CDS: synthetic CDOs vs traditional CDOs

--Synthetic CDOs needs asset manager to manage the collateral because synethics (CDS) are unfunded, paying less to investors. So they invested proceeds from selling notes (to investors) usually in AAA assets to increase payment. --advantage of synthetic vs traditional CDOs relates to the face that synethic does not require the sponsoring bank to sell any of the loans or SPV to source loand and securities in various markets. --Synthetic balance sheet CDOs vs synthetic arbitrage CDOs: in arbitrage CDOs, an asset manager, rather than the sponsoring entity who bought protection from SPV, managed the asset --selling loan can be both potentially problematic for maintaining bank relationships and costly in terms of the legal steps involved in the borrower approval and notification process.