This DoubleLine bond fund is beating the market. Here's what it's buying

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Doubleline Opportunistic Bond ETF,Markets,Investment Strategy

DoubleLine's Jeffrey Sherman spoke to CNBC about the risks to the economy and what part of the bond market makes the most sense for investors.

A bond fund run by two of the top names at DoubleLine is outpacing the broader market by being defensive without fully committing to an imminent recession. The DoubleLine Opportunistic Bond ETF has a total return of 3.2% over the past year. That's more than the broadest bond funds, such as the iShares Core U.S. Aggregate Bond ETF , and the category indexes for the ETF as determined by FactSet and Morningstar. The fund has a 30-day SEC yield of about 5%.

The fund's website says that 41% of the portfolio is in investment grade credit, compared to less than 12% for below investment grade bonds. "Given where yield levels are, you're paid relatively well just to be in the higher credit quality," Sherman said. Bonds that have higher perceived risk tend to have higher yields to lure investors. However, the spreads between safer and riskier debt right now is very tight, Sherman said.

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