Capital Group, KKR to Offer Hybrid Alts Investments to HNW Clients

Global investment firms Capital Group and KKR announced a partnership to bring new ways for investors to incorporate alternative investments into their portfolios.

Capital Group and KKR intend 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 U.S. in 2025.

The hybrid funds will hold about 60% in public bonds picked by Capital managers, and 40% in direct and asset-based loans sourced by KKR. The funds will target clients who invest between $100,000 and $1 million, the Wall Street Journal reported.

“We believe combining our respective areas of expertise in strategies that are more liquid than standalone private credit can help our clients achieve their goals,” Capital Group President and CEO Mike Gitlin said.

While alternatives have been available to high-net-worth individuals and accredited investors for some time, mass affluent investors, which represent more than 40% of the wealth market globally, have not historically had access to the asset class, the firms said.

“We see interest in alternatives only continuing to grow over the next decade as wealth investors gain access to high quality investment solutions,” said Eric Mogelof, partner and head of global client solutions at KKR.

As of March 30, 2024, Capital Group managed more than $2.6 trillion, of which $500 billion is in public fixed income. KKR oversees more than $500 billion in assets, including $200 billion in credit.