The TCW Group (TCW), an international asset management firm, acquired fixed-income money manager Metropolitan West Asset Management (MetWest) Friday and effectively fired its high yield fixed-income CIO and head portfolio manager.
Jeffrey Gundlach, previous lead investment officer and manager for the Los Angeles-based firm’s bond funds, was “relived of his duties” Dec. 4 and replaced by MetWest’s Tad Rivelle, who previously served as the California firm’s investment head. He will assume the CIO position immediately, a press release said Friday.
“Mr. Gundlach threatened to leave TCW and take key employees with him which would have interrupted our ability to manage clients high grade fixed-income assets,” TCW spokesperson Erin Freeman told Investment Management Weekly in a phone conversation this morning. “We were left no choice, but to find an alternative to ensure the continuity in our ability to manage clients high grade fixed-income assets.”
Meanwhile, he Los Angeles Times reported that after the move to get rid of Gundlach, some of the managers who worked directly with the manager for the last two decades in the firm's fixed-income group resigned on Saturday.
Those departing included Philip Barach and Louis Lucido, who are two senior managers of TCW’s MBS portfolios, the newspaper reported.
Other MovesAdditionally, MetWest Partner and CEO David Lippman will become group managing director and head of TCW’s high-grade fixed-income business and will assume Gundlach’s board of directors seat as well, the release stated.
"We are excited about the opportunity to become part of an organization that is as well-respected as TCW," Lippman said in the statement. "For 13 years, we have worked tirelessly to create a value-oriented fixed income firm focused on client service and dedicated to maintaining a culture of teamwork, intellectual curiosity and collegiality. We intend to remain true to our investment philosophy."
According to the press release, TCW, which has roughly $110 billion in assets under management, signed the definitive purchase agreement with MetWest, which has $30 billion in assets under management, last week.
The transaction’s announcement, which failed to disclose financial terms of the agreement, is subject to regulatory approval, and is expected to close during the first quarter in 2010.
"TCW's ability to attract a firm of this caliber underscores our strength and enables us to continue to provide clients with the world-class products and quality of service that has made us one of the top asset management firms in the country," said Marc Stern, TCW vice chairman and CEO in the release. "MetWest's strategies perform in the top quartile of comparable fixed-income strategies, which has garnered them a world-class reputation.
Meanwhile, Michael Reilly, who first joined the TCW in 1992, will assume the position of CIO for its equities group. He previously served as TCW’s director of U.S. equity research.
Big Canges ‘Aticipated’
Furthermore, the acquisition will effectively bring more than 115 employees from MetWest into TCW to assume all responsibilities for TCW’s bond client accounts.
Freeman added that the company is “fully anticipating potential departures” with the large multitude of MetWest personnel coming into the portfolio management scheme, but believes that it has matched “skill for skill and [is] ensure(ing) continuity.”
The Future of Fixed-Income
Stern added in the release that the MetWest acquisition would provide TCW’s clients with a broader suite of fixed-income products, without modifying any previously implemented investment practices.
"We look forward to working closely with MetWest's management to achieve a successful integration of the MetWest and TCW teams," Stern said in the release. "We do not anticipate any change in investment strategy, discipline or style."