Updated with correction
Change was the keyword for 2014.
One of the world's most famous money managers left the firm he co-founded, the U.S.'s largest pension fund dropped hedge funds, and U.S. retirement plan assets moved further away from the defined benefit plan model as the pension funding crisis continued this past year.
The top story of 2014, according to Pensions & Investments' editors, was the yearlong turmoil surrounding Pacific Investment Management Co., the largest bond manager in the world, and the departures of its two top executives.
Ranking second was the year of change at CalPERS that culminated in the surprise September announcement that the nation's largest pension fund would shut down its hedge fund program.
The next three stories all dealt with changes that experts said could result in an accelerated movement by U.S. corporations away from defined benefit plans.
Ranking third was the continuing departure of U.S. corporations from defined benefit plans, as lump-sum offers and annuity buyout activity accelerated in 2014 due to improved funding ratios at the end of 2013; fourth was the movement of interest rates driven by global economics and the approaching end of quantitative easing; fifth was the new mortality tables published by the Society of Actuaries that increased life expectancies and therefore increased pension liabilities.
No money manager in 2014 experienced change quite like PIMCO, Newport Beach, Calif. The drama began in January with the resignation of Mohamed El-Erian, PIMCO's CEO and co-chief investment officer, the presumed successor to William H. Gross, co-CIO of the firm he co-founded in 1972.
Mr. Gross, who took on the sole CIO title and tweeted “Batteries 110% charged. I'm ready to go for another 40 years,” on the day Mr. El-Erian resigned, himself resigned a little more than eight months later.
Even before the exit of Mr. El-Erian, who joined PIMCO for the second time in 2007, the firm was on the kind of shaky ground not previously seen in its storied history. Lagging performance, as well as predictions that the firm could not sustain the kind of growth to which it has long been accustomed, dogged the firm in the months leading to Mr. El-Erian's resignation.
Reports that Mr. El-Erian left before he was pushed out because of a feud with Mr. Gross, as well as high-profile controversial appearances by Mr. Gross in the months following the break, eventually led to Mr. Gross' resignation on Sept. 26 to join Janus Capital Group.
In all, PIMCO's U.S. mutual funds had $150.2 billion in outflows in 2014, according to Morningstar Inc., Chicago.
That number includes $102.9 billion in outflows from the PIMCO Total Return Fund, which Mr. Gross had managed. In addition, numerous asset owners terminated PIMCO from a variety of separate account portfolios. The fallout continues.