By Min Zeng 

Pimco's Total Return Fund cut U.S. government-related debt in January and raised holdings of mortgage-backed securities, corporate debt and foreign-currency bonds.

The allocation signaled the world's largest bond fund by assets reached for higher yields last month, outside the ultrasafe U.S. government debt market. The yield on the benchmark 10-year Treasury note tumbled nearly half of a point last month, the biggest monthly decline since August 2011. Yields fall as their prices rise.

The holdings of the $134.6 billion fund are being monitored by investors following the abrupt departure of longtime Total Return manager Bill Gross in late September. Clients pulled $11.6 billion from the flagship fund of Pacific Investment Management Co. in January, the 21st consecutive month of withdrawals.

U.S. government-related holdings accounted for 37.71% at the end of January, compared with 43.19% at the end of December, and 37% at the end of November, according to data available late Tuesday on Pimco's website.

The Pimco fund's U.S. government-related holdings include Treasury bonds, Treasury inflation-protected securities, Treasury futures and derivatives linked to U.S. government debt securities.

The fund's holdings of mortgage-backed bonds was 30.27% at the end of January, compared with 25.43% at the end of December.

The fund held 14.01% in U.S. corporate bonds, compared with 13.56% at the end of December. The fund's emerging market holdings were 17.94%, compared with 17.67% at the end of December.

Holdings in developed countries other than the U.S., which include sovereign debt sold by the U.K., Canada and eurozone countries, rose to 0.26%, compared with 0.07% at the end of December.

Mr. Gross surprised the investing world on Sept. 26 when he announced his departure from Pimco, which he co-founded in 1971, following a year of heavy outflows from the Pimco flagship bond fund and a fight with his former chief executive and heir apparent.

The Pimco fund posted a total return--including price changes and interest payments--of 2.64% in January, beating benchmark index Barclays U.S. Aggregate Bond Index, which gained 2.1%, according to data from Morningstar.

The fund posted a total return--including price changes and interest payments--of 4.69% in 2014, trailing the 5.97% return from the index.

The fund maintains a solid long-term track record. Its annualized average return over the past 15 years through Monday was 6.93%, beating 96% of its peers.

Write to Min Zeng at min.zeng@wsj.com

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