Collateralised Fund Obligations (CFOs): A Simple Guide

What Are CFOs?

Investment funds are great - until you realise they’re about as liquid as a brick. Collateralised Fund Obligations (CFOs) step in as the financial equivalent of turning that brick into something a bit more tradeable. They bundle fund stakes into neat little packages, slap a structured finance label on them, and sell them to investors. Essentially, they take your long-term, locked-up investments and give them a chance to see the light of day in a more market-friendly format.

First appearing in the early 2000s, CFOs took inspiration from their flashier cousin, the Collateralised Loan Obligation (CLO). They had a moment of fame before fading away, but much like baggy jeans and 80’s and 90’s tv remakes and movie revivals, they’re making a comeback, driven by investors who want an easier way to access alternative assets.