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By Jason Stipp | 12-15-2009 09:29 AM

Gundlach on Investors' Choice to Stay or Leave TGLMX

The former TCW CIO and manager makes a case for staying or departing TCW Total Return given the management shakeup.

Jason Stipp: Stepping back and looking at this from a fundholder's perspective, and what it means for a fundholder to move funds from one to another fund, if I were a fundholder in TCW Total Return, what would you say would be my reasons to stay, my reasons to leave? What should I be thinking about from that perspective? And why would you say your fund would be an option for me right now? Why would I come over? Make that case for me.

Jeffrey Gundlach: Well, one reason to stay in TCLMX would be that it's a low volatility fund anyway. Intermediate term bond funds are relatively low-risk anyway. And one that is two-thirds government guaranteed and one-third fairly cheap credit, it doesn't sound like a very bumpy ride for the time being. So TGLMX, when I left on Dec. 4, had a duration that was quite low. It was running an empirical duration of volatility similar to about the two-year Treasury. So it's not something that's going to bounce around and give you whiplash unless the fund is changed radically. And you'd have to ask the current management about ideas to radically change the fund.

Barring a radical change to the fund, it's simply a low volatility anyway, and therefore it seems to be a comfortable place to stay.

Another reason to stay, is an investor might be fond of the new investment team and might prefer their deliverable. It does rather beg the question as to why that investor was in TGLMX in the first place, though.

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