Alt Investments

KKR, Capital Group Widen Alternative Investment Doors In New Pact

Tom Burroughes Group Editor May 24, 2024

KKR, Capital Group Widen Alternative Investment Doors In New Pact

For years, private market investing, or alternatives, has been typically shut to individuals unable to put up at least $1 million or more. This has frozen out mass-affluent investors. Around the world, moves are building to try and change the game.

Capital Group and KKR, two prominent US investment houses, say they’re opening the door for mass-affluent investors who want access to alternative investments.
The firms have entered an exclusive partnership to bring new ways for investors to put alternative investments into their portfolios.

While alternatives have been available to high net worth individuals and accredited investors for some time, mass-affluent investors, which represent more than 40 per cent of the wealth market globally, have not historically had access to the asset class. The difficulty of gaining market “access” is one that this news service has tracked for some time, as shown here and here. A tricky issue is how to provide access to illiquid assets while ensuring that clients understand the risks, and prevent a mismatch between liquidity expectations and the assets themselves. We interviewed WE Family Office, for example, about its concerns on sectors such as private credit.

KKR and Capital Group plan to make hybrid public-private markets investment solutions available to investors across multiple asset classes, geographies and channels. 

The first two strategies will be public-private fixed income offerings designed for financial professionals and their clients, which are expected to launch in the US in 2025, the businesses said. 

"Capital Group sees a real opportunity to deliver hybrid public-private market solutions for our clients," Capital Group president and CEO Mike Gitlin, said.

"We will bring the strategies of a premium alternatives manager to our clients with a compelling fee and greater accessibility. Clients should think of this as 'the best of both worlds' – a hybrid investment solution that combines Capital's active management and long-term investment approach with KKR's private market expertise,” Gitlin said.

Global assets in alternatives have grown significantly over the last 20 years; it is estimated that individual wealth invested in alternatives is expected to grow 12 per cent annually over the next decade.

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