Gearing, or leverage, occurs when a fund borrows money against its own assets in order to create capital that is then used to invest. The amount of leverage can be seen from the fund’s reported indebtedness. The principal thinking here is that a fund with more debt is perhaps leveraging more than other funds, and therefore may be riskier over time than a fund with less debt. It may be good for some funds to leverage, especially to take advantage of upturns in markets, allowing the fund to benefit from these positive moves with more cash than current investors’ proceeds would allow in order to generate better performance for shareholders.