Not even the King of Bonds could escape the carnage when Federal Reserve chairman Ben Bernanke intimated this spring that later this year the central bank would reduce its monthly purchases of U.S. Treasuries and mortgage securities, sending interest rates soaring. In the second quarter, a whopping $17.7 billion in net assets fled Pacific Investment Management Co.'s Core Plus — Total Return Full Authority strategy, managed by bond guru Bill Gross, according to Atlanta-based eVestment, which tracks data on 53,000 funds held by investors. The exodus reflects a broader shift in bond asset allocation as institutional investors search globally for yield.

With $476 billion in assets, the Pimco strategy combines core medium-term U.S. bond assets, such as Treasuries, with investment-grade, higher-yielding bonds that together raise the total return of the portfolio. The bulk of the assets reside in the $261.7 billion Total Return Fund, which Pimco co-founder and co-CIO Gross has run since 1987.

....