Capital Group and KKR target retail investors with new fund series

This collaboration will provide a mix of traditional assets, such as stocks and bonds, alongside alternative investments, including private loans, corporate buyouts, and real estate and infrastructure projects. These funds aim to expand access to unlisted assets for individual investors, an area previously dominated by pension funds and large institutions.

The two companies will debut their first two debt funds this week, with plans to offer additional funds combining listed stocks with private buyouts as early as 2026. These funds will also include strategies dedicated to real estate and infrastructure. The goal is to create hybrid investment opportunities that provide a smoother entry point into private assets for investors with little prior exposure.

Expanding private market access for individual investors

Private capital firms, like KKR, are eager to capture more of the private market, which offers higher returns but comes with increased risk and higher fees. Meanwhile, traditional asset managers, such as Capital Group, are eager to expand their presence in private markets to meet growing demand from individual investors. The partnership comes at a time when other financial giants, such as Blackstone, are also collaborating with firms like Vanguard and Wellington Management to offer similar public-private hybrid funds.

The new funds from Capital Group and KKR will feature relatively low fees compared to other private funds. The Core Plus+ fund will carry an expense ratio of 0.84%, while the Multi-Sector+ fund will have a slightly higher rate of 0.89%. These fees are notably lower than the industry average for similar funds, which is typically 2.49%. However, they remain higher than the cost of exchange-traded funds (ETFs), which generally focus on public market assets.

Despite the attractive returns offered by private assets, investing in these funds carries inherent risks. Morningstar analyst Karen Zaya highlighted that private funds tend to be more complex, expensive, and less transparent than their public counterparts. As individual investors enter the private markets, they need to understand these risks and the trade-offs involved.