What plunged TCW into crisis was the firing on Dec. 4, 2009, of Mr. Gundlach, chief investment officer. TCW saw a drop of $10 billion in assets under management in less than 30 days.
In total, TCW sustained around $30 billion in outflows after dozens of clients and 45 of the 60 members of Mr. Gundlach's mortgage-backed securities team headed for the exit. Team members rejoined their former boss in a new firm — DoubleLine Capital LP — down the street.
To replace Mr. Gundlach, TCW announced in December 2009 that it would purchase Metropolitan West Asset Management, which brought with it $30 billion in assets under management.
But the $30 billion was canceled out by continuing TCW outflows. Before it acquired MetWest, TCW reported $110 billion in assets under management; as of June 30, 2010, TCW had $108.8 billion, according to eVestment Alliance and the company.
TCW's AUM started growing again in the second half of 2010, rising to $116 billion by Dec. 31, and then to $121 billion as of March 31 of this year.
Part of the increase can be attributed to TCW's expanded international focus. TCW has partnered with Societe Generale and Amundi, a new asset management firm founded by SG and Crédit Agricole in January 2010.
Mr. Stern said that since the partnership started in mid-2010, TCW has raised approximately $4.5 billion in new assets from institutional investors in Europe and other international markets.
In addition, Mr. Stern said, TCW will launch European mutual funds known as the Luxembourg Funds, “the first time TCW-branded products will be sold directly in Europe.”
In the U.S., TCW has also introduced new mutual funds.
Funds started since November are the TCW Emerging Markets Local Currency Income Fund, TCW Emerging Markets Equity Fund, TCW SMID Cap Growth Fund and the TCW International Small Cap Fund. The latter is managed by Rohit Sah, who had been a lead portfolio manager at OppenheimerFunds. Mr. Sah was nominated as Morningstar's international stock manager of the year in 2010 for his performance managing the $1.6 billion Oppenheimer International Small Company fund.
Mr. Sah said in an interview that he didn't have any doubts about coming to TCW in February. “I came to the conclusion that TCW had been around for a long time and was committed to building an international platform,” he said. “I didn't have any hesitation.”
The fact that TCW is owned by a central bank wasn't lost on Tad Rivelle, CIO for fixed income. Mr. Rivelle, one of MetWest's founders and its CIO, brought over MetWest's entire 100-person team.
When MetWest was a stand-alone company, Mr. Rivelle said, the 10 partners provided start-up capital out of their own pockets to launch new strategies. “It actually was very challenging in a boutique setting to go after new products.” At TCW, Mr. Rivelle said, Societe Generale provides the needed start-up capital for his team.
Also, documents from the Securities and Exchange Commission show TCW is planning to raise $300 million for a mortgage-backed real estate investment trust. Mr. Rivelle said he couldn't talk about it because the REIT is in registration.
TCW is also looking for opportunities to invest in distressed U.S. housing stock for potential resale when the economy improves. “We view this as an opportunity,” he said, adding he could not discuss the matter further.
Another new mutual fund would invest in commodity and currency futures, SEC documents show.
TCW is also considering a global bond fund that would be managed by staff from the MetWest group and TCW's veteran emerging markets debt team, Mr. Rivelle said.
Mr. Stern said the cooperation between teams is part of a new culture in the post-Gundlach era. Before, “there was not cooperation across the board,” he said.
Yet the fallout from Mr. Gundlach's dismissal helped Mr. Stern convince officials at Societe Generale to give the 160 TCW employees an ownership stake in the company after years of failed efforts, TCW executives have said privately.
Mr. Stern said the ownership interest, granted in February 2010, is helping with increased morale. “When there is a significant employee ownership, people can transcend more parochial interests,” he said.
Employee ownership, however, has not stemmed the loss of two key investment teams. The $10 billion Crescent Capital Group, which provides debt financing to public and private companies, announced it was leaving TCW last July while the $8.5 TCW billion energy and infrastructure group announced its departure three months ago.
Mr. Stern downplayed the losses, noting that winding down the two teams' activities at TCW will take 10 years.
Consultants say one winning part of the new TCW is the MetWest unit.
“We have a very high regard for MetWest,” said consultant Michael Rosen, principal and CIO of Angeles Investment Advisors, Los Angeles. “It was a great acquisition. TCW brought in a name fixed-income player. They (MetWest) are a very experienced group of people.”
The TCW Total Return Bond Fund — Mr. Gundlach's marquee TCW fund that is now managed by former MetWest executives — returned 10.3% for the year ended March 31, according to Morningstar data. That performance puts it in the top 3% of its category, according to Morningstar.
The fund had $5.2 billion in assets as of April 6 vs. $12 billion before Mr. Gundlach left TCW.
TCW is marketing the $13 billion MetWest Total Return Bond Fund as the company's new flagship fund. The fund has had $1.2 billion in inflows so far this year.