Ousted TCW exec launches first mutual funds
Four months after his ugly split with TCW Group Inc., star L.A. bond fund manager Jeffrey Gundlach on Tuesday will launch his first mutual funds, hoping to lure some of the individual investors whose billions of dollars he managed at TCW.
Gundlach’s firm, DoubleLine Capital, said it would open the DoubleLine Total Return Bond fund and the DoubleLine Emerging Markets Fixed-Income fund after receiving Securities and Exchange Commission clearance Friday.
Gundlach, 50, was TCW’s chief investment officer until the firm fired him Dec. 4, saying he had threatened to leave the company and take his team with him. On the same day, TCW agreed to buy Metropolitan West Asset Management to take over management of its bond funds.
Within 10 days Gundlach had formed DoubleLine. Since then, about 40 of his 65 fixed-income staffers at TCW have defected to DoubleLine.
The two sides now are embroiled in a vicious legal battle. TCW has accused Gundlach of stealing proprietary TCW information to set up DoubleLine, a charge that Gundlach denies.
At TCW Gundlach earned a reputation as one of the country’s sharpest investors in mortgage-backed securities. The TCW Total Return Bond fund gained an average of 7.7% a year in the 10 years through 2009, beating nearly all its rivals.
In 2009, amid the public’s unprecedented hunger for bond funds, TCW Total Return Bond’s assets ballooned from $2 billion at the start of the year to more than $12 billion just before Gundlach’s ouster.
After his departure the TCW fund suffered heavy redemptions as many investors yanked their money. The fund’s assets totaled $5.5 billion as of March 31.
With the launch of the DoubleLine Total Return Bond fund, Gundlach is aiming to pull in individual investors who have left TCW. DoubleLine Total Return, like its TCW rival, will invest primarily in mortgage bonds.
The second new fund, DoubleLine Emerging Markets Fixed-Income fund, will buy debt of emerging-market countries and their companies. The portfolio will be managed by Luz Padilla, who oversaw a similar fund at TCW before she defected to DoubleLine in December.
DoubleLine plans to sell its funds directly to investors without sales charges via its website and through popular mutual fund supermarkets. The minimum investment is $2,000.
Ron Redell, who heads DoubleLine’s fund arm, declined to say how much cash the firm expected to take into the new funds. But he said “a lot of individuals and financial advisors have called, asking when we’re launching.”
Gundlach late last year said he believed his firm could have $50 billion under management by the end of 2010.
But so far the firm has attracted only about $1.9 billion, from institutional investors and wealthy individuals. That is a fraction of the $70 billion that Gundlach oversaw at TCW.
