Home Mortgage Loans

The Collateral Managers Role in a CDO

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• A collateral manager is responsible for the performance of the collateral portfolio. He or she typically:
• Selects the collateral portfolio;

• Directs sales and purchases of collateral during the reinvestment period;
• Oversees the work-out process for defaulted collateral; and
• Monitors the collateral portfolio for compliance with the coverage, collateral quality, and other tests.
• The collateral manager's ability to generate high risk-adjusted returns through his or her research, market knowledge, and trading is a key determinant of the success of the CDO.
• CDO collateral managers come from a variety of asset management organizations that have expertise in managing the applicable asset class. This includes mutual fund companies, insurance companies, banks, private equity funds, and specialist asset management companies.