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When bond funds think outside the box

Non-traditional bond funds, which can own debt instruments of any type, are becoming popular with investors eager for higher yields

Attracting interest: The level of assets in non-traditional bond funds tracked by Morningstar rose about 80 per cent last year, to US$123 billion. By the end of February, assets have increased to US$132 billion. - PHOTO: AFP

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