Last year was a poor one for bonds, with the Barclays U.S. Aggregate Bond Index falling 2 percent.

Pimco co-chief investment officer Bill Gross, who predicted the decline, thinks the trend will continue.

"It's almost as obvious now as it was a year ago," he told The New York Times.

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"All bonds are still artificially priced, and that means artificially high. So the question becomes, does that change anytime soon?"

The Federal Reserve's cautious approach to tapering its quantitative easing and its forward guidance for keeping short-term interest rates at record lows have kept long-term rate increases gradual in recent months, Gross noted.

"I think the trend will continue in 2014," he predicted.

But the direction has been set. "Ultimately, if you've got artificial prices, at some point, those prices begin to head down like we saw in May," Gross said. "That was a wake-up call to mom-and-pop investors that bonds can go down."

Even though cash yields virtually nothing, he believes it's a reasonable play now. "My money market fund yields 0.01 percent. You can do a little better in a short-term Treasury fund or exchange-traded fund. But we're down to slim pickings.”

Last year, Pimco suffered from the fact that Gross misjudged the timing and impact of the Fed's tapering, Bloomberg reported. The Total Return Fund dipped 1.9 percent in 2013, its first loss since 1999 and its worst loss since 1994.

Gross' stance hurt other Pimco funds as well, with only two of its 11 largest funds outperforming more than half of their rivals last year, according to Bloomberg.

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