DoubleLine's Gundlach seeks more risk in new closed-end fund NEW YORK (Reuters) - DoubleLine Capital LP, the investment firm run by star bond manager Jeffrey Gundlach, said on Friday it completed an initial public offering for the closed-end DoubleLine Income Solutions Fund (DSL.N). Gundlach, DoubleLine's chief executive and chief investment officer, will manage the fund with portfolio managers Bonnie Baha and Luz Padilla. Gundlach said on Friday the fund will seek greater risk than the firm's flagship DoubleLine Total Return Bond Fund (DBLTX.O). The fund, which trades on the New York Stock Exchange, "is meant to fill out the periphery of a bond portfolio in a one-stop shopping kind of way," Gundlach said in an interview. He said the greatest weighting in the near-term will be in dollar-denominated emerging market corporate debt rated between BBB and B, or lowest-quality investment grade debt and higher-quality "junk" rated debt, respectively. "That particular spot is my favorite spot in global fixed income," Gundlach said in light of the bonds' higher yields. I think that sector of the market is too cheap relative to competing assets. The fund raised $2.3 billion from the offering of 92 million common shares at $25 each, making it the second largest amount raised in a closed-end bond fund offering in history after the PIMCO Dynamic Credit Income Fund (PCI.N), which raised over $3 billion last January. The new fund is the second closed-end fixed-income fund from DoubleLine after the DoubleLine Opportunistic Credit Fund (DBL.N), which raised $326 million from its offering in January 2012. The managers plan to invest at least 80 percent of the fund's assets in debt securities and other fixed-income assets around the world, including in emerging markets, and may seek mortgage-backed securities or debt rated below investment-grade, such as high-yield "junk" bonds or bank loans. Gundlach said that non-agency mortgage debt and bank loans issued in the United States are currently his favorite asset classes after dollar-denominated emerging market corporate bonds. The DoubleLine Income Solutions Fund will mainly hold the three asset classes in the near term. The fund does not, however, plan to invest more than 50 percent of assets in a single asset class with the exception of U.S. Treasuries in a defensive scenario, according to the fund's prospectus. The fund may also use leverage - or borrowed money - amounting to slightly more than 33 percent of its assets. Gundlach said in early March that he bought "more long-term Treasuries in the last month" than in the last four years once the yield on the 10-year U.S. Treasury note breached 2 percent [ID:nL1N0BW96Y]. On Friday, Gundlach said he still favors U.S. Treasuries since they are the only asset class that can continue to perform well if riskier asset classes suffer and that he still expects the 10-year Treasury bond to yield 1.63 percent by the end of the year. The yield on the 10-year Treasury was at 1.67 percent at the close of trading on Friday. "Treasury bonds are not going to explode higher in yield while the Federal Reserve is controlling them through quantitative easing," Gundlach said on the Fed's monthly purchases of $45 billion in Treasury bonds. Gundlach added that a global recession is "pretty unlikely" since economic growth in many emerging market countries remains positive. He is, however, still avoiding European assets given the region's debt crisis. UBS Investment Bank (UBSN.VX), BofA Merrill Lynch (BAC.N), Citigroup Inc (C.N), Morgan Stanley (MS.N) and Wells Fargo Securities (WFC.N) were the lead underwriters of the fund's offering. DoubleLine Capital LP is based in Los Angeles and has $59 billion in assets. The DoubleLine Total Return Bond Fund has earned a three-year annualized return of 11.37 percent, besting the Barclays Capital Aggregate Bond Index's return of 8.14 percent by over three percentage points, according to Lipper. Reporting by Sam Forgione; Editing by Lisa Von Ahn, Jennifer Ablan and Andre Grenon