“Stumbling is a great descriptor of how I got here,” Sherman said on one of his “Sherman Show” podcasts for DoubleLine. He declined to be interviewed for this article.

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After collecting a master’s degree in financial engineering at Claremont Graduate University, Sherman joined TCW Group, where Gundlach was already a star. After TCW fired Gundlach in 2009, Sherman was among about 40 financial professionals who left to help form DoubleLine. He was promoted to deputy CIO in June of last year.

The $4.28 billion CAPE Fund was up 13 percent this year through Wednesday, tops among the 90 funds with at least $1 billion in assets in the Bloomberg large-cap value category. Money has poured in. In the past year alone, the fund’s assets have more than tripled.

Sherman’s outsized gains partly reflect the fund’s unusual, rules-based approach. It first identifies the five cheapest industry sectors in the S&P 500 based on their cyclically adjusted price-to-earnings, or CAPE, ratios, a methodology that tracks a long-term historical average for inflation-adjusted earnings developed by 2013 Nobel laureate Robert Shiller. Then the fund throws out the sector with the least momentum.

The twist is how the fund actually gets exposure to those stock sectors. Instead of purchasing shares, it invests in a basket designed by Sherman of short- and intermediate-term bonds, which are used as collateral to enter swaps contracts that provide returns consistent with the selected industries. The CAPE fund in effect uses the same money twice, earning interest on the bonds while capturing equity returns. Sherman calls it DoubleLine’s “double value proposition.” The fund has outgained the Barclays ETN+ Shiller CAPE ETN, which uses a similar strategy without a fixed-income kicker.

Of course, there hasn’t been a major market downturn since the CAPE fund’s inception. And not all of Sherman’s ideas have panned out. His Strategic Commodity Fund, which takes long and short positions in commodity-related investments, has lost 4.6 percent since it launched in May 2015. That beat its benchmark, the Bloomberg Commodity Index, but failed to attract investors. Assets fell to $28 million from a peak of $36 million last July.

Still, Sherman’s rise to deputy CIO comes at a key moment. Even though Gundlach has continued to beat benchmarks, his Total Return Bond Fund -- by far the biggest among DoubleLine’s offerings -- suffered net outflows of $8.4 billion in the 12 months through July, almost as much as the combined inflows to the firm’s other funds, according to Bloomberg estimates.

‘More Humble’

Amid those withdrawals, Gundlach has taken to Twitter to criticize “haters” and “fake news,” railing against Business Insider, CNBC, Bloomberg and, recently, the Wall Street Journal. He accused an unnamed competitor “in utter turmoil” of planting a “phony narrative” about DoubleLine. The firm has denied repeated requests from Morningstar for certain information on the Total Return fund’s strategies and personnel, preventing the research company from considering it for a medal rating, according to a July note.