Can a core fund be more highly geared than an opportunity fund? In the past, probably not. But the developments and distressed assets opportunity funds have bought – and the next generation expects to buyoften cannot get debt funding. But banks will still lend on core assets.
One manager that runs opportunity and core strategies says its core vehicle is now more leveraged than its opportunity fund. INREV has got itself tied up in knots over this development and has changed its latest fund style classification to reflect that fact it considers that there are now core funds… and core funds.
The first kind of core fund still has sub-40% gearing, but now there is another kind of core fund – the kind with gearing above 40%. Opportunity funds are still defined as having gearing of over 60%. It goes to show that markets refuse to stand still while organisations burnish their definitions.