The coronavirus pandemic prompted fund managers to acquire flexibility to seize upon favorable investment opportunities in future market dislocations similar to those caused by Russia’s invasion of Ukraine. Some managers accomplish that by merely adopting broader investment strategies in their new fund launches or cajoling their existing LPs to commit to separate single investor funds. A more targeted approach, however, is to form a contingent dislocation fund (CDF) that remains dormant – with a fully committed batch of investors – until its investment period is triggered later by an economic signal. In light of the upside and benefits realized by CDF managers during the pandemic, the vehicle is likely to become more widespread in the coming years. The Private Equity Law Report is publishing this three-part series on CDFs to familiarize fund managers and investors with the upside – and risks – associated therewith. This second article explores unique CDF features (e.g., standby dormancy period) that cause the vehicle to stand out relative to traditional PE and hedge funds. The third article will review the types of investors and fund managers that tend to pursue CDFs, as well as the relatively limited downsides of CDFs. The first article described the fundamental traits of CDFs and trends in the structure’s current and future adoption. See “Structural and Operational Considerations for Hybrid Funds” (Feb. 23, 2021); and “Sidley Panel Discusses Operational and Tax Challenges of Hybrid Funds” (Nov. 5, 2019).