Two leading financial players, Capital Group and KKR, join forces for the creation of a Public-Private Equity Fund
The global investment firms Capital Group and KKR are expanding their partnership with the launch of a new offering, the Capital Group KKR U.S. Equity+ fund. This innovative public-private equity interval fund is designed to provide everyday investors with access to both public and private equity markets, traditionally difficult to enter due to high minimum investments and accreditation requirements.
The fund's key benefits and potential impacts for everyday investors include:
- Broader Market Access: By investing in a wider spectrum of companies, including private equity investments managed by KKR, investors can gain exposure to a diverse range of opportunities that were previously unavailable.
- Lower Barriers to Entry: With lower minimum investment requirements and no need for investor accreditation, the fund makes private equity more accessible than traditional private market funds.
- Growth and Diversification: By blending public and private equity holdings, up to 40% in private markets, the fund aims to provide enhanced diversification and potential growth opportunities within a single, integrated vehicle.
- Familiar Structure with Liquidity Features: Structured as an interval fund, it allows investors to redeem up to 5% of their shares quarterly, offering some periodic liquidity while still enabling investment in less liquid private assets.
- No Leverage Strategy and Benchmarking: The fund plans to avoid using leverage to boost returns, aiming for a risk profile benchmarked against the S&P 500, which may appeal to investors seeking growth without excessive risk amplification.
- Strategic Partnership Expertise: The collaboration leverages Capital Group’s extensive experience in public equities and KKR’s expertise in private markets, combining strengths to create a hybrid investment solution that could potentially improve investment outcomes.
The leaders of both firms, including Matt O'Connor, CEO of Capital Group's Client Group, and Scott Nuttall, Co-CEO of KKR, reaffirm their belief in the partnership, stating that it is only strengthened over the past year. The partnership continues to focus on client outcomes, aiming to bring public and private equity investing together for everyday investors.
This new fund is a continuation of the firms' successful public-private credit interval funds, which have already attracted over $100 million in investments. The firms are also collaborating on model portfolios and target-date funds, and are exploring additional public-private investment strategies, including real assets.
Demand for flexible, high-quality private market exposure has never been greater, according to KKR. The shift in the capital markets landscape, with companies strategically navigating both public and private capital, is driving this demand. KKR's approach to private equity aims to deliver performance for clients by investing in good companies and helping them grow into great ones.
In conclusion, the Capital Group KKR U.S. Equity+ fund potentially democratizes private equity access for everyday investors, offering a diversified growth opportunity through blended public-private exposure with lower entry barriers and some built-in liquidity. This could enhance portfolio diversification and return potential for retail investors seeking alternatives beyond conventional public equities.
- The Capital Group KKR U.S. Equity+ fund, a public-private equity interval fund, provides everyday investors with an opportunity to invest in both public and private markets through its lower minimum investment requirements and no accreditation needs, democratizing private equity access.
- By partnering with KKR, Capital Group is leveraging KKR's private equity expertise to offer blended public-private equity holdings with the aim of providing enhanced diversification, growth opportunities, and some liquidity, making it an attractive alternative for retail investors seeking to broaden their investment horizons in the finance sector.
