total Fixed-Rate Investment Grade Supply As of November 30, 2019

-3.0%

-2.0%

-1.0%

0.0%

1.0%

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3.0%

4.0%

5.0%

0

20

40

60

80

100

120

140

160

180

200

Bil

lio

ns

of

US

Do

llar

s

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Collateralized Loan Obligations

November CLO issuance totaled $9.7 billion across 21 deals, with a monthly issuance slightly below average for the year, and which brought total yearly issuance to $110 billion. This brings us into the lower end of expected issuance for 2019, as issuance was expected to be between $110 billion and $120 billion for the year.

Managers continue to come up with creative ways to work around the stressed arbitrage in new issue deals. During the month, a first time issuer purchased the AAA through the single A at levels inside of market average in order to make the arb work for the equity. With the below-average spread, the weighted average cost of debt was brought down, allowing more residual income to flow through to the equity.

After CLO mezzanine’s reaction to October’s loan market downward price movements, CLO investors saw a buying opportunity to pick up cleaner, higher quality BBBs and BBs. While spreads tightened up and down the CLO capital stack, spreads remain wide of the tights we saw in 2019.

Bank Loans

In November, the bank loan market bounced back smartly from its October sell-off, rallying 0.59%. Risk markets generally benefited from improved sentiment surrounding a possible U.S. trade deal with China, as well as third quarter earnings reports that were not as bad as feared. The weighted average bid price of the S&P/LSTA Leveraged Loan Index rose 17 bps during the month, with 32% of loans trading above par at month-end. The Index is up 6.94% YTD.

The consistent flight-to-quality theme evident throughout the year finally started to break down in November, as B-rated loans rallied 0.86% and outperformed the 0.52% return of BB-rated loans. BB-rated loans are up 8.36% YTD and have significantly outperformed the 6.91% YTD return of B-rated loans. The CCC-rated segment of the market remained weak, declining -0.47%.

The default rate remains stable at low levels, ending the quarter at just 1.63% on a last twelve months (LTM) issuer basis. Corporate earnings growth has slowed, heightening the risk of defaults, but the market expects earnings to rebound somewhat in 2020.

Activity in the primary market spiked in November, driven by a sizable number of refinancing and re-pricing transactions. In particular, BB-rated issuers tapped the market aggressively to reduce their interest spreads and extend maturities. On the demand side, CLO issuers printed $9.7 billion of new CLOs in the month, bringing the YTD total to a very robust $110 billion. Money continued to flow out of loan retail funds as the withdrawal streak hit its one-year anniversary, a period in which $41.8 billion has left the asset class.

With diminished expectations for further Fed interest rate cuts, the outlook for the bank loan market has improved. The market yield is attractive at 6.47%, and many names are still trading at sizable discounts to par, leaving the asset class well positioned going into the end of the year.

Collateralized Loan Obligations

Bank Loans

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5

10

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20

25

30

35

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Last 12 Months Issuance December 2018 to November 2019

$ Billions # of Deals

CLO New Issuance September 2012 to November 2019

$ Billions # of Deals

8



High Yield

High Yield (HY) returns remained positive in November, with the Bloomberg Barclays U.S. High Yield Corporate Index rising 0.33% for the month. Index yield fell 11 bps to 5.59%, while spread tightened 22 bps to 370 bps.

By rating, CCCs remained the laggard in November, losing -1.01% (+4.31% YTD). Single-Bs led, climbing 0.64% (+12.69% YTD), and BBs finished the month with a gain of 0.62% (+14.10% YTD). By sector, the three best performers in November were Aerospace/Defense (+2.17%), Automotive (+1.70%), and Metals and Mining (+1.37%). The worst sectors were Oil Field Services (-2.16%), Cable Satellite (-1.40%), and Retailers (-0.83%).

The par-weighted 12-month default is 2.64% as of November, up 10 bps from the October mark, according to J.P. Morgan. Notably, looking across loans and bonds, the Energy sector accounts for 44% of default volume so far in 2019 with a 12.0% TTM default rate (versus 14.2% in 2016). For reference, current default rate levels compare to 1.83% at the end of 2018 and a long-term average of 3.46 dating back to 1980.

Gross issuance was $37.0 billion in November, according to J.P. Morgan. On a YTD basis, primary activity has increased 43% gross and 18% net, compared to 2018 in which full-year activity was the lightest since 2009 (2018 volume of $187 billion was a 43% decline from 2017). Refinancing remains the primary use of proceeds, representing 69% of activity in November and 68% YTD. Issuance also skews higher quality, as BBs represented 51% of the November volume and 45% YTD. As a reference, BBs composed 20% to 38% of HY issuance in from 2010 to 2018.

Inflows ended in November, as HY experienced a modest outflow of $115 million. This brought YTD inflows to $18.0 billion, according to Lipper, and compares to outflows of $45.1 billion in 2018 and outflows of $20.3 billion in 2017.

Commodities

In November, the broad commodity market declined by -2.68% and -0.14%, as measured by the Bloomberg Commodity Index (BCOM) and S&P Goldman Sachs Commodity Index (GSCI), respectively.

The best performing sector for the month was Energy (+0.90%), with Brent Crude (+2.88%) and West Texas Intermediate (WTI) Crude (+1.76%) rallying, while Natural Gas sold off 16.16%.

The Precious Metals sector was the worst performer, declining -3.51%, as Silver dropped -6.13% and Gold slid -3.24%.

Industrial Metals fell -2.80%, with the worst performer, Nickel, slumping -18.23% and the best performer, Copper, increasing 1.13%.

The Agriculture sector dipped -0.21% in November, with Coffee as the best performer, rallying 13.23%, and Soybeans as the worst performer, declining -5.95%.

Emerging Markets Fixed Income

Emerging Market (EM) sovereign and corporate external bond performance was mixed for November. EM external sovereign debt, represented by the J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified, had a negative performance, which was driven by slightly higher Treasury rates and sell-offs in some countries, such as Ecuador and Lebanon. The positive performance of EM external corporate debt, represented by the J.P. Morgan Corporate Emerging Markets Bond Index (CEMBI) Broad Diversified, was driven by slightly tighter credit spreads and accrued interest. Yields rose 9 bps for 2-year Treasuries and 8 bps for 10-year Treasuries during the month.

The EMBI’s credit spread tightened 4 bps, while the CEMBI’s credit spread tightened 11 bps in November.

The corporate index outperformed the sovereign index over the period. The HY sub-index outperformed the IG sub-index within the corporate index, while the IG sub-index outperformed the HY sub-index within the sovereign index.

Commodities

High Yield

Emerging Markets Fixed Income

9



Performances across all regions were mixed in both the sovereign and corporate indices. Europe was the best performing region in the sovereign index and the Middle East was the best performing region in the corporate index. Latin America was the worst performing region in both the sovereign and corporate indices.

Factors that may affect risk appetite for 2020 include less accommodative developed market central banks, rising developed market yields, an escalation in trade tensions, a slowdown in Chinese and global growth, the protests in Hong Kong, Brexit negotiations, and policy risks due to an increase in populism .

International Sovereign

Global government bonds, as measured by the Financial Times Stock Exchange World Government Bond Index (FTSE WGBI), posted negative returns for November. Negative performance was driven by foreign currency losses against the USD.

USD, as measured by the U.S. Dollar Index (DXY), rose against most of its G-10 peers amid mixed signals that the U.S. and China would strike a compromise on trade, slightly stronger U.S. economic data, and higher Treasury yields. In testimony to Congress, Fed Chairman Jerome Powell indicated that the central bank was unlikely to move interest rates so long as economic data remains broadly the same.

The Euro fell against the USD over the month despite broadly positive economic data across the Eurozone. Christine Lagarde officially succeeded Mario Draghi as ECB president and called for a new policy mix with more fiscal support for the economy.8

The British Pound (GBP) was roughly flat versus the USD over the month, but outperformed most G-10 currencies. The BoE left interest rates unchanged at its November meeting while awaiting the outcome of Brexit and the upcoming election. The economy also averted a technical recession, as third quarter GDP growth was positive and rebounded from negative GDP growth in the second quarter.

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

JP Morgan Emerging Markets Bond Index Performance December 31, 2018 to November 30, 2019

Source: JP Morgan

Emerging Markets Fixed Income (cont’d)

International Sovereign

7 Testimony: The Economic Outlook. Chair Jerome H. Powell November 13, 2019. (https://www.federalreserve.gov/newsevents/testimony/powell20191113a.htm ) 8 The Future of the Euro Area Economy. Christine Lagarde November 22, 2019. (https://www.ecb.europa.eu/press/key/date/2019/html/ecb.sp191122~0c1f115db0.en.html)

10



Infrastructure assets slightly underperformed the Bloomberg Barclays U.S. Aggregate Bond and Bloomberg Barclays U.S. Corporate Index in November. Despite some intermittent volatility, November was generally a risk-on month in the markets, which caused counter-cyclical sectors such as Power and Utilities to underperform.

