As outlined in the Fund’s gearing policy:
Gearing magnifies the effect of gains and losses on an investment. The gearing ratio indicates the extent to which a scheme’s assets are funded by external liabilities. A higher gearing ratio means greater magnification of gains and losses and generally greater volatility compared to a lower gearing ratio. The gearing ratio is calculated as follows:
Gearing ratio = Total interest bearing liabilities / Total assets
The gearing ratio will be based on liabilities recorded in the Fund’s unaudited management accounts. The Fund may borrow up to a maximum of 60% of an inefficient asset’s value at the time of borrowing (including the value of any improvements, capital costs and/or market appreciation on an ‘as if complete’ basis) to finance or refinance an inefficient asset.
The gearing ratio may exceed 60% of an inefficient asset’s fair market value decreases after financing.