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Gross Trails Index Fund as Top Managers Miss Treasuries Rally

Bill Gross’s Pimco Total Return Fund, the world’s biggest mutual fund, is trailing a low-cost Vanguard index fund this year as some of the top bond investors were blindsided by the rally in Treasuries.

Gross’ fund returned 1.5 percent this year through Oct. 4, compared with 8.9 percent for the $10.4 billion Vanguard Intermediate Term Bond Fund, which outperformed 99 percent of intermediate bond funds tracked by Chicago-based Morningstar Inc. The Vanguard fund, which tracks an index rather than trying to beat it, topped managers including Loomis Sayles & Co.’s Dan Fuss and TCW Group Inc.’s Tad Rivelle.