SFA Research Corner: Smoothing the Lumps: How Collateralized Fund Obligations Turn Illiquid Assets Into Private Market Access

In today’s evolving capital markets, Collateralized Fund Obligations (CFOs) are gaining renewed attention as a way to expand access to private credit. By applying securitization techniques—such as tranching, credit enhancement, and liquidity support—CFOs offer a framework for managing the irregular cash flows typical of private funds. As institutional interest grows and NAIC guidance continues to evolve, CFOs are helping reshape how risk and return are structured across the alternative investment landscape.