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ARTICLE · 08 SEPTEMBER 2023

Collateralized Fund Obligations: The Advantages Of CFOs

Mayer Brown
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CFOs have become an increasingly popular alternative investment vehicle. They offer a way for portfolio investors, secondary funds...

United StatesFinance and Banking
Kiel Bowen
Kiel Bowen
Todd Bundrant
Todd Bundrant
Mark Dempsey
Mark Dempsey
J. Paul Forrester
J. Paul Forrester
Michael P. Gaffney
Michael P. Gaffney
Lawrence Hamilton
Lawrence Hamilton
Jennifer T. Hartnett
Jennifer T. Hartnett
Andrew L. Hogan
Andrew L. Hogan
Ann Richardson Knox
Ann Richardson Knox
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CFOs have become an increasingly popular alternative investment vehicle. They offer a way for portfolio investors, secondary funds, and funds of funds to layer their investment strategy with investments that have enhanced credit ratings, favorable returns, and diversified collateral. Although CFOs have a complex structure, they offer several benefits.

What to Know About the Benefits of CFOs

Among the main advantages of CFOs are:

  1. Diversification of financing sources.
    Because the CFO issuer issues bonds with varying risk and return profiles and acquires interests in several funds, portfolios, and funds of funds, fund sponsors and investors can maximize diversification of funding and financing sources.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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