Returns that exceed ordinary are reserved for smaller, niche opportunities. But if you deliver extraordinary in your first fund, then the speed at which you can attract money for your second fund accelerates.
This inspires others to copy your model either directly or indirectly. And in this way, purchases of private shares using leverage rises. Which of course lifts their price. And as prices increase, returns for leveraged funds appear extraordinary.The process attracts fresh capital and is thus self-reinforcing, reflexive. Carried to its logical conclusion this leads to prices that are infinite.
