We use derivatives to leverage the AP7 Equity Fund. Leverage means that investments can exceed the value of invested assets, which creates opportunities for higher returns but also involves added risk. Leverage increases our scope for investment and we use this to raise our exposure to global equities.
Leverage should generally be around 50 percent of fund capital but we have discretion to increase it from 0 to 70 percent of fund capital based on analysis of market conditions.
