Jeffrey Gundlach has become the latest money manager to plant his flag on the booming exchange-traded fund landscape.
Gundlach, chief executive of downtown L.A.’s DoubleLine Capital, launched an actively managed exchange-traded fund, the SPDR DoubleLine Total Return Tactical ETF, which began trading Feb. 24. It’s the firm’s first foray into the world of ETFs, which are similar to mutual funds except they trade throughout the day like stocks. ETFs also tend to have lower fees than mutual funds.
DoubleLine launched the fund in partnership with State Street Global Advisors, the investment management division of Boston’s State Street Corp. and the world’s second-largest provider of exchange-traded funds. State Street had $2.4 trillion in assets under management at the end of last year. DoubleLine, founded in 2009, had $64 billion in assets.
Gundlach, DoubleLine President Philip Barach and portfolio manager Jeffrey Sherman will oversee the fund’s investments. It trades on the NYSE Arca exchange under the ticker “TOTL.”
ETFs are among the financial world’s hottest products. A recent report from PricewaterhouseCoopers projected ETFs will hold $5 trillion in assets by 2020, nearly double the $2.6 trillion they hold today.
Sherman said he’s received a lot of requests to offer an ETF from financial advisers who wanted to participate in DoubleLine’s strategies but who don’t use mutual funds.
“It’s a natural evolution of our business,” he said. “Our goal is to give the broader masses access to the team and our thinking.”
The Total Return Tactical ETF’s portfolio is split between assets backed by the United States government, such as Treasuries and agency mortgage-backed securities, and investments with more credit risk, such as corporate debt. The fund holds about 10 percent in dollar-denominated foreign corporate debt, which is a critical distinction, Sherman said, because it limits exposure to the whims of foreign currencies in what’s designed to be a stable investment.
“It’s a low-risk investment that’s supposed to behave a certain way, and you don’t want to introduce currency risk,” he said.
Munster Deal
Local wealth manager Bruce Munster, who oversees $1.2 billion for about 60 clients, recently left Morgan Stanley for Merrill Lynch. His new firm reportedly gave Munster and his team quite a sweetener.
According to Fox Business correspondent Charlie Gasparino, Merrill gave Munster’s team a signing bonus that could hit $20 million – or about four times the group’s annual revenue. Some say the deal is overly risky for Merrill, as the Munster team’s fee revenue, which is generally based on a percentage of managed assets, would likely decline if the market turns – as financial assets eventually do.
“The deal, according to people who have been briefed on the terms, will be paid to the team over a number of years, so in order for Munster and his group to recoup the full amount, they would have to remain at the firm as much as nine years,” Gasparino wrote.
Munster declined to comment to the Business Journal.
Touchdown
USC will open its 2017 football season with a Sept. 2 game against Western Michigan University at the Los Angeles Memorial Coliseum. It’s a matchup dreamed up by private equity billionaire – and Western Michigan alum – Alec Gores.
Gores, chief executive of Beverly Hills private equity firm Gores Group, brokered the game between his alma mater, where he played football for two seasons, and one of the leading football schools in the city he now calls home. He personally reached out to the athletic directors of both schools, Kathy Beauregard of Western Michigan and USC’s Pat Haden. Beauregard and Haden signed the contract formalizing the game at Gores’ home in Beverly Hills’ posh Beverly Park neighborhood.
“I’m extremely proud of my degree from Western Michigan and my time with the football program,” Gores said in a statement from Western Michigan announcing the game. “There is no better way to show my pride for Western Michigan University than helping arrange this game.”
C-Suite News
Brentwood private equity firm Caltius Equity Partners has promoted Jeff Kendig to principal and Justin Benshoof to vice president. Kendig has been at Caltius since 2006; Benshoof joined in 2011. … Century City private equity and debt firm Breakwater Investment Management has named Harry Chung chief financial officer. He was previously with Century City investment bank Imperial Capital. … San Francisco mortgage lender Bay Equity has opened a branch in Downey. It will be led by sales manager Rick Kesseler. … Little Tokyo’s Pacific Commerce Bank has announced that both sets of shareholders have approved its deal to acquire Vibra Bank in Chula Vista. The combined bank will have about $358 million in assets, making it one of the 40 largest banks in Los Angeles.
Staff reporter Matt Pressberg can be reached at [email protected] or (323) 549-5225, ext. 230.
