Nontraditional Bond Funds

Nontraditional bond funds are like the grade-school kids that liked to color outside the lines. Here, the strategies often have very limited portfolio constraints on exposure to credit, sectors, currency, or interest-rate sensitivity. They may also have exposure to a mix of factors such as absolute return mandates (goals of producing returns not correlated with the overall bond market), performance benchmarks based on ultra-short-term interest rates (such as T-bills), and the ability to use a broad range of derivatives for market- and security-level positions.