UNCONSTRAINED bond funds can own debt instruments of any type - long or short-term, high or low-quality, corporate or government or whatever, in any country and currency - to try to enhance returns. With interest rates near record lows and investors eager to bolster yields, enthusiasm for these portfolios, also known as non-traditional funds, seems boundless, too.
The level of assets in non-traditional bond funds tracked by Morningstar rose about 80 per cent last year, to US$123 billion. They continued to attract fresh money early this year, reaching US$132 billion in assets at the end of February. How richly have shareholders been rewarded for these funds' ability to go anywhere in search of...
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