Primary market activity was mostly centered on Aviation, Railcar, and Data Center deals, which were met with adequate investor demand. Spread performance for these sectors YTD has lagged the robust tightening seen in conventional, IG corporate bonds. The Railcar and Intermodal Shipping sectors are viewed as having a heightened sensitivity to the U.S.-China trade conflict, which has prevented spreads from any sustained tightening.

Some of the most exciting opportunities for the Infrastructure investing space right now involve financing for data centers in securitized form. These transactions extend secured debt financing to data center operators in major U.S. markets, and the lessees of these facilities are often large cap, IG-rated companies. The solid credit profile coupled with expectations for continued growth in the data storage business are key drivers of performance for this sector.

U.S. Equities

Confident in the progress made by American and Chinese negotiators towards “trade peace” and flush with Fed assistance – from both the late October quarter-point cut in the Fed Funds Rate and support of the wholesale funding markets – the U.S. equity markets marched steadily higher throughout November. The markets seemed hopeful for a 2020 reacceleration in earnings and looked past both weak third quarter earnings and the expectation that fourth quarter earnings would fall below 2018 levels.

The S&P 500 closed at an all-time record high no fewer than 11 times during November’s 20 trading days. The Index closed with a total return of 3.63% for the month. Growth stocks outperformed value stocks, with the Russell 1000 Growth Index gaining 4.44% while the Russell 1000 Value Index returned 3.09%. Implied volatility remained subdued throughout the month, with the CBOE Volatility Index (VIX) remaining below 15 for the entire month.

The third quarter earnings season came to a close in November. According to FactSet, S&P 500 companies reported net income during the quarter 2.2% lower YoY, while revenues grew by 3.1%. Exiting November, consensus estimates were forecasting fourth quarter earnings would also shrink YoY (-1.4%) on lackluster revenue growth of +2.5%. The same consensus estimates forecast an acceleration in revenue growth in the full calendar year 2020 to 5.5%, contributing to net income 9.9% higher than 2019 .

Global Equities

Global equities continued to rally in November as the global economy appeared to stabilize, with the Morgan Stanley Capital International All-Country World Index (MSCI ACWI) up 2.49%. U.S. equities led the strong performance with the S&P 500 and NASDAQ Composite up 3.63% and 4.65%, respectively, during the month. The Russell 2000 Index and the Dow Jones Industrial Average (DJIA) rose 4.10% and 4.11%, respectively.

In Europe, equities performed in line with the broader market as the Eurostoxx 50 was up 2.81% in November. Core European equities had similar results, with the DAX returning 2.87% and CAC returning 3.13%. In the periphery, equities had mixed results with the FTSEMIB returning 2.68% and the IBEX returning 1.20%. U.K. equities underperformed its European peers with the FTSE 100 only up 1.82%.

Asian equities saw mixed performances as well. Japanese equities, as measured by the Nikkei, were up 1.60%. Chinese equities, as measured by the Shanghai Composite, and Hong Kong equities, as measured by the Hang Seng Index, underperformed quite a bit and returned -1.94% and -1.98%, respectively. Korean equities, as measured by KOSPI, were up 0.22%.

EM equities underperformed the broader market, with the MSCI EM Index returning -0.13% in November. Latin American equities were hit by rising social unrest, as Chilean and Colombian equities, as measured by the MSCI Chile Index and MSCI Colombia Index, were down -11.5% and -5.19%, respectively. Brazil’s Ibovespa was up 0.95%, and Taiwanese equities, as measured by the TAIEX index, returned 1.16%. Russian equities, as measured by the MSCI Russia Index, were down -0.68%, and Indian equities, as measured by the MSCI India Index, were up 0.57%.

U.S. Equities

Infrastructure

Global Equities

11 Monthly Commentary - November 30, 2019

AUD - Australian Dollar

ADP Research Institute – ADP generates data-driven discoveries about the world of work and derives economic indicators from these discoveries. Its two primary areas of focus are Labor Market trends, and issues related to People + Performance at work.

Banks Loans - Represented by the S&P/LSTA Leveraged Loan Index (the Index) is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market based upon market weightings, spreads and interest payments.

Bloomberg Agriculture Subindex - Formerly known as Dow Jones-UBS Agriculture Subindex (DJUBSAG), the index is a commodity group subindex of the Bloomberg CI. It is composed of futures contracts on coffee, corn, cotton, soybeans, soybean oil, soybean meal, sugar and wheat. It reflects the return of underlying commodity futures price movements only and is quoted in USD.

