Morningstar goes all-California with bond fund manager of the year nominees

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Is it something in the water?

Investment research firm Morningstar Inc. on Wednesday announced the nominees for its annual bond mutual fund manager of the year award, and this year they’re all Californians.

It helps, of course, that the state has long been home to several of country’s biggest fixed-income fund firms, including Pimco, TCW Group, Western Asset and the Franklin/Templeton funds.

Bigger doesn’t necessarily mean better, but managers at Newport Beach-based Pimco this year took two spots on the list -- and a team of ex-Pimco managers now at L.A.-based Hotchkis & Wiley took a third.

All of the funds nominated had scored double-digit total returns year to date through Tuesday. But as market interest rates continue to rise, devaluing existing bonds, those gains are fading. For bond fund managers and their shareholders this year can’t end soon enough.

To pick its nominees Morningstar says it looks for managers who have “gone above and beyond the call of duty to do what’s right for shareholders, deliver superior long-term returns, and produce strong results for the year. We also look for good stewards who have developed sound strategies.”

The five 2010 nominees (Morningstar will announce the winner in early January) and the funds’ year-to-date returns through Tuesday:

--- Michael Hasenstab, Templeton Global Bond, San Mateo, Calif.; 11.8%.

--- Ray Kennedy and Mark Hudoff, Hotchkis and Wiley High Yield Fund, Los Angeles; 17.1%

--- Mark Kiesel, Pimco Investment Grade Corporate Bond, Newport Beach; 10.3%.

--- Curtis Mewbourne, Pimco Diversified Income, Newport Beach; 13.2%.

--- Tad Rivelle, Steve Kane, Laird Landmann and team, Metropolitan West Total Return Bond (now part of TCW Group), Los Angeles; 10.4%. Rivelle, Kane and Landmann also are Pimco alums from way back. They left in 1996 to start Met West.

Not nominated this year: Pimco Total Return Fund’s Bill Gross, whom Morningstar named bond fund manager of the decade for the 2000s. His fund is up 7.4% year to date.

-- Tom Petruno