Gundlach blasts TCW's touting as 'offensive'

Star bond fund manager Jeffrey Gundlach blasted his former employer, TCW Group, over a press release that touted the long-term performance of the fund that he managed before being axed. The press release said that the $5.4 billion TCW Total Return Bond Fund (TGMNX) won a Lipper mutual fund award based on its risk-adjusted performance in the U.S. mortgage bond category over five- and 10-year periods. Mr. Gundlach, now chief executive of DoubleLine Capital LP, managed the fund from its inception in 1993 to December 2009 when he was fired from The TCW Group Inc. “It's utterly inappropriate for them to be talking about the long-term track record of a fund they had nothing to do with,” he said. “It's offensive to everyone in the industry.” Mr. Gundlach was replaced by managers Mitchell Flack, Tad Rivelle and Bryan Whalen. “The team that took over the TCW Total Return Bond Fund in December 2009 has delivered very strong performance for nearly two and a half years, ranking in the top quartile of its Morningstar Inc. peer group,” said Peter Viles, a spokesman for TCW. The new management team performed well on the heels of Mr. Gundlach's high-profile ouster, posting a return of more than 10% in 2010, 2.6% better than its category average, while dealing with the liquidation of about half the fund's $10 billion in assets, as a result of outflows that followed his firing.

ROUGH PATCH

The fund slumped badly last year, though, notching a 3.88% return. That placed it in the bottom 10th percentile of the same category. This year, it is back on the upswing and ranks in the top 5th percentile of intermediate-term-bond funds. Meanwhile, the DoubleLine Total Return Bond Fund (DLTNX), which Mr. Gundlach launched following the founding of his new firm, has been a runaway success with investors. It has grown to more than $22 billion in just over two years, and a $10,000 investment at inception would be worth $13,156 today, compared with $11,779 for an investment in the TCW Total Return Fund over the same time period. [email protected]