Pimco fund loses crown to Vanguard

Pimco has also been able to trumpet some market-beating performance by the Total Return Fund under new managers Scott Mather, Mark Kiesel and Mihir Worah, in part thanks to a bet against the euro. Having returned 1.62 per cent after fees, the fund is in the top quarter of funds in its category this year, research firm Morningstar says. However, its performance has been volatile and in the past month has been worse than 97 per cent of all funds.

The US aggregate bond index, which is tracked by the Vanguard fund, has returned 0.91 per cent over the same period, according to Barclays Indices.

Turmoil sparked by the sudden exit of Bill Gross last September has cost the Pimco Total Return Fund its title as the world's largest bond mutual fund, after another month of withdrawals in April.

The fund's assets slipped to $110.4bn at the end of last month, compared to $117.3bn in the Vanguard Total Bond Market Index Fund.

The changing of the guard means that Vanguard now runs both the largest equity market mutual fund and the largest fixed income fund in the world.

Pimco, a unit of Germany's Allianz, said on Monday that clients had pulled $5.6bn from the Total Return Fund last month, taking the outflow since Mr Gross's departure to more than $110bn. April's figure was the smallest monthly outflow since Pimco managers moved to oust Mr Gross as chief investment officer and he walked out to join smaller rival Janus Capital.

Under Mr Gross, dubbed the Bond King for his decades of successful investing, Pimco Total Return assets peaked at $293bn in 2013. Customer withdrawals began that year as the Federal Reserve began talk of tightening monetary policy, and accelerated as Mohamed El-Erian quit as Mr Gross's co-chief investment officer in January 2014.

Vanguard, meanwhile, has continued to attract investors to its low-cost tracker funds, even though many bond market veterans question the value of index investing. Bond market indices reflect the universe of available bonds, so can be skewed to government bonds and issues by heavily indebted companies.

Other active bond fund managers have also been big beneficiaries of Pimco's woes, in particular MetWest and DoubleLine, which run similar core bond funds.

Newport Beach, California-based Pimco has attempted to shore up relations with clients since the 2014 upheaval, emphasising a new generation of investment talent and adding star advisers, including former Federal Reserve chairman Ben Bernanke last week.

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