Basis Point - A basis point (bps) equals 0.01%.

Bloomberg Barclays U.S. Aggregate Bond Index - An index that represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.

Bloomberg Barclays U.S. Aggregate Credit Average OAS Index - The Option-Adjusted Spread calculated on the Bloomberg Barclays U.S. Aggregate Bond Index.

Bloomberg Barclays Asset-Backed Securities (ABS) Index - The ABS component of the U.S. Aggregate Index. It includes securities whose value and income payments are derived from and collateralized (‘or backed”) by a specified pool of underlying assets including credit cards, auto loans, etc.

Bloomberg Barclays U.S. Corporate Index - An index that represents the total return measure of the corporates portion of the Barclays U.S. Aggregate Index.

Bloomberg Barclays U.S. Credit Index – The U.S. Credit component of the U.S. Government/Credit Index. This index consists of publically-issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity, and quality requirements. To qualify, bonds must be SEC-registered. The U.S. Credit Index is the same as the former U.S. Corporate Investment Grade Index.

Bloomberg Barclays U.S. MBS Index - An index that measures the performance of investment grade fixed-rate mortgage-backed pass-through securities of the Government-Sponsored Enterprises (GSEs): Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).

Bloomberg Barclays U.S. High Yield Corporate Index - An index that covers the universe of fixed rate, non-investment grade debt. Eurobonds and debt issuer from countries designated as emerging markets (e.g. Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeros, step-up coupon structures, 144-As and pay-in-kind (PIK, as of October 1, 2009) are also included.

Bloomberg Barclays U.S. Treasury Total Return Unhedged USD Index - Measures U.S. dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. Treasury bills are excluded by the maturity constraint, but are part of a separate Short Treasury Index.

Bloomberg Barclays U.S. Treasury Index - The Index is the U.S. Treasury component of the U.S. Government Index. Public obligations of the U.S. Treasury with a remaining maturity of one year or more.

Bloomberg Commodity Index (BCOM) - An index calculated on an excess return basis that reflects commodity futures price movements. The index rebalances annually weighted 2/3 by trading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification. Roll period typically occurs from 6th-10th business day based on the roll schedule.

Bid Wanted In Competition (BWIC) - A situation where an institutional investorsubmits its bond bid list to various securities dealers. Dealers are then allowed to make bids on the listed securities. The dealers with the highest bids are subsequently contacted.

Brent - Brent Crude Oil Front Month Futures Contract

CBOE Volatility Index (VIX) - A popular measure of the stock market’s expectation of volatility implied by S&P 500 Index options, calculated and published by the Chicago Board Options Exchange (CBOE).

CMBX Index - The CMBX is an index, or more accurately a series of indices, designed to reflect the creditworthiness of commercial mortgage-backed securities (CMBS). Conference Board Leading Economic Index (LEI) - Phenomena, such as the unemployment and new construction rates, used by The Conference Board to predict the financial condition of a particular industry or the economy in general.

Conference Board Consumer Confidence Index (CCI) - Measures how optimistic or pessimistic consumers are with respect to the economy in the near future. The Index is based on the concept that if consumers are optimistic, they tend to purchase more goods and services. This increase in spending inevitably stimulates the whole economy.

Conference Board Measure of CEO Confidence - A survey of approximately 100 CEOs in a wide variety of industries that details Chief Executive’s attitudes and expectations regarding the overall state of the economy as well as their own industry.

Consumer Price Index (CPI) - A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.

Copper - COMEX Copper Front Month Futures Contract

Credit Default Swap Index (CDX) - Formerly the Dow Jones CDX, this is a financial instrument made up of credit securities that have been issued by North American or emerging markets companies. The CDX is itself a tradable security – a credit market derivative.

Dot Plot - A simple statistical chart that consists of data points plotted as dots on a graph with x- and y-axes. Dot plots are well known as the method that the U.S. Federal Reserve (Fed) uses to convey its benchmark Federal Funds interest rate outlook at certain Federal Open Market Committee (FOMC) meetings.

Dow Jones Industrial Average (DJIA) - An index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange (NYSE) and the NASDAQ.

EM Sovereign Debt is represented by Bloomberg Barclays EM Sovereign TR Index—The Bloomberg Barclays Emerging Markets USD Sovereign Bond Index tracks fixed and floating-rate US dollar-denominated debt issued by EM governments. Country eligibility and classification as Emerging Markets is rules-based and reviewed annually using World Bank income group and International Monetary Fund (IMF) country classifications.

