It was one of the ugliest breakups the money-management business had ever seen -- a tabloid tale of ego and betrayal.
But a decade after the star investor known to his staff as “the Godfather” stunned Wall Street with his bitter split from TCW Group and creation of a rival firm, the verdict is in:
Jeffrey Gundlach won, and won big.
His DoubleLine Capital, which turns 10 this month, today sits atop roughly $150 billion. In a business increasingly dominated by inexpensive index funds, the young juggernaut succeeded by actually picking good investments. Along the way, its flagship bond fund beat its benchmark in every year but one.
DoubleLine’s first decade was so good that it’s not unreasonable to ask: can Gundlach possibly top this, and can anyone match it? At 60, he is a rare breed in mutual funds: a successful, 21st-Century founder. Many mutual fund managers have faded from public view, but markets hang on Gundlach’s pronouncements with a fervor these days usually reserved for hedge fund titans.
“There aren’t that many famous managers today,” said Howard Marks, the billionaire co-founder of Oaktree Capital Management, whose firm paid $20 million for a 20% stake in DoubleLine when it started. “That probably argues against somebody else having as effective a startup.”
DoubleLine's flagship fund has outperformed the bond market index
Turmoil at bond giant Pacific Investment Management Co. following the 2014 ouster of Bill Gross helped DoubleLine succeed. As has Gundlach’s fame. He was already a star when he and more than 40 colleagues departed TCW to start the new firm, a move that led to a bitter dispute and a trial that was finally settled out of court. TCW’s assets over the past decade nearly doubled to $211 billion, including $30 billion from the purchase of MetWest.
Click here to read more about Gundlach’s clash with TCW
For Los Angeles-based DoubleLine, it’s been mostly about performance: the firm’s Total Return Bond fund is up 5.9% a year on average since its 2010 launch, outpacing its benchmark’s 3.8% annualized gain. Its latest darling, the DoubleLine Shiller Enhanced CAPE fund, has risen 15% a year since it opened in late 2013, beating the S&P 500 Index’s 12% increase.
Gundlach’s investing relies on choosing securities and limiting risks such as interest rate fluctuations and other volatility. His outlook is shaped by a deep team of portfolio managers who have worked together for an average of 16 years. In an industry known for high turnover, DoubleLine has remained stable, with only one major defection.