KKR’s Henry McVey Says Leading Family Offices Plan to Allocate More to Alternatives in 2024
February 13, 2024New Asset Allocation Report Based on Proprietary Survey Highlights the Growth Ambitions of Family Offices
Based on a proprietary survey of more than 75 Chief Investment Officers (CIOs) who oversee over
“We hear the message ‘Loud and Clear’ that this segment of the market is changing – and for the better,” said McVey. “These investors are diversifying across asset classes, and as they mature, they are getting better at harnessing the value of the illiquidity premium to compound capital. They are also using better hedging techniques and increasing both their desire and ability to lean into dislocations, strengths that we believe will position them to be at the winner’s table at the end of this cycle.”
In the report, McVey notes several key parallels between the asset allocation objectives of KKR’s Balance Sheet and those of the surveyed CIOs. These include a focus on compounding capital in a tax efficient manner to build wealth and investing behind key themes such as supply chain disruption, industrial automation, artificial intelligence and the ‘security of everything.’ Other key takeaways from the survey included:
- Family offices are allocating more to Alternatives, with 52 percent of assets allocated to Alternatives on average, up 200 basis points since 2020.
- Within Alternatives, there is meaningful diversification including a significant jump in allocations to Real Assets.
- Cash positions are still high at nine percent, which further confirms our thesis that many investors are under-risked for today’s markets.
-
Family offices are planning to allocate more to Private Credit, Infrastructure and Private Equity at the expense of
Public Equities and Cash. - We continue to see notable bifurcation in the asset allocation approaches between family offices set up within the last five years and those that had already scaled before COVID, with more seasoned family offices typically holding less cash and allocating more to Private Equity.
-
There are pronounced regional differences in asset allocation.
U.S. family offices allocated less to traditional Private Equity compared to counterparts inLatin America ,Asia andEurope , whileAsia -based family offices had relatively heavy allocations to Real Estate. - CIOs are going against the grain to find value-based private market opportunities, especially in the Oil & Gas and Industrial sectors.
- Geopolitics is eclipsing inflation as the main concern for CIOs, with more than 40% of respondents identifying geopolitics as the single most important risk today.
- There is growing concern that more resources are required to support both the growth in assets under management and the increase in diversification across asset classes.
Links to access this report in full as well as an archive of
- To read the latest Insights, click here.
-
To access the 2020
Family Capital survey, click here. - For an archive of previous publications please visit www.KKRInsights.com.
About
About KKR
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of
The views expressed in the report and summarized herein are the personal views of
KKR’s Balance Sheet refers to that portion of KKR’s corporate balance sheet that is primarily used to support KKR’s asset management business, including the general partners of KKR’s investment funds and other controlling interests.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240213746598/en/
Media:
Julia Kosygina
212-750-8300
media@kkr.com
Source: KKR
Back to Press Releases
Media Contacts
Americas
Miles Radcliffe-Trenner
Telephone: +1 (212) 750-8300
Email: media@kkr.com
Investor Relations
Craig Larson
Telephone: +1 (877) 610-4910
Outside US: +1 (212) 230-9410
Facsimile: +1 (212) 750-0003
Email: Investor-Relations@kkr.com