NXT Capital: Under the hood of fund-level leverage

Asking a few simple questions can reveal the essentials of a manager’s leverage strategy and its ability to protect investors’ interests, writes NXT Capital’s Neil Rudd

This article is sponsored by NXT Capital

Neil Rudd

Investors considering a new fund always investigate its risk and return characteristics, the manager’s track record, deal sourcing and underwriting processes, and reporting and controls.

For levered funds, investors also evaluate the nature, use and terms of the fund-level financing.

Or do they? When it comes to levered funds, these factors tend to take a back seat to the maximum leverage outlined in the placement memo.

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