TCW hit by fund withdrawals, more staff departures

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TCW Group’s decision to oust its star bond manager triggered heavy cash withdrawals from the L.A. firm’s flagship mutual fund, TCW Total Return Bond, on Monday, people familiar with the situation say.

Three sources put total redemptions from the fund in the $1-billion range. That would represent about 8.3% of the $12-billion fund’s total assets.

Whatever the outflow, the fund’s per-share net asset value still inched up 2 cents to $10.22 for the day, as the bond market rallied.

The stock-price story was different for TCW’s closed-end bond mutual fund, Strategic Income, as noted in this post Monday.

Meanwhile, about 15 people have departed TCW’s 65-member fixed-income department since the firm terminated Jeffrey Gundlach as chief investment officer on Friday, sources say. Some of those departures may have been forced rather than voluntary.

Three more of Gundlach’s top lieutenants on the TCW mortgage-backed securities team have quit: Joel Damiani, Vincent Fiorillo and Joseph Galligan joined Philip Barach and Louis Lucido in exiting the firm. All five were managing directors at TCW.

The company has declined to put specific numbers on asset withdrawals or staff departures.

Amid a power struggle, TCW on Friday sacked Gundlach and simultaneously announced a merger with another L.A. money manager, Metropolitan West Asset Management. TCW, which manages about $110 billion in all, put Met West’s bond team in charge of the funds that Gundlach had overseen, including TCW Total Return Bond fund.

Some outflow of money from TCW was inevitable, given Gundlach’s stellar performance numbers and investors’ concerns that Met West wouldn’t be able to duplicate those results.

Also, the 50-year-old Gundlach, who spent 24 years at TCW, has sounded increasingly confident about launching his own firm to jump back into money management. He said Monday that he was “lopsided” toward the option of starting a new company rather than seeking to join an established firm, although he hadn’t made a decision.

-- Tom Petruno