Emerging Markets is represented by the MSCI EM (Emerging Markets) Index is a free-float weighted equity index that captures large and mid cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

EUR - Euro

EUR/USD - The Currency Pair EUR/USD is the shortened term for the euro and U.S. dollar pair or cross for the currencies of the European Union (EU) and the United States (USD). The currency pair indicates how many U.S. dollars (the quote currency) are needed to purchase one euro (the base currency).

Eurostoxx 50 Index - A stock index of Eurozone stocks designed by STOXX, an index provider owned by Deutsche Borse Group and SIX group, with the goal of providing a blue-chip representation of Supersector leaders in the Eurozone.

FactSet - Provides computer-based financial data and analysis for financial professionals, including investment managers, hedge funds and investment bankers. It consolidates data on global markets, public and private companies, and equity and fixed-income portfolios.

Federal Family Education Loan Program (FFELP) - A system of private student loans which were subsidized and guaranteed by the United States federal government.

Definitions of Terms Used Definitions of Terms Used


Financial Times Stock Exchange Milano Italia Borsa (FTSE MIB) - The benchmark stock market index for the Borsa Italiana, the Italian national stock exchange, which superseded the MIB-30 in September 2004. The index consists of the 40 most-traded stock classes on the exchange.

Financial Times Stock Exchange 100 (FTSE 100) - A capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock Exchange.

The Financial Times Stock Exchange World Government Bond Index (FTSE WGBI- Measures the performance of fixed-rate, local currency, investment-grade sovereign bonds. The WGBI is a widely used benchmark that currently includes sovereign debt from over 20 countries, denominated in a variety of currencies, and has more than 30 years of history available. The WGBI provides a broad benchmark for the global sovereign fixed income market. Sub-indexes are available in any combination of currency, maturity, or rating.

G-10 (Group of 10) - The G10 consists of eleven industrialized nations that meet on an annual basis or more frequently, as necessary, to consult each other, debate and cooperate on international financial matters. The member countries are: Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom and the United States.

FTSEMIB - The benchmark stock market index for the Borsa Italiana, the Italian national stock exchange, which superseded the MIB-30 in September 2004. The index consists of the 40 most-traded stock classes on the exchange.

GBP - British Pound

Gilt - Bonds issued by the U.K., India, and other Commonwealth countries.

Gold - COMEX Gold Front Month Futures Contract

Hang Seng Index - A free-float capitalization-weighted index of a selection of companies from the Stock Exchange of Hong Kong. The components of the index are divided into four subindices: Commerce and Industry, Finance, Utilities, and Properties.

Ibovespa Index - A gross return index weighted by traded volume and comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The IBOVESPA Index has been divided 10 times by a factor of 10 since January 1, 1985.

IHS Markit Eurozone Manufacturing Purchasing Managers’ Index - A measure of the performance of the manufacturing sector derived from a survey of 3,000 manufacturing firms and including national data for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland, and Greece. The index is based on five individual indexes: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stock of Items Purchased (10%), with the Delivery Times index inverted to move in a comparable direction. A reading of above 50 indicates an expansion of the sector, while a reading below 50 represents a contraction and 50 indicates no change.

The IHS Markit/CIPS UK Manufacturing PMI® - Based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 600 industrial companies. It is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers' Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times Index inverted so that it moves in a comparable direction.

Indice Bursatil Espanol (IBEX) - The official index of the Spanish Continuous Market. The index is comprised of the 35 most liquid stocks traded on the Continuous market. It is calculated, supervised and published by the Sociedad de Bolsas.

Institute for Supply Management (ISM) Purchasing Managers Index (PMI) - An indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

ISM Non-Manufacturing Index (ISM NMI) - An index made up of data from 400 non-manufacturing firms collected by the Institute of Supply Management (ISM).

ISM New Orders Index - The Manufacturing ISM Report On Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers Inventories, Employment, and Prices), this report shows the percentage reporting each response, the net difference between

the number of responses in the positive economic direction and the negative economic direction and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). The resulting single index number is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are supplied by the U.S. Department of Commerce and are subject annually to relatively minor changes when conditions warrant them.

JP Morgan Corporate Emerging Markets Bond Broad Diversified Index (CEMBI) -This index is a market capitalization weighted index consisting of U.S.-denominated Emerging Market corporate bonds. It is a liquid global corporate benchmark representing Asia, Latin America, Europe and the Middle East/Africa.

JP Morgan Government Bond Emerging Markets Broad Diversified Index (GBI EM) - This index is the first comprehensive, global local Emerging Markets index, and consists of regularly traded, liquid fixed-rate, domestic currency government bonds to which international investors can gain exposure.

