Explaining Southern California's economy

Bond kings chase returns in a low-interest-rate world

A short sale home in the Spring Valley a

MARK RALSTON/AFP/Getty Images

A recovering housing market has yielding big returns for Southern California bond funds that have invested in risky assets.

Heather Perlberg and Pierre Paulden at Bloomberg have a good piece Wednesday about what I call Southern California's "bond triangle" - and its investment managers' relentless quest for returns when interest rates are at historic lows. 

The major players in the story are PIMCO, the nearly $2 trillion fixed-income colossus based in Newport Beach; TCW, with $135 billion in assets under management and in the process of being taken over by the Carlyle Group, a big private-equity firm; and DoubleLine Capital, run by former TCW trader Jeff Gundlach and one of the fastest-growing financing startups in history, with more than $50 amassed in assets in three years. ( TCW and DoubleLine are based in L.A.)

Here's Perlberg and Paulden on how these firms' investment in a risky category of debt has paid off big time:

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