Pacific Investment Management Co’s flagship Total Return fund is headed for its biggest quarterly loss in two years, hurt by a broad selloff in high-grade debt markets in the US and Europe.

The $107.3 billion fund has posted a negative total return of 1.97% this quarter through Thursday, according to data from fund tracker Morningstar that accounts for price moves and interest payments. It was the fund's biggest three-month loss since the second quarter of 2013 when the bond market was rattled by the so-called taper tantrum, or fears over reduced bond buying from the Federal Reserve.