JP Morgan Emerging Markets Bond Global Diversified Index (EMBI) - This index is uniquely-weighted version of the EMBI Global. It limits the weights of those index countries with larger debt stocks by only including specified portions of these countries’ eligible current face amounts of debt outstanding. The countries covered in the EMBI Global Diversified are identical to those covered by EMBI Global.

JPY - Japanese Yen

Last Cash Flow (LCF) - The last revenue stream paid to a bond over a given period.

Leveraged Commentary & Data (LCD) - A unit of S&P Global Market Intelligence, LCD provides in-depth coverage of the leveraged loan market through real-time news, analysis, commentary, and proprietary loan data.

Major Markets - Major markets are defined by Real Capital Analytics as Boston, Chicago, Washington, D.C., Los Angeles, New York City and San Francisco. All markets outside of the Major Markets are Non-Major Markets.

Markit CMBX Index - A synthetic tradable index referencing a basket of 25 commercial mortgage-backed securities.

Morgan Stanley Capital International All Country World Index (MSCI ACWI) - A market-capitalization-weighted index designed to provide a broad measure of stock performance throughout the world, including both developed and emerging markets.

Mortgage Bankers Association (MBA) Purchase Index - An index that includes all mortgage applications for purchases of single-family homes. It covers the entire market, both conventional and government loans and all products.

Mortgage Bankers Association (MBA) Refinance Index - An index that covers all mortgage applications to refinance an existing mortgage. It includes conventional and government refinances. SA indicates seasonally adjusted and NSA indicates non-seasonally adjusted.

MSCI Emerging Markets (MSCI EM) - An index that covers 24 Emerging Market countries and is designed to capture the large and mid-cap representation across those countries.

MSCI Russia Index - A free-float capitalization-weighted index used to track the equity market performance of Russian securities on the MICEX Stock Exchange.

NASDAQ Composite - A stock market index of the common stocks and similar securities (e.g. ADRs, tracking stocks, limited partnership interests) listed on the NASDAQ stock market with over 3,000 components. This index is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies. Since both U.S. and non-U.S. companies are listed on the NASDAQ stock market, the index is not exclusively a U.S. index.

NASDAQ 100 Index - A basket of the 100 largest, most actively traded U.S companies listed on the NASDAQ stock exchange.

Definitions of Terms Used Definitions of Terms Used (cont’d)


NFIB Small Business Optimism Index - The small business optimism index is compiled from a survey that is conducted each month by the National Federation of Independent Business (NFIB) of its members. The index is a composite of 10 seasonally adjusted components based on the following questions: plans to increase employment, plans to make capital outlays, plans to increase inventories, expect economy to improve, expect real sales higher, current inventory, current job openings, expected credit conditions, now a good time to expand, and earnings trend.

Nikkei 225 Index - A price-weighted index comprised of Japan's top 225 blue-chip companies on the Tokyo Stock Exchange. The Nikkei is equivalent to the Dow Jones Industrial Average Index in the U.S.

Personal Consumption Expenditures (PCE) Core Price Index - Measures price changes in consumer goods and services. Expenditures included in the index are actual U.S. household expenditures. Data that pertains to services, durablesand non-durables are measured by the index.

Qualified Mortgage (QM) - A qualified mortgage is a mortgage that meets certain requirements for lender protection and secondary market trading under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

RCA Commercial Property Price Index - The Moody's/RCA Commercial Property Price Index (CPPI) describes various non-residential property types for the U.S. (10 monthly series from 2000). The Moody's/RCA Commercial Property Price Index is a periodic same-property round-trip investment price change index of the U.S. commercial investment property market. The dataset contains 20 monthly indicators.

Russell 1000 Growth Index - An index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 1000 Value Index - An index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values.

Russell 2000 Index - A subset of the Russell 3000 Index representing approximately 10% of the total market capitalization and measuring the performance of the small-cap segment of the U.S. equity universe.

S&P CoreLogic Case-Shiller National Home Price Index - An index that tracks the value of single-family housing within the United States. The index is a composite of single-family home price indices for the nine U.S. Census divisions.

S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index - Seeks to measures the value of residential real estate in 20 major U.S. metropolitan areas: Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa and Washington, D.C.

S&P/LSTA Leveraged Loan Index - An index designed to track the market-weighted performance of the largest institutional leveraged loans based on the market weightings, spreads and interest payments.

S&P Goldman Sachs Commodity Index (GSCI) - Standard & Poor’s Goldman Sachs Commodity Index, or GSCI, is a composite index of commodity sector returns which represents a broadly diversified, unleveraged, long-only position in commodity futures.

