ETF Movers & Shakers: Jeffrey Gundlach

One of the best-known names in bond investing brings his approach to ETFs.

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Reviewed by: Cinthia Murphy
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Edited by: Cinthia Murphy

[This is part of an 11-part series we will be publishing each weekday until it is complete. The ETF Movers & Shakers feature appears in the March edition of ETF Report: Previously published: Michael Crinieri; Reggie Browne; Nadig & Balchunas]

Jeffrey Gundlach is known as one of the best fixed-income investors in the market today. That notoriety is 30-plus years in the making, and came about thanks to consistent outperformance relative to his peers.

Gundlach's footprint in the investment world is huge by any measure, and in the past year, it finally reached the ETF market.

Movers and Shakers

Jeffrey Gundlach

In a partnership with State Street Global Advisors, Gundlach launched the SPDR DoubleLine Total Return Tactical (TOTL | C) on Feb. 24, 2015. The fund went on to become one of the industry's most successful launches ever—it gathered its first $1 billion in assets in less than five months, and its first $2 billion in less than a year.

As a result, many now see Gundlach as the face of the promising future of active management in ETFs, particularly in the fixed-income space.

Initially considering a life as a math and/or philosophy teacher, Gundlach became "disillusioned" with academia while a graduate student at Yale, and decided to pack up his car and move to California for lack of "any better idea." The plan was simple: Live in the sun and play rock 'n' roll.

But as a drummer for the band Radical Flat, Gundlach found neither fame nor fortune. Instead, he soon found himself broke, and in a need of a job.

Gundlach's math skills aided him in landing a position helping the CFO of insurance company Transamerica Corp. His first taste of the investment world soon followed as a "low-level trainee" working in a very small bond department within an equity-centric firm. But it wasn't long before he was running the bond desk.

Then came 2005. Gundlach started warning of a credit crisis ahead of most. He began trimming exposure to credit risk back then, and did that up through 2007.

When the market finally collapsed, his performance didn't falter. Instead, he was in a position to rotate into credit risk at the market bottom in 2009, buying cheap and reaping huge returns since. He essentially succeeded when everyone else failed.

Gundlach took that success, and founded DoubleLine Capital in late 2009. Within three years, the firm went from zero to $50 billion in assets under management—a massively successful startup. "And that was all because returns were consistently good," he said. As of the end of 2015, DoubleLine had roughly $85 billion in AUM.

ETFs were a natural next step. A partnership with a top-tier ETF provider made it all possible for the avid active manager known for his $54 billion Total Return Bond mutual fund.

"There are pundits out there who say ETFs are going to take over the world, and mutual funds are going the way of the dinosaur," Gundlach said. "If they're right, it would make sense as the CEO of DoubleLine to have a more diversified distribution platform, so doing ETFs makes sense."

"Now, we are in that business, and we intend to expand the number of ETF offerings we have because we've had a very pleasant experience in launching TOTL, and we have a great partnership with SSgA," he added.

Cinthia Murphy is head of digital experience, advocating for the user in all that etf.com does. She previously served as managing editor and writer for etf.com, specializing in ETF content and multimedia. Cinthia’s experience includes time at Dow Jones and former BridgeNews, covering commodity futures markets in Chicago and Brazil equities in Sao Paulo. She has a bachelor’s degree in journalism from the University of Missouri-Columbia.