If it decides to create an equity investment team, DoubleLine Capital LP may be going back to the well at founder and chief executive Jeffrey Gundlach's former employer one more time.
Mr. Gundlach said last week that his fixed-income shop is is considering expanding into equities.
The timing of Mr. Gundlach's comments raise questions.
In an article last month in
InvestmentNews' sibling publication Pensions & Investments, management at TCW Group Inc. — Mr. Gundlach's former employer — declined to comment about whether equity mutual fund managers at the company had signed new long-term contracts following TCW's sale to the Carlyle Group LP.
Mr. Gundlach is no stranger to recruiting from TCW. After his ugly divorce from the company in late 2009, more than 40 TCW employees signed on at DoubleLine.
If he is able to attract any of TCW's equity managers, it could be quite a coup for DoubleLine. Thanks to their strong long-term track records, TCW's large-cap mutual funds have been able to avoid the massive withdrawals that have plagued most actively managed equity funds.
The TCW Select Equities Fund (TGCNX), which ranks in the 20th percentile of large-cap-growth funds over the past three years and in the 10th percentile over the past five years, had $260 million in inflows through the end of last month, according to Morningstar Inc.
The TCW Relative Value Large Cap Fund (TGDVX) and the TCW Growth Fund (TGGYX) have had $245 million and $1.2 million of inflows, respectively.
Those inflows may not seem impressive on their own, but the very fact that investors are adding more money than subtracting is a feat in and of itself. Large-cap mutual funds saw a net $116 billion in outflows through the end of last month, according to Morningstar.
Given the industrywide trend of equity outflows, it may come as a bit of a surprise to some that Mr. Gundlach, who built DoubleLine's assets to more than $40 billion in less than three years, thanks to his fixed-income reputation, would consider branching out into equities. It turns out he likes that they're out of favor.
"SUPERIOR INVESTMENT'
“I like the way equities are out of favor, and I like doing things when they're unpopular,” Mr. Gundlach told Bloomberg last Tuesday. “Equities are a superior investment to bonds for an inflation hedge, and I like the ability to diversify and broaden the firm.”
[email protected] Twitter: @jasonkephart