S&P 500 Index - Standard & Poor’s U.S. 500 Index, a capitalized-weighted index of 500 stocks.

S&P Global Market Intelligence - A provider of multi-asset class and real-time data, research, news and analytics to institutional investors, investment and commercial banks, investment advisors and wealth managers, corporations, and universities.

Shanghai Composite Index - A capitalization-weighted index that tracks the daily performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100.

Spread - The difference between yields on differing debt instruments, calculated by deducting the yield of one instrument from another. The higher the yield spread, the greater the difference between the yields offered by each instrument. The spread can be measured between debt instruments of differing maturities, credit ratings and risk.

TAIEX Index - A stock market index for the companies traded on the Taiwan Stock Exchange. TAIEX covers all of the listed stocks excluding preferred stocks, full-delivery stocks and newly listed stocks, which are listed for less than one calendar month.

Trade Reporting and Compliance Engine (TRACE) - The Trade Reporting and Compliance Engine is the FINRA-developed vehicle that facilitates the mandatory reporting of over-the-counter secondary market transactions in eligible fixed income securities.

U-3 Unemployment Rate - The U.S. Bureau of Labor Statistics U-3 unemployment rate is the officially recognized rate of unemployment, measuring the number of unemployed people as a percentage of the labor force.

U.S. Corp IG - The Bloomberg Barclays U.S. Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by U.S. and non-U.S. industrial, utility and financial issuers.

U.S. Corp HY - The Bloomberg Barclays U.S. Corporate High Yield Bond Index measures the USD-denominated, high yield, fixed-rate corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch and S&P is Ba1/BB+/BB+ or below. Bonds from issuers with an emerging markets country of risk, based on Barclays EM country definition, are excluded.

U.S. Dollar Index (DXY) - A weighted geometric mean of the United States dollar's value relative to a basket of 6 major foreign currencies, including the Euro, Japanese yen, Pound sterling, Canadian dollar, Swedish krona and Swiss franc.

U.S. Treasuries (UST) - Commonly used for references to the Treasury debt that the U.S. issues.

University of Michigan Consumer Sentiment Index - The Surveys of Consumers is a rotating panel survey based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by telephone. The minimum monthly change required for significance at the 95-percent level in the Sentiment Index is 4.8 points; for Current and Expectations Index the minimum is 6 points.

USD/JPY - The Currency Pair USD/JPY is the shortened term for the yen and U.S. dollar pair or cross for the currencies of Japan (JPY) and the United States (USD). The currency pair indicates how many Japanese yen (the quote currency) are needed to purchase one U.S. dollar (the base currency).

Weighted Average Cost of Capital (WACC) - The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All sources of capital, including common stock, preferred stock, bonds, and any other long-term debt, are included in a WACC calculation.

WAL (Weighted Average Life) - The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding.

World Interest Rate Probabilities WIRP (WIRP) - Allows you to analyze the probabilities of various interest rate level outcomes as implied by the futures, options, and OIS markets, so you can quantify to what extent the markets are “pricing in” future central bank interest rate changes.

WTI - West Text Intermediate Crude Oil Front Month Futures Contract

Z-Score - A numerical measurement used in statistics of a value’s relationship to the mean (average) of a group of values, measured in terms of standard deviations from the mean. If a Z-score is 0, it indicates that the data point’s score is identical to the mean score. A Z-score of 1.0 would indicate a value that is one standard deviation from the mean. Z-scores may be positive or negative, with a positive value indicating the score is above the mean and a negative score indicating it is below the mean.

An investment cannot be made directly in an index.

Definitions of Terms Used Definitions of Terms Used (cont’d)


Important Information Regarding This Material

Issue selection processes and tools illustrated throughout this presentation

are samples and may be modified periodically. Such tools are not the only

tools used by the investment teams, are extremely sophisticated, may not

always produce the intended results and are not intended for use by non-

professionals.

DoubleLine has no obligation to provide revised assessments in the event of

changed circumstances. While we have gathered this information from

sources believed to be reliable, DoubleLine cannot guarantee the accuracy of

the information provided. Securities discussed are not recommendations and

are presented as examples of issue selection or portfolio management

processes. They have been picked for comparison or illustration purposes

only. No security presented within is either offered for sale or purchase.

DoubleLine reserves the right to change its investment perspective and

outlook without notice as market conditions dictate or as additional

information becomes available. This material may include statements that

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Forward-looking statements include, among other things, projections,

estimates, and information about possible or future results related to a

client’s account, or market or regulatory developments.

