Collateralized Fund Obligations: A Primer

Collateralized fund obligations (“CFOs”) emerged in the early 2000s as a means of applying securitization techniques developed for collateralized debt obligations to portfolios of hedge fund and private equity fund investments. CFOs allow portfolio investors, secondary funds and funds of funds an alternative and diversified capital markets financing solution and, potentially, a means of earlier monetization of their holdings. This article reviews the basic structures and features of a CFO.