Understanding the mechanics of these funds has gotten so difficult that even analysts at fund research shops Morningstar and Lipper can't get a handle on what these portfolios are doing, analysts told Reuters.
"A lot of promises have been made about unconstrained fixed- income approaches and those promises have been a lot more powerful than the level of disclosure that the funds provide," said Michael Herbst, an analyst at Chicago-based Morningstar.
Fund companies say that the whole reason investors choose their funds is because they don't want to be bothered with the nuances of what the managers are doing.
Jessica Toonkel tackled the opaque and confusing realm of the Unconstrained Bond Fund – a product category I’ve had quite a bit to say about this year. I love that killer line in her story for Reuters about how investors are picking these funds so they can shut their brains off.
That usually works out.