Instead, unconstrained (also called nontraditional) funds were designed to protect investors against losses that come with rising yields by making unconventional calls, such as betting on Treasury-market losses and delving into riskier and more esoteric corners of debt markets, sometimes even owning stocks.

What does unconstrained fixed-income mean?

Unconstrained investing focuses on performance over time, rather than on short-term gains. ... For example, in the case of fixed-income investing, managers are not required to adhere to specific bond ratings, currencies, or sectors as these requirements may only apply to a portion of the portfolio.

What is an unconstrained bond?

An unconstrained bond fund can invest in a wide range of debt instruments in terms of sector, country, or currency, without duration constraints. It is not designed to track a specific benchmark, has less stringent or no limits on duration and sector exposure, and can use derivatives.