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PIMCO Settles Suit, Promotes Emerging-Markets Bond Skipper

Plus, equities and fixed income now under single CIO at DWS, and more.

Morningstar Analysts, 01/03/2011

PIMCO announced that it has settled a class-action lawsuit relating to the firm's trading of futures contracts in 2005. The suit involved accusations that PIMCO helped to improperly enrich its clients, but the $92 million settlement is being paid solely out of PIMCO coffers from reserves it set aside during the last three years. PIMCO funds will be unaffected, and the firm does not expect the statement will affect its future financial performance, compensation for any staff, or any future plans for growth.

Ramin Toloui will take over as lead manager of PIMCO Emerging Markets Bond PEMDX on Jan. 1. Toloui, who is a comanager with CEO Mohamed El-Erian on PIMCO Global Advantage Strategy PSAIX, will replace Curtis Mewbourne, who has managed the fund since April 2009. Mewbourne is moving to New York to oversee PIMCO's growing stable of portfolio managers there. While Mewbourne will continue running PIMCO Diversified Income PDIIX (for which he is nominated to be named Morningstar Fixed-Income Fund Manager of the Year) and PIMCO Floating Income PFIIX, his new responsibilities are forcing him to shed his role with Emerging Markets Bond.

This is a significant promotion for Toloui, who has only been with the firm since 2006. That said, he's not new to emerging markets. He currently manages about $10 billion in institutional and separate emerging-market accounts. Before joining PIMCO, Toloui worked for seven years in the U.S. Treasury, where he helped intervene in debt crises in Argentina and Turkey.

Toloui will also be the co-head of PIMCO's overall emerging-markets effort with Michael Gomez, who runs PIMCO Developing Local Markets PLMDX and PIMCO Emerging Local Bond PELBX. As indicated by their portfolio responsibilities, Toloui will focus on so-called "hard-currency" bonds (such as those denominated in the U.S. dollar, euro, or other developed currencies), while Gomez will stick mostly to local-currency debt.

DWS Brings Equities and Fixed Income Under One CIO
On Dec. 29, DWS announced changes in the firm's management that unites equities and fixed income under a single CIO.

Klaus Kaldemorgen is stepping down as equity CIO (a role he's held since 2005) to concentrate exclusively on investment management, including new absolute-return funds. He started at DWS in 1982. Asoka Woehrmann, fixed-income CIO, will retain that role and take over equity CIO responsibilities, as well.

Additionally, Wolfgang Matis will be appointed as speaker of the management board of DWS Investment GmbH and global CEO of DWS. He will report to Kevin Parker, Deutsche Asset Management's global head. (DWS is the mutual fund arm of Deutsche Asset Management.)

Finally, Ingo Gefeke--the firm's global head of distribution and product management--is stepping down from the DWS board of management and will take on a new role with Deutsche Asset Management in New York. Also, Axel Schwarzer, on the DWS board of management and vice chairman of Deutsche Asset Management, is leaving.

Neuberger Berman Founder Passes Away
Legendary value investor and avid art collector Roy R. Neuberger passed away recently at the age of 107. He founded mutual fund firm Neuberger Berman in 1939.

Wells Fargo Announces Manager Changes
Wells Fargo recently announced a number of management changes.

Walter McCormick and Emory Sanders, who managed Wells Fargo Advantage Classic Value ETRAX and Wells Fargo Advantage Core Equity EVVTX, have left Wells Capital Management. James Tringas will take over as the sole manager on Classic Value and Ann Miletti will run Core Equity. Miletti currently runs the well-performing Wells Fargo Advantage Opportunity SOPVX and Wells Fargo Advantage Common Stock STCSX funds and she will remain on those offerings.

Senior research analyst Bruce R. Johns is now the comanager of Wells Fargo Advantage Pennsylvania Tax-Free EKVAX with Robert Miller, who has been running the fund solo since November 2009.

Finally, Michael C. Bray will become a comanager with Christopher Kauffman of Wells Fargo Advantage Adjustable Rate Government ESAAX, replacing Richard Applebach. Bray also helps run the Wells Fargo Advantage Government Securities STVSX and Wells Fargo Advantage Income Plus STYAX funds.

Eve Guernsey, who retired as CEO of investment management Americas at J.P. Morgan Asset Management in August 2010, hasn't stayed idle for long. She is filling the board seat left vacant at Lord Abbett by the retirement of William H.T. Bush.

Aston is launching another new offering subadvised by River Road. It will be a a long-short fund managed by Matthew Moran and Greg Deuser. The expense ratio for the N shares will be 1.95% after fee waivers and expense reimbursements, above the median for no-load long-short funds.

Munder Energy MPFAX and Munder Healthcare MFHAX are slated to be merged into Munder Growth Opportunities MNNAX pending a shareholder vote on Feb. 25, 2011. These are the last of the firm's sector funds. The once-huge Munder Netnet (which went over the $10 billion mark in the dot-com craze) was merged away a couple of years ago.

Daphne Car joined the portfolio-management team of Lord Abbett California Tax-Free Income LCFIX. Car comanages the fund with Daniel Solender.

Philip Herman joined the portfolio-management team of Lord Abbett New Jersey Tax-Free Income LANJX and Lord Abbett New York Tax-Free Income LANYX. The funds are now comanaged by Herman and Solender.

Arthur Weise joined the portfolio-management team of Lord Abbett Developing Growth LAGWX. The fund is now comanaged by Weise and F. Thomas O'Halloran.

WestEnd Advisors replaced Analytic Investors as a subadviser of SEI Institutional Managed Trust Large Cap SLGAX. Robert Pharr manages WestEnd Advisors' sleeve of the fund.

William Blair & Company was added as a subadviser to SEI Institutional Managed Trust Small Cap SLLAX, SEI Institutional Managed Small Cap Value SESVX, and SEI Institutional Managed Tax-Managed Small Cap STMSX.

Lee Munder Investments is no longer a subadviser for SEI Institutional Managed Small Cap Growth SSCGX.

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