A theoretical and experimental investigation into a particular type of tunable microwave circuit commonly used for LSA operation of GaAs layers is reported. It is shown that certain effects which often impose severe limitations on the performance of wide-band transferred-electron oscillators (TEO's) such as frequency saturation, fixed frequency operation, resonance switching, deterioration of efficiency, and high FM noise may, in many instances, be attributed directly to the interaction of the equivalent circuit of the encapsulated device and the microwave circuit. The theoretical result are used to deduce design criteria for a J-band (11 to 19 GHz) waveguide circuit in order to optimize the performance of the oscillator with respect to tunning range, efficiency, and FM noise performance. In particular the results of the investigation indicats that, for continuous tuning combined with low FM noise over the tuning range, the parallel resonant frequency associated with the encapsulated device should be less than the minimum operating frequency, and that, by suitable design of the oscillator, frequency deviation due to fluctuation in the magnitude of the device capacitance can, in principle, be reduced to zero over a narrow bandwidth.