The saga of Artio and CGM should serve as a warning to investors about the hazards of relying on boldly contrarian funds. Managers who go against the crowd will inevitably suffer periods of underperformance. \

But there are some unorthodox funds that are worth considering. The managers have avoided the fate of CGM and Artio by maintaining tight risk controls.

Among the top-returning contrarian bond funds is Legg Mason BW Global Opportunities Bond ( GOBAX). During the past five years, the fund returned 7.9% annually, three percentage points higher than the average world bond competitor.

Legg Mason favors unloved markets that are about to rebound. When they spot bargains, the managers are not shy about acting on their convictions. At the moment, the fund has no assets in Japan and big stakes in Poland and Mexico. The fund limits its risks by emphasizing government securities. Those rarely default.

In 2011, Legg Mason portfolio manager Jack McIntyre worried that economies in the developed world would remain sluggish. Rising oil and commodity prices would cause consumers to curtail shopping. For protection, he took shelter in rock-solid government bonds from the U.S. and the UK. That proved to be a sound move when concerns about the Arab Spring sank bonds in Europe and the emerging markets.

After the European Central Bank pledged to back the shakier members of the eurozone last summer, McIntyre began buying bonds in Italy and Portugal. The bonds have since rallied sharply. "It was a game-changing event when the ECB said that it would support the bond markets," says McIntyre.

FPA Crescent ( FPACX) ranks as one of the most wide-ranging funds. Portfolio manager Steve Romick can buy stocks and bonds from around the world. The aim is to provide equity-like returns while taking little risk. Most often Romick has succeeded. During the past ten years, the fund returned 10.4% annually, outdoing 98% of peers in the moderate allocation category.

Romick aims to buy securities at big discounts. When he can't find bargains, the fund holds cash. Romick's caution helped the fund in the downturn of 2008. With 40% of assets in cash during the market collapse, FPA outdid peers by a wide margin. At the depths of the financial crisis, Romick bought deeply depressed high-yield bonds. Those rebounded strongly as the markets improved. In 2011, he bought depressed bank stocks, including Bank of America ( BAC), which soon rallied.

The fund currently has 34% of assets in cash. Romick is finding some bargains abroad. He owns Orkla ( ORKLY), a Norwegian conglomerate that makes aluminum products, chemicals and branded consumer goods. The company is shedding some of its poor-performing industrial businesses to focus on consumer goods. Romick says many of the consumer products are dominant brands in Scandinavian markets. He argues that profit margins will climb as the company refocuses.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.

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