Why does leverage matter in a private fund?

Private funds can invest on a scale larger than their net assets by investing in derivatives, borrowing money, providing debt guarantees and so on; this is called leverage.

Because leverage magnifies losses as well as gains, the Enforcement Decree sets a higher minimum investment for individuals and other general investors, KRW 500 million instead of KRW 300 million, for funds whose total leverage exceeds 200% of net assets. Check the fund's level of leverage before investing.