DoubleLine Capital, one of the fastest growing mutual fund start-ups in the country, may close its flagship fund, DoubleLine Total Return Bond, because the firm does not want it to get much bigger.

No decision has been made yet on whether to close the fund or to just close it to new investors.

DoubleLine launched its first mutual fund in April 2010 and is currently at $53 billion in assets under management, after a whirlwind growth. In 2012 alone, DoubleLine’s asset base more than doubled and it has been called the fastest-growing mutual fund start-up in history by Businessweek.

DoubleLine officials previously have said that based on the rate of fund inflows, it was possible the Total Return Bond fund would reach a limit and they would close it because of "capacity constraints."

DoubleLine’s growth is due to CEO Jeffrey Gundlach’s outstanding reputation in the bond market, particularly in mortgage-backed securities. He started DoubleLine, based in Los Angeles, after leaving the asset management firm TCW with several colleagues.

DoubleLine will have other funds available that give investors access to his strategies. Gundlach has said he anticipates being in the low $60 billion range in assets by the end of the year, which is a deceleration from the doubling in assets that DoubleLine experienced the last two years.

Some of the other funds to remain available include DoubleLine Core Fixed Income Fund (DBLFX/DLFNX), which has $2.8 billion in total net assets. The fund can invest in most sectors of the global market, with Gundlach as lead manager deciding the sector weights in consultation with his sector specialists. The sector teams handle security selection within their respective asset classes such as mortgage-backed securities, Treasuries, high-yield and investment-grade corporate bonds in developed markets, developed market sovereigns, emerging markets debt.

If the Total Return Bond is closed, it would happen later this year or in 2014. DoubleLine Total Return Bond Fund (DBLTX/DLTNX), which is the mortgage-backed securities-centric open-end mutual fund led by Gundlach and co-managed by Philip Barach, has $38.3 billion in total net assets. DoubleLine does not want the fund to get much bigger so that it will remain manageable.

“Jeffrey thinks it is quite possible the DoubleLine Total Return Bond fund will reach optimal capacity in terms of total net assets by the end of this year or in 2014,” says Loren Fleckenstein, an analyst at DoubleLine. “Once the portfolio management teams make that determination, DoubleLine will need to determine what type of limit to put on inflow, which remains to be determined whether it would be a hard close or soft close.”

Ron Redell, president of the DoubleLine Funds Trust, agrees. “We would be looking at multiple options, from hard to soft closes, in the event the portfolio management team deems the strategy to have reached its optimal capacity,” he said.

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