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.
Hybrid
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.