Here’s the best way to invest in bonds for the long term, according to these five-star portfolio managers

A fixed-income team at Morgan Stanley points to two less conventional corners of the bond market—distressed debt and frontier local-market investing—as contributors to their fund's returns, according to the managers' own account. Both areas sit well outside the core investment-grade universe that most long-term bond portfolios rely on.

Distressed debt refers to bonds of issuers under financial stress, priced at a discount and sensitive to recovery prospects rather than ordinary interest-rate moves. Frontier local-market investing means holding bonds issued in the local currency of smaller, less-developed economies, which adds currency and liquidity considerations on top of credit risk. These strategies typically demand dedicated research and carry meaningful volatility.

For long-term investors, the takeaway is less about copying a specific approach than understanding the trade-offs it illustrates. What to watch: how such holdings behave when credit spreads widen or currencies weaken, and whether the return premium justifies the added complexity relative to a simpler, diversified bond allocation.