{"id":781975,"date":"2023-09-06T08:12:56","date_gmt":"2023-09-06T12:12:56","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/kkr-releases-regime-change-the-role-of-private-real-assets-in-the-traditional-portfolio\/"},"modified":"2023-09-06T08:12:56","modified_gmt":"2023-09-06T12:12:56","slug":"kkr-releases-regime-change-the-role-of-private-real-assets-in-the-traditional-portfolio","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/kkr-releases-regime-change-the-role-of-private-real-assets-in-the-traditional-portfolio\/","title":{"rendered":"KKR Releases \u201cRegime Change: The Role of Private Real Assets in the \u2018Traditional\u2019 Portfolio\u201d"},"content":{"rendered":"

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KKR Releases \u201cRegime Change: The Role of Private Real Assets in the \u2018Traditional\u2019 Portfolio\u201d<\/b><\/p>\n

\nNew KKR Report Explains Why Investors Need to Look Beyond Traditional Inflation Hedges to Protect Returns and Enhance Portfolio Diversification<\/p>\n

NEW YORK–(BUSINESS WIRE<\/a>)–
\nKKR, a leading global investment firm, today announced the release of Regime Change: The Role of Real Assets in the \u2018Traditional\u2019 Portfolio <\/i>by Henry McVey, CIO of KKR\u2019s Balance Sheet and Head of Global Macro and Asset Allocation (GMAA) and Racim Allouani, Head of Portfolio Construction, Investment Risk Management and Quantitative Analysis at KKR. This latest Insights<\/i> piece is the fourth installment in a series dedicated primarily to portfolio construction. While the prior portfolio construction pieces delved more into the roles of Private Credit and Private Equity in a diversified portfolio, this note focuses more heavily on Private Real Assets exposure.<\/p>\n

\nMcVey and Allouani explain that, despite record monetary tightening around the globe, persistent inflationary trends across many developed markets, including sticky wage pressures, heightened geopolitics, and repositioning of global supply chains, have strengthened their conviction in their original thesis for investors to consider diversifying beyond the traditional stock and bond 60\/40 portfolio. A major underpinning of their view is that stocks and bonds are becoming increasingly more correlated, an important structural change for asset allocation. Against this backdrop, McVey and Allouani assert that Private Real Assets can offer diversification benefits that can help many investors better protect their returns in this new investing regime. Moreover, in this cycle, many Private Real Assets have outperformed traditional inflation hedges, including Inflation-Protected Notes (TIPS) as well as Public REITs.<\/p>\n

\nThis conviction is reflected in investment allocations on KKR\u2019s balance sheet, where Private Real Assets have increased from 18% in 2018 to nearly 25% by the second quarter of 2023.<\/p>\n

\u201cReal Assets have delivered both strong upfront yield as well as a compelling total return during one of the fastest increases in both interest rates and inflation that we have seen in 50 years. Importantly, though, we still see more opportunities ahead for this asset class, given today\u2019s complex macroeconomic environment. As such, for investors who have the liquidity budget to spend on potentially enhancing returns, we think that there is an opportunity to benefit from allocations to Asset-Based Finance (ABF), Real Estate Credit, and Infrastructure,\u201d <\/i>said McVey and Allouani.<\/p>\n

\nLinks to access this report in full as well as an archive of Henry McVey’s previous publications follow:<\/p>\n