PIMCO Total Return Sees First Month of Outflows in Two Years

Bill Gross'  PIMCO Total Return (PTTRX), the largest taxable-bond fund in the country with $256 billion in assets, saw redemptions of $1.9 billion in November according to preliminary Morningstar fund flow data. This was the fund's first month of net outflows in two years.

PIMCO Total Return wasn't alone. The Morningstar Intermediate-Term Bond Category, the category with the largest amount of inflows this year with more than $74 billion, had $154 million in outflows in November. Like PIMCO Total Return, this was the category's first month of net outflows in two years.

Gross said earlier this year that "bonds have seen their best days," and investors may be finally taking Gross' proclamation to heart. The rise in bond yields in recent weeks has led to sharp declines in bond funds. The 10-year Treasury note's yield increased to 2.81% from 2.63% in November.

PIMCO Total Return lost 1.5% in November alone, its worst month since September 2008. The Barclays Capital U.S. Aggregate Bond Index declined 0.57% in November.

The fund's advisor, PIMCO, still took in $1.1 billion for the month, thanks in part to the continued popularity of  PIMCO Unconstrained Bond (PFIUX), which absorbed $700 million.  PIMCO Commodity Real Return Strategy (PCRIX) fared even better with $800 million in inflows.

PIMCO's McCulley to Retire
PIMCO announced late last week that managing director Paul McCulley will retire at the end of the year to join a think tank.

McCulley joined the firm in 1999. He heads PIMCO's short-term bond desk, is a member of PIMCO's investment committee, and is author of the monthly research publication, Global Central Bank Focus.

Jerome Schneider will replace McCulley as manager of  PIMCO Short-Term (PSHAX) Jan. 1. Prior to joining PIMCO in 2008, Schneider was a senior managing director with Bear Stearns.

DoubleLine Discloses Federal Inquiry
Federal law enforcement officials are investigating DoubleLine personnel for misappropriation of proprietary TCW information.

DoubleLine, the firm started by TCW's former CIO and star bond-fund manager Jeffrey Gundlach, recently provided details about the federal inquiry first disclosed in April in its most-recent SEC filings.

DoubleLine was required to file an amended prospectus because of the recent litigation commenced by TCW against the DoubleLine mutual funds and its trustees. Details regarding that private litigation were made public last week.

DoubleLine Capital LP, the advisor to the DoubleLine mutual funds, disclosed to the fund's trustees that employees and former employees of DoubleLine have been interviewed by the office of the United States Attorney for the Southern District of New York in connection with the same allegations of misappropriation of proprietary information made by TCW in its litigation against DoubleLine.

DoubleLine says the inquiry stems at least in part from a federal grand jury inquiry. Doubleline said in a statement that it has and will continue to cooperate fully with the government's inquiry.

American Beacon Ditches MetWest Capital
On Nov. 22, American Beacon notified MetWest Capital of its intent to terminate its services as a subadvisor on  American Beacon Large Cap Value (AAGPX) and  American Beacon Small Cap Value (AVPAX).

MetWest Capital's recent management shakeup, rather than its performance as a subadvisor, was the reason for the change. In October, MetWest Capital's cofounder and CIO Howard Gleicher left the firm to start a competing investment manager. It was a significant loss; he had served as CIO since MetWest Capital's founding in August 1997 and had been the lead manager for the firm's sleeve here since November 2000.

American Beacon selected Steven Gorham and Nevin Chitkara of MFS to replace MetWest at Large Cap Value. Gorham and Chitkara also comanage MFS' large-cap value strategies, including  MFS Value (MEIAX).

American Beacon does not intend to replace MetWest Capital on Small Cap Value.

Etc.
 MSCI (MSCI) announced it has launched a series of value-weighted indexes similar to the fundamental indexes launched by Robert Arnott's firm Research Affiliates in 2005. Each MSCI Value Weighted Index reweights the constituents of a standard MSCI parent index on four fundamental accounting variables: sales, earnings, cash earnings, and book value.

Vanguard recently detailed estimated year-end distributions for its funds.

Touchstone Investments replaced Turner Investment Partners Inc. on  Touchstone Small Cap Value  (formerly Touchstone Small Cap Value Opportunities) with DePrince, Race & Zollo Inc. The $66 million fund has struggled since its launch in 2002.

Michael Goldstein, the lead manager of Lord Abbett High Yield (LHYAX), left the firm this week. The fund's other listed manager, Chris Towle (who manages  Lord Abbett Bond-Debenture (LBNDX) and comanages several other funds) is staying on. He's being joined on High Yield by Steven F. Rocco. Rocco was removed from the portfolio-management team of Lord Abbett Income (LAGVX) and Lord Abbett Short Duration Income (LALDX).

