Using a Subscription Line Doesn't Lever a Fund

Subscription lines can substitute for l p capital, but it can't be used to allow the fund to invest more than its committed capital. A 100 million dollar fund with a subscription line might be able to buy 50 million dollars of assets without calling l p capital. Since a subscription line doesn't lever a fund, its use doesn't increase the total dollar profits that the fund will earn from investments over its lifetime. If a fund finances investments by borrowing under a subscription line, interest and expenses will be that wouldn't have been paid if l p capital had been called.