KKR and Capital Group will launch funds targeting a combination of private and public credits

By Niket Nishint

(Reuters) – KKR and Capital Group have launched two funds targeting investments in the fusion of public and private credit, leveraging the vast pool of retail investors looking beyond traditional assets for diversification.

Capital groups KKR Core Plus++ and Capital Group KKR Multi-Sector+ will allocate 60% of their assets to public bonds and the remainder to private credit, the company said Tuesday.

“We aim to unlock the benefits of private investment for 95% of individual investors who have historically been unable to invest in the private market,” said KKR CE-CEOS Joe Beh and Scott Nuttar.

Growing class of asset managers are trying to capitalize on the high demand for private credit. These are loans that are usually made by non-bank institutions.

According to Morgan Stanley, the market is estimated to increase from nearly $1 trillion in 2028 to $2.8 trillion in 2028.

Private credit can be a key source of portfolio diversification, as it is relatively isolated from the volatility of the public debt market.

But so far, these assets have been primarily in the territory of institutional investors, such as pension funds, insurance companies, and family offices.

Limited liquidity, loose regulatory oversight, and higher barriers have been out of reach of everyday investors.

Analyst TD Cowen wrote in the memo: “The new funds are “in the masses, beyond the qualifications and accredited segments.”

According to Morningstar, it allows investments starting at $1,000, which is lower than the typical $2,500 to $10,000 minimum investment.

The funds will provide redemption periodically, allowing shareholders to sell up to 10% of their outstanding shares quarterly under normal conditions. KKR also appeals to retail investors with low annual fees.

(Reporting by Nicket Nishant of Bengaluru, edited by Krishna Chandra Elli)