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Big Hitter Leaves Gundlach, Returning to TCW

Decision raises question of whether others might follow.

Morningstar has learned that Claude Erb, former Jeffrey Gundlach lieutenant and 2006 winner of the prestigious Graham and Dodd Award, has elected to return to TCW. Erb had resigned from the firm in the wake of Gundlach's Dec. 4 termination and removal from  TCW Total Return (TGLMX) and had apparently been part of the team that Gundlach formed to run his new firm, DoubleLine.

Erb may not be a household name, but his reputation in the industry is considerable. And though he was an important contributor to Gundlach's work on the Total Return fund, he is more broadly known for his global investing expertise and his management responsibility over long-only and long-short commodity portfolios at TCW. He has written numerous papers for industry publications such as the Financial Analysts Journal, and along with a co-author, Erb received the Graham and Dodd award for a 2006 article in the FAJ titled, "The Strategic and Tactical Value of Commodity Futures." He is also the co-author of Country Risk in Global Financial Management, a book published under the CFA Institute banner.

Erb's resume is distinguished as well. In addition to his roughly eight-year tenure at TCW, he held portfolio management positions with Liberty Mutual Insurance, First Chicago (now part of J.P. Morgan (JPM)) and Weiss, Peck & Greer. The latter shop, in particular, is held in high regard among bond management aficionados.

This departure certainly isn't going to derail Gundlach's overall efforts to build his new firm given the number of other mortgage specialists who agreed to join him. This decision does call into question, however, the unity with which Gundlach's team acted so immediately after his firing. Moreover, it suggests the possibility that others who committed to joining him could eventually come to decisions similar to Erb's.

Eric Jacobson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.