The $9.7 billion Natixis Loomis Sayles Investment Grade Bond Fund, co-managed by Fuss, returned 2.6 percent this year through Oct. 4, Bloomberg data show. The $15.8 billion Metropolitan West Total Return Bond Fund, co-managed by Rivelle, gained 4.1 percent. Fuss' fund had no money in Treasuries as of July 31. Rivelle had 9 percent in Treasuries as of June 30, according to Morningstar. Both funds trailed their benchmarks in 2011, Bloomberg data show. They beat more than 90 percent of rivals over 5 years and 10 years, Morningstar data show.

Coming into 2011, most bond managers assumed the U.S. economy would grow at a faster pace and that interest rates would rise, said Colin Lundgren, head of fixed income at Minneapolis-based Columbia Management Investment Advisers LLC, where he oversees $170 billion in bonds. To prepare for that scenario, they cut Treasuries and added corporate bonds, which are less sensitive to rates, he said.

"We have been in a massively unusual environment which made Treasuries very hot," Morningstar's Jacobson said in a telephone interview from Overland Park, Kansas. "Most managers didn't want to hold a lot of Treasuries because they yielded so little."

Treasuries outperformed corporate bonds and mortgage bonds in 2011, data from Bank of America Merrill Lynch indexes show, and bonds with 5-10 year maturities topped bonds with shorter due dates. Over the past five years, longer maturities also did better.

"We have been in the sweet spot," Vanguard's Davis said in a telephone interview.

The Vanguard fund tracks the Barclays Capital U.S. 5-10 Year Government/Credit Float Adjusted Index. As of Aug. 31, the fund had 52 percent of its money in Treasuries, 3 percent in government agency securities and most of the balance in corporate bonds, Davis said. The average intermediate bond fund had 15 percent of its assets in Treasuries as of June 30, Morningstar data show.

The Vanguard fund has an average duration of 6.4 years compared with 4.8 years for the typical intermediate bond fund, according to Morningstar. Duration is a measure of how much the price of a bond will change when interest rates rise or fall. Morningstar defines intermediate bonds as those with maturities between 4 and 10 years.

"Declining interest rates have overwhelmed everything else," Margie Patel, who manages more than $1 billion in stocks and bonds for Wells Capital Management Inc., said in a telephone interview from Boston. Bonds with longer maturities are more sensitive to changes in rates, Patel said.

Gross, co-chief investment officer at Pacific Investment Management Co., had been reducing the vulnerability of his Total Return Fund to interest-rate swings and increasing its reliance on credit quality since July 2010 by shifting from Treasuries to corporate and non-U.S. sovereign debt.

The strategy backfired in August as the U.S. economy slowed and Europe's debt crisis worsened. The $242 billion Pimco Total Return Fund trailed 80 percent of rivals so far in 2011, according to Bloomberg data.