Previously, Mr. Gundlach managed bond funds at Los Angeles money manager TCW Group Inc.

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"The Fed wants to keep mortgage rates low, " said Mitch Flack, co-head of the mortgage group at TCW Group Inc.

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Packagers like TCW and Pimco were putting these questionable securities in packages to be sold on to others and receiving substantial fees for being the middleman.

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For those looking for emerging and developing market bond exposure, we recommend checking out the TCW Emerging Markets Income I Fund (Ticker: TGEIX) and the Columbia Emerging Markets Bond K (Ticker: CMKRX).

FORBES: 3 Reasons Your Portfolio Needs More Exposure to Emerging Markets

That figure includes transactions that closed during the period, such as the auto body-shop chain King Collision Repair Centers, and those announced but still pending, such as the acquisitions of asset manager TCW Group and photo library Getty Images.

FORBES: Connect

Third Avenue Value Fund owned as much as 13.8%, or 33.6 million shares, in 2008 but disappeared as a major shareholder by early 2010, when it was briefly replaced by Fidelity with a 6.8% stake and TCW at 5.6%.

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Here are five funds and ETFs currently held in our Upgrader portfolio: Utilities Select Sector SPDR ( XLU), Vanguard Consumer Staples ( VDC), TCW Select Equity ( TGCNX), Yacktman Fund ( YACKX) and iShares Dow Jones Select Dividend ( DVY).

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