Fund Strategy
Why no leverage matters
Many income funds borrow against investor capital to increase returns. We don’t. Here’s why we believe a fortress balance sheet creates a more durable investment strategy.
Leverage is the easiest way to make a return look bigger than it is. Borrow against investor capital, deploy more of it, and the headline yield climbs. But that extra return is rented, not owned — and when markets tighten, the lender is first in line, not you.
A fortress balance sheet
We run the fund with no fund-level borrowing. Every dollar we lend is a dollar of investor capital, secured directly against real property. That means there is no margin call that can force us to sell good loans at the wrong moment, and no senior creditor whose interests sit ahead of yours.
The trade-off is honest: in a roaring market, an unlevered fund will print a slightly lower number than a levered competitor. We are comfortable with that. Durable income is built by surviving the bad years intact, not by maximising the good ones.
What this protects against
Without leverage, a downturn in property values erodes our cushion gradually rather than triggering a cascade. Our loans are conservatively sized, our reserves are real, and our investors are never exposed to the hidden fragility that borrowing introduces. In income investing, the absence of a catastrophe is itself a return.