Do you own mutual funds? FYI, I don’t know much about investment strategy and I won’t give advice per se, but here’s my two cents:

The Collateralized Debt Obligations (CDOs) are a bunch of re-packaged mortgages (think bad) that were sold, in bond form, to institutional investors (like banks and funds).

Mutual Funds are generally diversified stock holdings, commodities, etc., that you, as an individual investor, can purchase a stake in through investment firms and money managers. The investment firms manage the funds to produce a steady low-risk yield, based on the income of the fund’s portfolio, and take a cut of the earnings as a management fee.

Should you talk to your fund manager about the fund’s exposure to CDO’s? Yes, definitely. My understanding is that the major funds that are marketed to people like you and I typically don’t invest in risky assets, but they may own large pieces of companies, like international banks, that may have lots of risky mortgage securities on their books.

I don’t have a gambler’s constitution or a deep understanding of the markets, so I don’t invest their either. I don’t think that mutual funds have been recently earning more than 5-6% anyway, and you can get that from an internet bank without the need to risk your hard earned dinero.

If you have less than 100k to invest, an FDIC insured account can be had from more than a few major national banks this way, currently earning around 5.0%. The banks may go under, but atleast its insured by the Federal Government. If it ever gets bad enough that FDIC insurance can’t cover the loss, then the jig will finally be up and it won’t matter anyway.