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RiverNorth/DoubleLine Strategic Opportunity Fund
The RiverNorth/DoubleLine Strategic Opportunity Fund launched in 2011 as a collaboration between two boutique investment firms with distinct fixed-income...
RiverNorth/DoubleLine Strategic Opportunity Fund
The RiverNorth/DoubleLine Strategic Opportunity Fund launched in 2011 as a collaboration between two boutique investment firms with distinct fixed-income expertise. RiverNorth Capital, a specialist in closed-end fund arbitrage and tactical allocation, joined forces with DoubleLine Capital, the Los Angeles-based firm founded by Jeffrey Gundlach in 2009 that rose to prominence managing mortgage-backed securities. The fund sits at the intersection of a trading operation and an allocator shop, using a dual structure where RiverNorth handles opportunistic positioning across other closed-end funds while DoubleLine directly manages part of the underlying capital. The strategy divides its portfolio across two main sleeves. The first is a tactical allocation to discounted closed-end funds, primarily in fixed-income sectors, where RiverNorth attempts to capture mean reversion in trading spreads. The second sleeve involves direct investments in DoubleLine-managed vehicles, historically including the DoubleLine Total Return Bond Fund, DoubleLine Flexible Income Fund, and DoubleLine Floating Rate Fund, giving the vehicle direct exposure to agency and non-agency mortgage-backed securities, collateralized loan obligations, and leveraged loans. The geographic focus is almost entirely US domestic credit markets. The fund operates as a publicly traded closed-end fund, not a private partnership, which creates structural tensions: the vehicle trades on an exchange at a premium or discount to its net asset value, adding a third layer of potential mispricing beyond the underlying closed-end fund discounts RiverNorth already targets. This nested-discount structure is unusual in the fund-of-funds landscape and drove intensive allocator interest during the 2020 volatility spike, when closed-end fund discounts widened dramatically before contracting through 2021. The fund's defining structural choice is its perpetual capital base, a feature borrowed from the closed-end fund world that gives the managers a mandate to deploy patiently in dislocated credit markets without redemption pressures. This contrasts with open-end mutual funds and private drawdown vehicles, both of which face different liquidity constraints. The governance sits inside a registered investment company structure, regulated under the Investment Company Act of 1940, with a board of directors overseeing the sub-advisory relationship between the two firms.
General information
Firm type
Fund of Funds
Year founded
2011
AUM
Undisclosed
Location
Region
North America
Country
United States
City
West Palm Beach
Corporate office
West Palm Beach, FL, United States
Principals
Brian Schmucker
President
Jeffrey Gundlach
Sub-Adviser (DoubleLine Capital CEO/CIO)
Sector focus
Frequently asked questions
How does the sub-advisory structure between RiverNorth and DoubleLine work?
RiverNorth Capital Management acts as investment adviser, managing tactical allocations to other closed-end funds. DoubleLine Capital operates as sub-adviser, directly managing a portion of the fund's assets in proprietary DoubleLine strategies, primarily across mortgage-backed securities, floating-rate bank loans, and high-yield credit. Both firms receive management fees from the fund, and the board oversees the allocation between the two managers.
What distinguishes this fund from a standard closed-end fixed-income fund?
Unlike a standard closed-end fund that holds individual securities directly, this fund holds other closed-end funds and allocates to DoubleLine-managed vehicles, creating a nested fund-of-funds structure. This means the vehicle's net asset value reflects discounts on other closed-end funds, and the fund's own market price can trade at an additional discount or premium to that NAV — a double layer of potential mispricing that the managers actively exploit.
What asset classes does the fund target?
The fund targets fixed-income closed-end funds, agency and non-agency mortgage-backed securities, collateralized loan obligations, leveraged loans, high-yield bonds, and other specialty credit instruments. The sleeve managed by DoubleLine is heavily weighted toward structured credit and securitized products, while RiverNorth's sleeve focuses on trading closed-end fund discounts across the fixed-income universe.
Is this fund suitable for institutional allocators, or is it designed for retail investors?
The fund is structured as a publicly traded closed-end fund registered under the Investment Company Act of 1940, which makes it accessible to retail investors, but institutional allocators have used the vehicle as a liquid proxy for hard-to-access DoubleLine credit strategies and as a tactical tool to harvest closed-end fund discount cycles. Its perpetual capital base and managed distribution policy appeal to income-oriented institutional mandates.
What is the fund's distribution policy?
The fund operates a managed distribution policy, targeting a minimum 10% annual distribution rate based on net asset value as of August 2023 (per the firm, August 2023). Distributions can include net investment income, realized capital gains, and return of capital. Allocators scrutinize the composition of distributions to assess the sustainability of the payout ratio relative to underlying portfolio yield.
How does the fund's structure handle liquidity compared to open-end mutual funds?
As a closed-end fund, the vehicle does not face daily redemptions. Investors exit by selling shares on the secondary market. This permanent capital structure allows the managers to hold less liquid credit positions and trade opportunistically during market dislocations without worrying about forced asset sales, a key advantage over open-end mutual funds in the credit space.
Who runs investment decisions for the fund?
Brian Schmucker serves as President of the fund. RiverNorth Capital, led by its investment team specializing in closed-end fund arbitrage, manages the tactical allocation sleeve. Jeffrey Gundlach and the DoubleLine Capital investment team, including deputy CIO Jeffrey Sherman, manage the sub-advised sleeve focused on direct fixed-income and structured credit positions.
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