Pimco's flagship bond product has lost its status as the world's largest mutual fund, Morningstar data has shown.
The $248 billion Pimco Total Return fund was overtaken by the Vanguard Total Stock Market Index fund, a product which tracks the entire U.S. equity market, in October, according to the funds data provider.
The Vanguard fund had $288 billion of assets at the end of October.
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The Pimco Total Return fund, which is run by renowned bond manager Bill Gross, saw its sixth consecutive month of outflows in October, as investors withdrew $4.4 billion of net assets, bringing total outflows to $33.2 billion year-to-date.
The Pimco product has lagged the sector of late, returning 0.9 percent in October, compared to a 1 percent average return by U.S. intermediate term bond funds - those with maturity levels of 10 to 15 years - Morningstar data showed. The Pimco fund has lost 1.29 percent over the past year, compared to an average 0.71 percent loss.
Investors' healthy appetite for stocks, which has seen the S&P 500 power 24 percent higher this year, has dampened demand for fixed income investments in general.
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Concern over the end of the U.S. Federal Reserve's quantitative easing program, which is expected to eventually lead to higher interest rates, has made bond products less attractive to investors.
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"At a macro level, this reflects the rotation away from bonds," said Rob Aspin, head of equity strategy at wealth management group for Standard Chartered bank.
"The bond market is in a thirty-year cycle, and its bull market started in 1980 so we should be close to the bottom now. We expect yields [on Treasurys] to continue rising over the longer term and expect the US 10-year [yield] to hit around 3 percent over 6 months and approximately 3.5 percent 12 months out," he added.
Morningstar data also showed that global appetite for fixed income has waned over the past year.
Year-to-date, fixed income funds have attracted roughly $150 billion worth of net flows (the amount of inflows minus redemptions), while their equity counterparts have attracted around $219 billion on a global scale.
Pimco were not immediately available for comment.
— By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie