[March 21, 2014]NEW YORK (Reuters) — Pacific Investment
Management Co. has been replaced by TCW Group Inc. as the subadviser
of a $1.3 billion bond fund offered by Columbia Management
Investment Advisers LLC.
In a statement on Thursday, TCW said the fund, previously known as
the Pimco Mortgage-Backed Securities Fund, will become the TCW Core
Plus Bond Fund. Initially launched in 2010, the fund had invested
significantly in highly rated mortgage instruments and sought to
provide shareholders with total return through both income and
Within its mutual fund families, TCW manages several Morningstar
five star-rated bond funds, including the MetWest Total Return Bond
Fund and the TCW Total Return Bond Fund. Over the past three years,
the MetWest Total Return Bond Fund outperformed 95 percent of its
peers, and the TCW Total Return Bond Fund outperformed 98 percent of
The news was another black eye for Pimco and co-founder Bill Gross,
who has been dealing with the ugly public split from his former heir
apparent Mohamed El-Erian.
On February 24, the Wall Street Journal reported that former Pimco
CEO El-Erian's close relationship with Gross had soured as the
firm's investment performance deteriorated last year. Then Gross
told Reuters that his one-time lieutenant was trying to "undermine"
him and that he had "evidence" El-Erian "wrote" the Journal article.
Morningstar Inc analysts have downgraded Pacific Investment
Management Co's overall stewardship grade by one notch on Tuesday,
reflecting a higher degree of uncertainty after the departure of its
Chief Executive Officer Mohamed El-Erian and other key personnel.
The research firm downgraded Pimco's stewardship grade to a C from B
following a comprehensive review of Pimco which included a visit to
the Newport Beach, California-based fund company by Morningstar
analyst Eric Jacobson on March 10. The highest grade is an A and the
worst is an F.
Pacific Investment Management Co., which had $1.91 trillion of
assets under management as of December 31, is a unit of European
financial services company Allianz SE.
David Lippman, chief executive officer of TCW, said, "We are pleased
to continue to expand our partnership with Columbia Management and
look forward to putting our industry-recognized expertise in fixed
income to work for the benefit of investors in the TCW Core Plus