After $110 billion of outfllows, Pimco's Total Return finally lost its position as the world's biggest bond mutual fund - the result of underperformance, being caught between management turmoil and the ongoing trend of cost-sensitive investors shifting from actively managed to index funds, industry observers say.

With assets of $110.4 billion, Pimco's Total Return Fund fell behind the Vanguard Total Bond Market Index Fund, which had $117.3 billion as of April 30, Bloomberg reports.

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