Why a Fund Trimmed a $3.9 Million Stake in the Billionaire-Managed DoubleLine Income Solutions Despite an 11.7% Yield

On November 13, Dallas-based McGowan Group Asset Management, Inc. disclosed a sale of 319,882 shares of the DoubleLine Income Solutions Fund (NYSE:DSL) (DSL), reducing its position by approximately $3.93 million.

What Happened

According to a filing with the Securities and Exchange Commission dated November 13, McGowan Group Asset Management, Inc. sold 319,882 shares of the DoubleLine Income Solutions Fund (NYSE:DSL) during the third quarter. The sale brought the fund’s position down to 2.91 million shares with a reported market value of $35.69 million at quarter-end.

What Else to Know

As of September 30, DSL represents 4.42% of the fund’s reportable assets under management. The position was previously 4.97% of the fund’s AUM as of the prior quarter.

Top holdings after the filing:

• NYSE:JGH: $50.69 million (7.29% of AUM)
• NYSE:AWF: $41.90 million (6.03% of AUM)
• NYSE:HYT: $35.91 million (5.17% of AUM)
• NYSE:DSL: $35.69 million (5.13% of AUM)
• NYSE:UTF: $34.01 million (4.89% of AUM)

As of Tuesday, shares of DSL were priced at $11.27, down 10% over the past year and well underperforming the S&P 500, which is up about 17% in the same period. The fund's dividend yield, however, is about 11.7%.

Fund Overview

Metric	Value
Revenue (TTM)	$110.73 million
Net Income (TTM)	$108.96 million
Dividend Yield	11.7%
Price (as of Tuesday)	$11.27

Fund Snapshot

• The DoubleLine Income Solutions Fund offers a diversified portfolio of fixed income securities including corporate and sovereign debt, mortgage-backed securities, hybrid REITs, bank loans, and municipal bonds.
• It generates income primarily through interest payments and capital appreciation from a global portfolio of debt instruments, managed by DoubleLine Capital LP.
• It targets institutional and retail investors seeking high current income and diversification through exposure to global fixed income markets.

The DoubleLine Income Solutions Fund is a closed-end fund specializing in global fixed income investments, leveraging the expertise of DoubleLine Capital LP. DoubleLine Income Solutions Fund emphasizes income generation through a broad allocation across debt markets.

Foolish Take

Despite the sale, DoubleLine Income Solutions still offers what many portfolios want right now: a hefty distribution, global credit exposure, and active management under finance billionaire Jeffrey Gundlach. But high income rarely comes free. As of late September, the fund was running with roughly 23% leverage and a heavy tilt toward below-investment-grade credit and emerging markets debt, sectors that can amplify returns but also magnify drawdowns when volatility spikes or liquidity tightens. That structure explains the roughly 11.7% yield, but it also explains why returns have lagged broader equity benchmarks over the past year, even as income stayed elevated.

The trim also fits the broader shape of the portfolio. This manager’s largest holdings skew toward other closed-end funds like JGH, AWF, HYT, and UTF, suggesting the goal isn’t to exit credit but to rebalance exposure across similar income vehicles. Ultimately, with DSL still representing a fair amount of assets, the signal looks more strategic, as opposed to alarmist.

Glossary

Assets Under Management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Closed-end fund: An investment fund with a fixed number of shares that trades on an exchange like a stock.
Diversified portfolio: A mix of different asset types or securities to reduce investment risk.
Fixed income securities: Investments that pay regular interest, such as bonds, loans, or debt instruments.
Corporate debt: Bonds or loans issued by companies to raise capital, repaid with interest.
Sovereign debt: Bonds issued by national governments to finance spending or projects.
Mortgage-backed securities: Investments backed by pools of home mortgages, paying investors principal and interest.
Hybrid REITs: Real Estate Investment Trusts that invest in both property and mortgage assets.
Bank loans: Loans made by banks to companies, often traded as investment products.
Municipal bonds: Bonds issued by local or state governments, typically to fund public projects.
Dividend yield: A financial ratio showing how much a company pays in dividends relative to its share price.
TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BlackRock Corporate High Yield Fund. The Motley Fool has a disclosure policy.