In 2009, TCW Group Inc. watched as investors pulled billions of dollars after it ousted star money manager Jeffrey Gundlach. Today, the firm finds itself the beneficiary of another messy divorce.
TCW’s Metropolitan West Total Return Bond Fund collected more money than any other bond mutual fund in the year following Bill Gross’ sudden departure from Pacific Investment Management Co., according to data compiled by Bloomberg. MetWest Total Return received $35 billion in the 11 months ended Aug. 31, doubling its assets.
Gross’s exit on Sept. 26, 2014, touched off a scramble among competitors to capture the spoils. Pimco lost about $360 billion, very little of which found its way to Gross’s new fund at Janus Capital Group Inc. TCW had qualities some former Pimco investors were seeking: a strong long-term record, a simple-to- understand process for picking bonds and a team approach that didn’t depend on one person, however talented.
“They were in the right place, at the right time, with the right numbers,” said Lawrence Glazer, managing partner at Mayflower Advisors in Boston, where he helps oversee $2 billion.
The experience of TCW, started the same year as Pimco but long eclipsed by its larger rival, suggests that under the right circumstances, it is possible to recover from the loss of a superstar manager.
Besides MetWest, the biggest winners from Pimco’s bloodletting were Vanguard Group Inc., Gundlach’s DoubleLine Capital, Dodge & Cox Inc. and BlackRock Inc., each of which had a fund that attracted more than $10 billion.
Gundlach’s fund had the best returns of the group over one year and five years. It attracted less money than the MetWest offering, probably because it hasn’t been around as long and invests primarily in mortgages, rather than a broad mix of bonds, said Steven Roge, who oversees more than $200 million at R.W. Roge & Co., in Bohemia, New York.
DoubleLine declined to comment.
“Pimco continues to generate strong outperformance across its portfolios so far this year and has inflows to more than 40 strategies including Pimco Income Fund,” Group Chief Investment Officer Daniel Ivascyn said in a statement. “But our primary focus is on sustaining that performance over the long-term for our clients and investors.”
TCW was an unlikely candidate to profit from Pimco’s troubles. For years, the Los Angeles-based firm, under the ownership of French bank Societe Generale SA, was in the shadow of larger rival Pimco. TCW suffered withdrawals and dozens of defections when it fired Gundlach in December of 2009. By the end of February 2010, clients had pulled about $25 billion, some of which followed Gundlach to DoubleLine. Societe Generale eventually sold TCW to private-equity firm Carlyle Group LP in 2013.