TCW Launches Emerging-Markets Fund

Even as TCW's bond operation remains in limbo, it's business as usual for its stock portfolios.


Beleaguered fund provider TCW announced yesterday the launch of its Emerging Markets Equities Fund. The fund's debut serves as a small reminder that even as TCW's bond operation remains in limbo after the company fired its star manager, it's business as usual for TCW's stock portfolios.

"My understanding in talking to managers on the equities side is that they haven't really been affected by the happenings going on in the bond side," says Ryan Leggio, a Morningstar analyst who covers TCW's equity funds. "From an investment research standpoint, the bond situation really hasn't had an impact on the equities as far as I can tell."

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While it hardly made much of a splash, yesterday's launch provided TCW with a needed break from the negative headlines that have plagued the company since it fired manager Jeffrey Gundlach last month. In the aftermath of his firing, billions of dollars in investments and dozens of employees followed Gundlach out the door, leaving TCW's bond managers struggling to assuage wary investors.

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More recently, the situation has begun to calm down a bit, and investor confidence seems to have rebounded after TCW's flagship Total Return Fund was able to readily meet the hefty redemption requests it faced. Still, it remains to be seen how much long-term damage the Gundlach ouster will cause. "As far as if the brand has been tarnished, I think that's still an open question at this point," says Leggio.

In the meantime, the new fund will be one of TCW's few forays into international markets. Of the $108.1 billion the company had under management at the end of the third quarter of 2009, $65.1 billion was tucked into its U.S. fixed-income portfolios. International stocks and bonds, meanwhile, accounted for a comparatively paltry $5.4 billion. The remaining $37.6 billion was in U.S. stocks and alternative investments.

Mark Madden, a comanager of the nascent Emerging Markets Equity Fund, says he's excited to move TCW further into the international arena. "Over the next few years, growth in emerging markets will be substantially higher than in the developed economies, which means that EM companies will deliver greater earnings growth. Emerging economies continue to benefit from both globalization and expanding domestic consumption," he said in a press release.