• Jeffrey Gundlach recommends a defensive allocation of 30% equities, 30% bonds, 20% real assets, and 20% dry powder, aiming to reduce exposure to expensive, AI-heavy stock indexes.
  • The bond sleeve splits between a conservative total-return strategy and local-currency emerging-market debt, while real assets comprise gold and a commodity strategy.
  • His “dry powder” includes income-generating funds with market and credit risk, not simply cash, and the allocation reflects concerns about persistent inflation and government borrowing.

DoubleLine Capital CEO Jeffrey Gundlach has laid out a defensive portfolio allocation that cuts equity exposure and emphasizes real assets and income-generating reserves, as investors grapple with elevated stock valuations and persistent inflation. The recommendation—30% equities, 30% bonds, 20% commodities, and 20% dry powder—was detailed in recent interviews and reports, though it was not a new announcement made today.

The equity allocation employs an equal-weighted Fortune 500 approach, a shift from the market-cap-weighted indexes that have been dominated by a handful of technology giants. Gundlach told The Julia La Roche Podcast that he wanted to move away from the “epicenter” of the AI trade, not exit stocks entirely or bet against the market. The change came in September, when he reduced his recommended equity weighting from 40% to 30%. However, an equal-weighted portfolio does not eliminate AI exposure; MarketWatch noted that AI-linked businesses remain among the holdings of DoubleLine’s corresponding ETF.

The fixed-income sleeve is split evenly between a relatively conservative total-return bond strategy and local-currency emerging-market debt. Gundlach expects a weaker dollar to support the latter, though it carries higher currency and credit risk. For real assets, he recommends 10% gold and 10% in the DoubleLine Commodity Strategy ETF (ticker DCMT), a hedge against inflation and dollar depreciation.

The “dry powder” portion—10% in the DoubleLine Commercial Real Estate Debt ETF (DCRE) and 10% in a DoubleLine flexible-income fund—is designed to earn income while awaiting opportunities. But these are investment funds with market and credit risk, not bank cash or Treasury bills, and should not be read as a capital guarantee.

The allocation is a recommendation, not an independently verified disclosure of Gundlach’s entire personal portfolio, and several suggested vehicles are managed by his own firm—a relevant commercial consideration.

Gundlach’s views come as the Federal Reserve left rates unchanged at its October meeting, following a quarter-point increase in September. He had argued that September’s move should have been half a percentage point. Market-implied odds of a December increase stood at about 85% at the time of publication, according to CNBC, reflecting expectations that inflation may remain stubbornly high.

His preference for selected bonds over long-maturity Treasuries stems from concerns about sustained government borrowing. October reporting indicated he would want roughly 6% or more before buying long-dated Treasuries, a valuation threshold rather than a forecast. DoubleLine deputy CIO Jeff Sherman noted on October 23 that most firm portfolios remained significantly underweight long-dated U.S. Treasuries due to government borrowing and weaker overseas demand.

At DoubleLine, which reported $96 billion in assets under management and 259 employees as of December 31, 2025, Gundlach remains involved in asset allocation and firm leadership. Morningstar (MORN)’s September 29 assessment put assets at approximately $95 billion, below the 2019 peak, and noted succession planning and an expanding group of employee owners that has diluted his still-significant ownership stake.

The strategy offers investors a way to reduce dependence on a narrow group of large stocks, but the counterargument is visible in the reporting: an equal-weighted portfolio is not AI-free, and moving away from market leaders could sacrifice gains if those companies continue outperforming. Income-oriented investors should note that the bond and “dry powder” components include emerging-market currency exposure and real-estate debt—not merely low-risk cash holdings.

Gundlach’s wider concern is that an eventual slowdown in AI-related capital spending could weaken the economy. October reporting attributed to him a possible recession within a couple of years following such a reversal, a scenario that remains his forecast, not an established outcome.

The recommendation has evolved over months. In May, Gundlach advocated 20% cash and 20% hard assets. By September, the emphasis shifted toward lower equity exposure, equal weighting, and income-producing substitutes for literal cash. Relative to a conventional 60/40 portfolio, the framework halves the equity weighting and explicitly adds real assets and an opportunity reserve, based on the premise that stocks and long-duration bonds may not provide sufficient diversification when inflation and fiscal pressures dominate.

Gundlach’s most consequential prediction is that the next recession could bring larger deficits, a weaker dollar, and higher—not lower—long-term interest rates. That explains why his recommendation combines bonds with gold, commodities, and deployable reserves rather than relying on long Treasuries alone. It is a coherent investment thesis, but should be distinguished from a consensus forecast or a universally suitable portfolio.