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Morningstar analysts may downgrade their ratings for Pacific Investment Management Co.’s (Pimco) mutual funds after a review of the firm’s regulatory issues, board quality, manager incentives, fees and corporate culture.

The research firm downgraded Pimco’s stewardship grade to a C from B after a visit to the company by Morningstar analysts March 10.

The highest grade is an A and the worst is an F. One of the categories used for Morningstar’s analyst ratings that looks at the priorities of the firm was also downgraded to neutral from positive.

Analyst ratings are qualitative, and different from the firm’s five-star rating system, which is based on risk-adjusted returns.

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Pimco co-founder Bill Gross has been entangled in an ugly split from his former heir apparent, Chief Executive Mohamed El-Erian, who left the firm this month.

The firm, which had $1.9 trillion in assets as of Dec. 31, has also been under pressure in the past 12 months amid underperformance and withdrawals from its largest fund, Total Return.

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