By Jennifer Ablan

NEW YORK (Reuters) - Bill Gross's Janus Global Unconstrained Bond Fund (JUCAX.O) suffered its second day of declines in its net asset value on Tuesday, wiping out gains for the year, according to fund-research firm Morningstar Inc on Wednesday.

The $1.5 billion Janus fund's returns stood at negative 2.63 percent year-to-date as of Aug. 25, which places Gross's portfolio behind 92 percent of its peers category, Morningstar said. The Janus Global Unconstrained Bond Fund was down 0.42 percent on Tuesday after a 2.86 percent decline on Monday.

"Looking to their asset allocation as of July 31, the fund has 6 percent or so exposure to equity-related securities and has 20 percent in high-yield bonds while another 14 percent in non-rated bonds," said Todd Rosenbluth, director of ETF & Mutual Fund Research at S&P Capital IQ Global Markets Intelligence. "This is an approach that will not benefit from a flight to quality of investment-grade corporates and Treasuries."

Unconstrained bond funds had become some of the most popular investment vehicles in the 2013 Taper Tantrum after the Fed hinted at the possibility of tapering its bond purchases sooner than previously expected, causing bond yields to rise sharply.

In the Taper Tantrum investors liked the funds because they have the flexibility to invest in all types of bond securities globally and often choose corporate credit securities rather than interest-rate sensitive assets.

The inflows continued for some unconstrained bond funds into 2014, but then as bonds rallied that year and rates fell, some of the funds underperformed, and investors began moving out of some of them.

Rosenbluth said, "Investors would have been better in a traditional bond fund."

A Janus spokeswoman did not respond to requests for comment.

Wednesday, Gross tweeted about New York Fed President William Dudley's remark that he was confident China had the policy tools to stabilize the economic and financial situation. "Sort of like the "successful" tools other central banks have used for 6 years???" Gross said on Twitter.

Last month, Janus Capital Group Inc (JNS.N) announced Gross would be getting help running his mutual fund from Kapstream Capital Pty Ltd's Kumar Palghat after the Denver-based Janus acquired a majority stake in Kapstream.

(Reporting by Jennifer Ablan; Editing by Phil Berlowitz)