OppenheimerFunds has launched Oppenheimer Rochester Short Term Municipal Fund and Oppenheimer Rochester Intermediate Municipal Fund. Including these new national funds, the roster of Oppenheimer Rochester municipal-bond funds includes five national municipal-bond funds and 15 state-specific funds.

The Scout Funds board of trustees has decided to liquidate Scout Money Market Fund-Federal Portfolio, Scout Money Market Fund-Prime Portfolio, and Scout Tax-Free Money Market Fund.

John V. Miller has been named portfolio manager of the  Nuveen All-American Municipal Bond (FLAAX), succeeding John Wilhelm.

Aberdeen Natural Resources  changed its index from the S&P North American Natural Resources Sector Index to the S&P Global Natural Resources Index.

Credit Suisse Large Cap Blend  has agreed to waive fees and reimburse expenses so that the fund's annual operating expenses will not exceed 1.3% of assets for A shares and 2.05% of assets for B and C shares.  Credit Suisse Commodity Return Strategy (CRSAX) has agreed to waive fees and reimburse expenses so that the fund's annual operating expenses will not exceed 0.8% of the fund's assets for Common Class shares, 1.05% for A shares, and 1.8% for C shares. The waivers and expense reimbursements may be discontinued at any time.

Causeway Capital Management is a new subadvisor to Strategic Advisers International  (FILFX). The fund is now managed by Causeway Capital Management and Pyramis Global Advisers. Causeway's portion of the fund's assets is managed by Sarah Ketterer, Harry Hartford, James Doyle, Jonathan Eng, Kevin Durkin, and Conor Muldoon.

The board of trustees of John Hancock Value Opportunities  has decided to liquidate the fund and distribute its assets to shareholders by Feb. 11, 2011.

John Wong replaced Vanessa Shiu as a portfolio manager for Oberweis China Opportunities (OBCHX), joining James Oberweis.

D. Andrew Shipman is no longer on the management team of PNC Balanced Allocation  or PNC Large Cap Value . PNC Balanced Allocation is now managed by Gordon Johnson, Edward Johnson, Doug Roman, Martin Schulz, Andrew Harding, Michael Santelli, and Alex Vallecillo. PNC Large Cap Value is now managed by Edward Johnson, Michael Santelli, and Alex Vallecillo. Paul Hayes is no longer on the management team of  PNC Mid Cap Value . The fund is now managed by Michael Santelli, Alex Vallecillo, Edward Johnson.

The board of directors of Prudential Small Cap Core Equity  approved the reorganization of the fund into Prudential Small Cap Value . Given shareholder approval, the reorganization will take place in the first quarter of 2011.

Roberta Goss is no longer a portfolio manager of  Goldman Sachs High Yield (GSHAX).

Effective Feb. 21, 2011, Federated International High Income (IHIAX) will change its name to Federated Emerging Market Debt.

SEI Institutional U.S. Managed Volatility (SVOAX) added LSV Asset Management as a subadvisor. LSV's portion of fund assets is managed by Josef Lakonishok, Menno Vermeulen, and Puneet Mansharamani.

CSI Capital Management has resigned as advisor to CSI Equity . Until the board of directors of the fund finds another advisor, CSI Capital Management will continue to act as the fund's investment advisor.

The board of trustees of Virtus AlphaSector Allocation  approved the merger of the fund into Virtus AlphaSector Rotation . Given shareholder approval, the merger will take place on Jan. 21, 2011.

On Jan. 1, 2011, Tony Elavia will no longer be a member of the New York Life Investment Management's portfolio-management team for  MainStay Balanced (MBNAX) or the MainStay Asset Allocation (MainStay Conservative Allocation (MCKAX)) or MainStay Retirement funds (MainStay Retirement 2050 ). MainStay Balanced will be managed by Thomas Girard, Harvey Fram, and new manager Jae Yoon. New York Life Investment Management's portion of the MainStay Asset Allocation and MainStay Retirement funds will be managed by Jae Yoon and Jonathan Swaney.

On Jan. 1, 2011, Madison Square Advisors will no longer serve as subadvisor to the MainStay Asset Allocation (MainStay Conservative Allocation) or MainStay Retirement Funds (MainStay Retirement 2050). The funds will still be managed by New York Life Investment Management.

Sean Feeley, Scott Roth, and Jeffrey Stewart joined the management team of MassMutual Premier High Yield (MPHAX).

This article was edited to clarify that the original details of DoubleLine's federal investigation were disclosed by DoubleLine in April 2010. We originally reported they were first disclosed this week.

Mutual fund analyst Kailin Liu and editorial director Kevin McDevitt contributed to this report.