– Bill Gross, in an investment outlook in April, pondered his legacy in a new era of shrinking bond returns.

Almost a year later, his largest fund, the $236 billion PIMCO Total Return, is trailing rivals, prompting clients to pull money for 10 consecutive months. On top of that, the 69-year-old is entangled in an ugly split from his former heir apparent, Mohamed El-Erian, 55.

The departure of El-Erian and other top executives in the past year has become a distraction at a critical time for Pacific Investment Management Co., the Newport Beach, Calif., firm Gross co-founded in 1971 and built into the world’s largest fixed-income manager amid a 30-year rally in bonds.

“We prefer our portfolio managers to simply manage portfolios and not spend time thinking about what’s being said in the media,” said Michael Rosen, chief investment officer at Angeles Investment Advisors of Santa Monica, Calif.

Gross’ PIMCO Total Return Fund has declined 0.6 percent in the past year, trailing 76 percent of rivals and underperforming the Barclays U.S. Aggregate Index, according to data compiled by Bloomberg. This year, the fund has advanced 1.45 percent, ahead of 56 percent of peers.

“No distractions here — just long term performance satisfaction — working hard as always for clients,” Gross wrote Monday in a message on Twitter.

The billionaire’s introspective notes in the April outlook came just as bond markets entered a period of turmoil after former Federal Reserve Chairman Ben Bernanke signaled in May that the central bank would start unwinding its unprecedented asset purchases. Investors responded by pulling a record $9.6 billion from PIMCO Total Return in June, according to data from Morningstar Inc.

Growing tensions

Tensions between Gross and El-Erian mounted around that time, according to two people familiar with the firm who asked not to be identified because the matter is private. During an investment committee meeting in June, Gross lashed out at El-Erian, the people said.

El-Erian on Jan. 21 announced his resignation from PIMCO. He declined to comment on the meeting.

The Wall Street Journal first reported details of the June meeting in its Feb. 25 edition. The newspaper, citing people it didn’t identify, said that Gross and El-Erian disagreed over trading strategy, personnel decisions, new products and Gross’ treatment of employees.

In a March 6 story published on the Reuters website, Gross said he had evidence El-Erian was trying to “undermine” him by talking to the media about conflicts at PIMCO. Gross said El-Erian “wrote” the Wall Street Journal article and “indicated” he had been monitoring El-Erian’s phone calls, Reuters reported.

A spokesman for PIMCO told Reuters that Gross didn’t make the statements attributed to him, and that he “categorically denies” that his firm listened in on El-Erian’s phone calls. Mark Porterfield, a spokesman for PIMCO, declined to comment on the Reuters story, as did Petra Brandes, a spokeswoman for PIMCO’s parent, Allianz SE. Reuters stands by the fairness and accuracy of its story, Heather Carpenter, a spokeswoman, said in an e-mail.

“This is an astoundingly incorrect claim about a thoroughly reported article that was in the best tradition of the Wall Street Journal,” Colleen Schwartz, a spokeswoman for Dow Jones, which publishes the Wall Street Journal, said in an e-mailed statement.

Big withdrawals

PIMCO suffered record redemptions of $41.1 billion in the Total Return Fund last year, based on data from Morningstar. Clients pulled a net $1.6 billion from the fund in February, according to PIMCO, even as investors put $3.5 billion into all bond mutual funds last month, according to estimates from Investment Company Institute.

The redemptions don’t include institutional accounts. PIMCO’s assets under management have declined to $1.91 trillion as of Dec. 31, from a peak of $2.04 trillion as of March 31.

“The most important thing in this business is performance,” said Thomas Seidl, an analyst at Sanford Bernstein who covers PIMCO parent Allianz. “If PIMCO had good performance, people wouldn’t care about the noise so much.”

Gross’ returns are still among the best in the industry over the long run. PIMCO Total Return Fund beat 96 percent of peers over the past 15 years, according to Morningstar. By his own standards, that may not be enough unless he can adapt to a changing market.

“Am I a great investor?” Gross wrote in his April investment outlook. “No, not yet.”