Bill Gross’s Pacific Investment Management Co., which suffered record redemptions from its main mutual fund last year, was dropped as manager of a $1.3 billion bond fund offered by Columbia Management Investment Advisers LLC.
Columbia replaced PIMCO with TCW Group Inc., and the fund will be renamed TCW Core Plus Bond Fund from PIMCO Mortgage- Backed Securities Fund, according to a statement Thursday from Los Angeles-based TCW. The decision to change the mandate was made late last year before former CEO Mohamed El-Erian announced his resignation in January, said two people familiar with the matter who asked not to be identified because the details are private.
PIMCO, based in Newport Beach, California, has been under pressure in the past 12 months amid investor withdrawals from its mutual funds and underperformance by its largest fund, PIMCO Total Return, run by Gross. The departure by El-Erian, 55, who was considered 69-year-old Gross’s heir apparent, triggered a shakeup within the firm’s executive ranks.
PIMCO Mortgage-Backed Securities Fund, offered in a variable annuity strategy from Columbia and created in 2010, invested in highly rated mortgage securities and sought to provide investors with total return through income and capital appreciation, TCW said in the statement.
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TCW didn’t give returns for the fund. A mutual fund with the same name, the $269 million PIMCO Mortgage-Backed Securities Fund, has advanced 0.2% in the past 12 months, beating 80% of peers, according to data compiled by Bloomberg. Over the past three years, the fund has returned an annual 3.2%, better than 78% of rivals.
The strategy PIMCO managed for Columbia isn’t the same as the mutual fund since there were restrictions on what the subadvised fund could invest in, and they have different benchmarks.
Mark Porterfield, a spokesman for PIMCO, didn’t respond to an e-mail seeking comment about the change and whether the mutual fund’s returns are comparable to the strategy subadvised for Columbia.