Pimco's flagship fund – the Total Return Fund – is on a roll and showed no signs of slowing down in December, as the fund topped the $200 billion asset mark by the month's end, reports the Wall Street Journal's Min Zeng on Wednesday. Not only is Total Return the world's biggest bond fund, it is the largest mutual fund.

Pushing the assets past the $200 billion mark was the fund's $69.4 billion in net flows during December. In 2009, Total Return Fund posted a 13.8 percent gain, trumping the 5.93 percent return delivered by the Lehman Brothers U.S. Aggregate Index, the fund's benchmark. An equally rosy picture emerges for the fund's five-year performance as well, with the Total Return Fund returning 6.84 percent, compared to the benchmark's 4.97 percent.

From a strategy perspective, the fund appears to have benefited substantially from manager Bill Gross' decisions to trim the fund's mortgage-bond holdings during 2009 and slash its exposure to U.S. And U.K. Government bonds during December, reports Reuters, owing to concerns about the governments' debt issuance. By the end of the month, the Total Return Fund's weighting to MBS was raised slightly from 12 to 17 percent, while the fund's weighting to Treasuries dropped from 51 percent in November to 32 by month-end December. In 2010, Gross reportedly plans to shun Treasuries and U.K. Government debt in favor of German government debt.

Despite the fund's enticing track record, critics are beginning to ponder whether the fund is getting too big for its britches. After all, the legacy of 2009's 'too big to fail' mantra will inevitably cast its shadow on companies and funds well into 2010, no matter what the numbers might suggest now. 

Edited by: Patricia Kelly


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