Important Information Regarding Risk Factors

Investment strategies may not achieve the desired results due to

implementation lag, other timing factors, portfolio management decision-

making, economic or market conditions or other unanticipated factors. The

views and forecasts expressed in this material are as of the date indicated,

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investment. All investments involve risks. Please request a copy of

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In preparing the client reports (and in managing the portfolios), DoubleLine

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DoubleLine seeks to maximize investment results consistent with our

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© 2019 DoubleLine Capital LP


For Investors in Chile

If any products are offered within Chile, they will be offered and sold only

pursuant to General Rule 336 of the SVS, an exemption to the registration

requirements, or in circumstances which do not constitute a public offer of

securities in Chile within the meaning of Article 4 of the Chilean Law No.

18,045 on Securities Market.

This communication is addressed only to “Qualified Investors” (as defined in

SVS General Rule No. 216).

Si algunos valores son ofrecidos dentro de Chile, serán ofrecidos y colocados

sólo de acuerdo a la Norma de Carácter General 336 de la SVS, una excepción

a la obligación de registro, o en circunstancias que no constituyan una oferta

pública de valores en Chile según lo definido por el Artículo 4 de la Ley 18.045

de Mercado de Valores de Chile.

Esta comunicación está dirigida a “Inversionistas Calificados” (según se define

en la Norma de Carácter General N° 216 de la SVS).

For Investors in Peru

All content in this document is for information or general use only. The

information contained in this document is referential and may not be

construed as an offer, invitation or recommendation, nor should be taken as a

basis to take (or stop taking) any decision.

This is neither an offer or an invitation to offer nor authorizes such sales or

invitations in places where such offers or invitations are contrary to the

corresponding applicable law.

This communication is not intended for any person who is not qualified as an

institutional investor, in accordance with provisions set forth in SMV

Resolution Nº 021-2013-SMV-01, and as subsequently amended. No legal,

financial, tax or any other kind of advice is hereby being provided.

Todo lo contenido en este documento es sólo para fines informativos o de uso

general. La información contenida en este documento es referencial y no

puede interpretarse como una oferta, invitación o recomendación, ni debe

considerarse como fundamento para tomar (o dejar de tomar) alguna

decisión.

La presente no constituye una oferta ni una invitación a ofertar ni autoriza

tales ventas o invitaciones en los lugares donde tales ofertas o invitaciones

sean contrarias a las respectivas leyes aplicables.

Esta comunicación no está dirigida a ninguna persona que no califique como

un inversionista institucional, de conformidad con lo dispuesto en la

Resolución SMV Nº 021-2013-SMV-01, así como pueda ser modificada en el

futuro. Por medio de la presente comunicación no se le está proveyendo de

consejo legal, financiero, tributario o de cualquier otro tipo.

For Investors in Latin America and the Middle East

This material has not been registered with, or approved or passed on in any

way, by any regulatory body or authority in any jurisdiction. This material is

for the information of prospective investors only and nothing in this material

is intended to endorse or recommend a particular course of action. By

receiving this material, the person or entity to whom it has been issued

understands, acknowledges and agrees that neither this material nor the

contents therein shall be deemed as an offer to sell or a solicitation of an offer

to buy, or a recommendation of any security or any other product, strategy or

service by DoubleLine or any other third party.

For Investors in Japan (Discretionary Investment Manager (DIM) & Non-

Discretionary Investment Manager (Non-DIM)

DoubleLine Investment Management Asia Ltd. (“DoubleLine Asia”) is

registered with the Kanto Local Finance Bureau as an Investment Advisory and

Agency (“IAA”) operator in Japan (Registration No. 2986). However,

DoubleLine Asia only conducts the agency business under its IAA registration.

Under its agency business, DoubleLine Asia is authorized to intermediate in

the execution of investment advisory and investment management contracts

between its affiliates which are registered investment managers outside of

Japan (“Foreign Investment Managers”) and discretionary investment

managers and trust banks conducting the investment management business

(together the “Japan DIMs”) registered in Japan.

DoubleLine Asia is not permitted to market or solicit any securities or other

investment products, nor is it able to provide any direct investment advisory

or investment management services in Japan or elsewhere.

While discussions with Japan DIMs may involve its agency business of

intermediating investment advisory and investment management

arrangements, all discussions with persons other than Japan DIMs are

necessarily limited to general information about DoubleLine Asia and its

affiliates and nothing herein should be read to suggest a solicitation of

products or services inconsistent with such regulatory status.

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