Morningstar Inc. analysts have downgraded Pacific Investment Management Co.’s overall stewardship grade by one notch, reflecting a higher degree of uncertainty after the departure of its Chief Executive Officer Mohamed El-Erian and other key personnel.

The research firm downgraded Pimco’s stewardship grade to a C from B following a comprehensive review of Pimco which included a visit to the Newport Beach, California-based fund company by Morningstar analyst Eric Jacobson on 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 called Parent Pillar 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.

Morningstar analysts said: The changes to Pimco’s Stewardship Grade and Parent Pillar score do not automatically affect Pimco funds’ overall Morningstar Analyst Ratings for Funds, yet it is logical to assume that Morningstar analysts would move quickly from here to reassess those ratings on a fund-by-fund basis.

The downgrade was also because of lower levels of investments by Pimco managers in their own respective funds.

Morningstar has found that portfolio managers who invest in their funds show a conviction in their investment approach and their funds perform better on average, particularly on a risk-adjusted basis.

Morningstar also said the firm is preparing a follow-up piece for early April 2014 that will summarize our current opinions on individual Pimco funds. In that piece we’ll also answer a number of Pimco-related questions that we have been receiving most frequently from investors.

On Feb. 24, the Wall Street Journal reported that former Pimco CEO El-Erian’s close relationship with Pimco co-founder Bill Gross had soured as the firm’s investment performance deteriorated last year. Then Gross told Reuters that his one-time lieutenant was trying to undermine him and that he had evidence El-Erian wrote the Journal article.

On Monday, El-Erian told Reuters that he wanted to steer clear of the drama surrounding his falling out with Gross for now.

In his first phone interview since leaving the world’s largest bond fund, El-Erian declined to discuss what he thought about reports that a clash with Gross led to his resignation. He also would not discuss Gross’ comments questioning his investment record, or Gross’ allegation that he was trying to undermine him.

Morningstar analysts remarked on those recent news stories in their report on Tuesday: A number of media articles have focused on the fractious interactions between CIO Bill Gross and El-Erian; short-term performance challenges and outflows at a few of the firm’s funds; and Gross’ at-times tempestuous behavior.

Those articles generally did not directly address the question of whether El-Erian’s departure, Gross’ behavior, or the recent leadership changes have actually impaired or benefited Pimco’s investment process and investment culture. We’ve been delving into that question in a series of extensive conversations with Pimco’s leadership.

2015 Thomson/Reuters. All rights reserved.