Bond giant Pimco was dropped as the manager of a $1.3-billion bond fund and replaced by its Southern California rival, TCW Group Inc.
The fund, which is offered by Columbia Management, was formerly called the Pimco Mortgage-Backed Securities fund. It will now be known as the TCW Core Plus Bond Fund, according to a statement from TCW.
The size of the fund is small compared with the $1.9 trillion that Pacific Investment Management Co. managed at the end of the year. However, losing that business comes at an inopportune moment for the Newport Beach company.
Pimco has been thrust into an uncomfortable spotlight with the surprise resignation of its chief executive in January and the subsequent disclosure of friction between the departing executive and star fund manager Bill Gross.
A story in the Wall Street Journal last month painted an unflattering portrait of Gross' management style, including publicly dressing down employees and discouraging them from speaking to him or making eye contact.
The article said he and Mohamed El-Erian, the outgoing CEO, had clashed in front of colleagues, with El-Erian complaining that he had to clean up messes created by Gross. Gross, in turn, belittled El-Erian and compared himself to Secretariat, the Triple Crown thoroughbred racehorse.
A Pimco spokesman did not return an email Thursday seeking comment.