Bill Gross' Pimco Total Return fund has lost its position as the largest mutual fund in the world after investors pulled over 13% of assets from the fund since the summer.
Gross' fund - which has more than doubled in size between 2008 and 2012 according to Bloomberg - attracted $50.1bn in 2009 and $22.6bn in 2012, but has had a tough year in 2013 as investors turn away from fixed income.
Bond markets have suffered a heavy sell-off after a monumental bull market that has spanned three decades.
Investors are now concerned over the outlook for bonds, and with yields so depressed they have been looking to equities for returns instead.
Bond funds across the globe have suffered as a result, with US mutual bond funds seeing redemptions of $117bn (£73bn) in four month to September, according to Bloomberg.
In July, nervous investors pulled as much as $10bn from Gross' fund, but the veteran manager dismissed the sell off as a "minor skirmish as opposed to a major war", speaking to CNBC in August.
However, the outflows continued to mount, climbing to $37.5bn year to date, Bloomberg reports.
As a result, the fund's AUM has dropped from $280bn at the start of the year to $247.9bn by the end of October, pushing it down into second place behind the $251bn Vanguard Total Stock Market Index fund for the first time since 2008.
The Vanguard index fund attracted $14.5 billion in contributions this year, including $2.1 billion in October, according to estimates from Morningstar.
Gross' fund, which became the largest mutual fund in 2008, is on track to suffer the highest redemptions in its history this year, according to estimates from Morningstar.
Improving portfolio diversification
Hanging on the telephone
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