medium · Private Credit fund-structures-returns-economics
A private credit fund holds a portfolio of $75 loans with 1.0× fund-level leverage ($500M equity, $1.0B gross assets). The average asset yield is 10.5%. The fund's cost of leverage is 6.5%. Management fees are 1.5% of gross assets.
If there are no credit losses or incentive fees, what is the net ROE?
- 11.5%
- 9.0%
- 14.5%
- 10.5%
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