Nontraditional Bond

The Nontraditional Bond category contains funds that pursue strategies divergent in one or more ways from conventional practice in the broader bond-fund universe. Many funds in this group describe themselves as "absolute return" portfolios, which seek to avoid losses and produce returns uncorrelated with the overall bond market; they employ a variety of methods to achieve those aims. Another large subset are self-described "unconstrained" portfolios that have more flexibility to invest tactically across a wide swath of individual sectors, including high-yield and foreign debt, and typically with very large allocations. Funds in the latter group typically have broad freedom to manage interest-rate sensitivity, but attempt to tactically manage those exposures in order to minimize volatility. The category is also home to a subset of portfolios that attempt to minimize volatility by maintaining short or ultra-short duration portfolios, but explicitly court significant credit and foreign bond market risk in order to generate high returns. Funds within this category often will use credit default swaps and other fixed income derivatives to a significant level within their portfolios. Morningstar®

Putnam Absolute Return 100 Fund (PARTX)

Performance (1-yr.): 1.37% Expenses: 0.64%
Performance (1-mo.): 0.30% Total Assets: $257.27M
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Putnam Absolute Return 300 Fund (PTRNX)

Performance (1-yr.): 3.47% Expenses: 0.78%
Performance (1-mo.): 0.95% Total Assets: $991.44M
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RBC BlueBay Absolute Return Fund (RABAX)

Performance (1-yr.): 5.52% Expenses: 1.25%
Performance (1-mo.): 1.11% Total Assets: $452.06M
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Redwood Managed Volatility Fund (RWDIX)

Performance (1-yr.): Expenses: 2.59%
Performance (1-mo.): 1.99% Total Assets: $58.25M
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Scout Unconstrained Bond Fund (SUBFX)

Performance (1-yr.): 1.16% Expenses: 0.50%
Performance (1-mo.): 0.06% Total Assets: $2.2B
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Semper MBS Total Return Fund (SEMMX)

Performance (1-yr.): Expenses: 0.75%
Performance (1-mo.): 1.09% Total Assets: $36.2M
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Spectrum Low Volatility Fund (SVARX)

Performance (1-yr.): Expenses: 2.95%
Performance (1-mo.): 1.30% Total Assets: $21.98M
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Stone Harbor Strategic Income Fund (SHSIX)

Performance (1-yr.): Expenses: 0.70%
Performance (1-mo.): 2.10% Total Assets: $10.24M
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The Arbitrage Credit Opportunities Fund (AGCAX)

Performance (1-yr.): 5.51% Expenses: 1.50%
Performance (1-mo.): 0.10% Total Assets: $25.03M
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Toews Unconstrained Income Fund (TUIFX)

Performance (1-yr.): Expenses: 1.50%
Performance (1-mo.): 0.99% Total Assets: $55.31M
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Top Performing Nontraditional Bond Funds As of 03.05.2014

Cedar Ridge Unconstrained Credit Fund (CRUMX)

Total Return: 5.00%

Western Asset Macro Opportunities Fund (LAAAX)

Total Return: 2.41%

Stone Harbor Strategic Income Fund (SHSIX)

Total Return: 2.10%

Legg Mason BW Alternative Credit Fund (LMAPX)

Total Return: 8.45%

Iron Strategic Income Fund (IFUNX)

Total Return: 7.20%

Altegris Fixed Income Long Short Fund (FXDAX)

Total Return: 6.69%

Legg Mason BW Alternative Credit Fund (LMAPX)

Total Return: 14.01%

MainStay Unconstrained Bond Fund (MASAX)

Total Return: 6.03%

Metropolitan West Strategic Income Fund (MWSTX)

Total Return: 5.11%

* Annualized