NEWPORT BEACH, Calif. ( TheStreet) -- Can any bond fund beat Bill Gross's Pimco Total Return ( PTTDX), which hasn't declined in a decade? Yes, the U.S. bond giant says: Pimco's own Unconstrained Bond ( PUBAX) fund. While Unconstrained Bond comes with some extra risk, it should outperform the $186 billion Total Return over the long term, Pimco contends. As its name suggests, Unconstrained Bond has considerable freedom to invest anywhere in the world. In contrast, Gross has stricter limits on how he manages his fund. By charter, Gross must track the Barclays Capital aggregate bond index, placing only limited bets on the direction of interest rates. Unconstrained Bond isn't tied to any benchmark. Under extreme circumstances, the young fund can short the bond market, betting that bonds will fall as interest rates rise. While Pimco Total Return can only put up to 10% of its assets in junk bonds, Unconstrained Bond can put up to 40%. Plenty of people are intrigued by the more aggressive approach. They have already invested $2.5 billion in the young fund. What has attracted much of the interest is Pimco's reputation for making shrewd market calls. In letters to shareholders and interviews with reporters, Gross and other Pimco managers present their outlook for the markets. They invest according to that view, and most often they have been right. When banks suffered huge loan defaults in the early 1990s, Gross decided that the problems weren't as serious as many investors believed. He bought bonds from Citicorp, the precursor to Citigroup ( C), riding them to huge gains. Gross scored another coup in the 1990s by buying emerging-market bonds that had been crushed when Asian markets melted down.