The Federal Reserve will start decreasing its unprecedented bond-buying program at its next meeting, according to Pacific Investment Management Co.’s Mohamed El-Erian.

“The longer you stay unconventional, the greater the risk of policy ineffectiveness,” El-Erian said in a radio interview on “Bloomberg Surveillance” with Tom Keene.

The Fed, which next meets Sept. 17-18, is “concerned about the costs and risks. They are trying to strike the balance between not interrupting the healing process but, on the other hand, making sure they don’t distort excessively the functioning of markets and asset allocation.”

Any cut in purchases will be announced alongside caveats in the Fed’s language that will allow policy makers to resume the purchases if needed, said El Erian, Pimco’s chief executive and co-chief investment officer, as the economy hasn’t reached “escape velocity.”

Minutes of the Federal Open Market Committee’s July meeting released on Aug. 21 showed members were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to taper purchases this year if the economy strengthens, with a few saying a reduction may be needed soon.

The Fed will trim its monthly purchases of $85 billion in Treasury and mortgage debt at the meeting in two weeks, according to 65 percent of economists in a Bloomberg survey this month.

Forward Guidance

The Fed’s transition away from asset purchases in favor of forward guidance, or announcements on short-term interest-rate policies, as their primary monetary easing tool may weaken the central bank’s ability to impact the economy, El Erian said.

“When you move from a policy that has a direct impact on markets because you are purchasing securities, to one where you’re trying to change and alter behavior through language, the effectiveness goes down,” El Erian said.

The proportion of U.S. government debt in Total Return, the world’s biggest bond fund, rose to 39 percent in July, from 38 percent in June, according to data on Newport Beach, California-based Pimco’s website.

The Total Return Fund shed $41 billion, or 14 percent of its assets, in the past four months through losses and investor withdrawals. The fund suffered $7.7 billion in net redemptions in August, Chicago-based researcher Morningstar Inc. said in an e-mailed statement, the fourth straight month of withdrawals.

Over the past five years, the $251 billion Total Return Fund has returned 6.72 percent, outperforming more than 87 percent of competitors. It lost 1.87 percent over the past year, placing it in the 50th percentile of its category, according to data compiled by Bloomberg. Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.97 trillion in assets as of June 30.