New Survey and Macro Report Highlight Opportunities and Challenges of
the High Net Worth Market
NEW YORK–(BUSINESS WIRE)–
KKR, a leading global investment firm, today released The Ultra High
Net Worth Investor: Coming of Age, a new macro Insights piece by Henry
H. McVey, KKR’s Head of Global Macro and Asset Allocation (“GMAA”),
in collaboration with Jim
Burns, Head of the Individual Investor Business for KKR.
“As our client base has diversified, we are not only engaging with
allocators who serve as fiduciaries for large pensions but also with
sophisticated individual investors, many of whom have or run large
family offices,” Henry McVey said. “Not surprisingly, the investment
objectives of KKR’s average Ultra High Net Worth investor can be quite
different from the objectives of the traditional pension, endowment, or
foundation.”
To better understand the changing dynamics of the Ultra High Net Worth
(“HNW”) market, McVey and Burns conducted a proprietary survey of and
interviews with over 50 KKR Ultra High Net Worth clients, including
several family offices, to delve deeper into the key opportunities and
challenges that the HNW market now faces.
In The Ultra High Net Worth Investor: Coming of Age, they outline
important trends they discovered in surveying the Ultra HNW market, a
unique subset of individual investor clients that KKR now serves on a
global basis:
-
The average KKR Ultra HNW investor surveyed has a much different
profile than the average individual or institutional investor: Many
are operating sizeable businesses, view investing more on an absolute
return basis, and value deal sourcing
-
Ultra HNW accounts maintain a sophisticated approach to global asset
allocation that tends to include a diversified, multi-asset class
portfolio with a heavy weighting in Alternatives
-
In recent years, Ultra HNW accounts have been earning strong returns,
harnessing structural themes to their benefit, including:
-
Embracing capital markets dislocation
-
Being early to take advantage of a shifting landscape in the
banking system
-
Taking advantage of the illiquidity premium in areas like Private
Credit and Private Equity to earn strong absolute returns
However, according to McVey and Burns, there are some potential asset
allocation “storm clouds” ahead:
-
Current Ultra HNW asset allocation positioning appears to make more
sense for the environment we just left – and not necessarily the one
to which we could be headed
-
Beyond potentially lower absolute returns, the Sharpe ratio, or return
per unit of risk, could be poised to fall
-
Many Ultra HNW investors appear over-indexed to their local markets,
the U.S. in particular
Nonetheless, McVey and Burns find there is no doubt, the high end of the
HNW market, including the family office market, has “come of age.”
“These investors are using increasingly sophisticated products,
becoming more global, and learning to leverage their competitive
advantages in the marketplace. Coupled with strong growth, this market
should remain a dynamic one for the coming years. And if we are right
about the macroeconomic backdrop that we laid out in our Outlook
for 2017: Paradigm Shift, then Ultra High Net Worth
individuals and family offices are in an excellent position for the
Paradigm Shift we are envisioning.”
Links to access this note as well as an archive of Henry McVey’s
previous publications follow:
About Henry McVey
Henry H. McVey joined KKR in 2011 and is Head of the Global Macro and
Asset Allocation team. Mr. McVey also serves as Chief Investment Officer
for the Firm’s Balance Sheet and is Head of the Private Market and
Balance Sheet Risk team. Prior to joining KKR, Mr. McVey was a managing
director, lead portfolio manager and head of global macro and asset
allocation at Morgan Stanley Investment Management (MSIM). Prior to
that, he was a portfolio manager at Fortress Investment Group and chief
U.S. investment strategist for Morgan Stanley. While at Morgan Stanley,
Mr. McVey was also a member of the asset allocation committee, and the
top ranked asset management and brokerage analyst by Institutional
Investor for four consecutive years before becoming the firm’s
strategist. He earned his B.A. from the University of Virginia and an
M.B.A. from the Wharton School of the University of Pennsylvania. Mr.
McVey serves as co-chair of the TEAK Fellowship board of trustees and is
a member of the Pritzker Foundation Investment Committee. He is also a
member of the national advisory board for the Jefferson Scholarship at
the University of Virginia and a member of the Council on Foreign
Relations Corporate Leader Program.
About Jim Burns
Jim Burns joined KKR in 2010 and is a member of the Client and Partner
Group, where he leads KKR’s Individual Investor Business globally. Prior
to joining KKR, Mr. Burns was a managing director in the private wealth
management division of Morgan Stanley, where he worked for nearly
thirteen years and held a variety of positions, most recently as head of
the Eastern United States for private wealth management. Mr. Burns holds
a B.A., Phi Beta Kappa, from Emory University and an M.B.A. from Harvard
Business School. Mr. Burns serves as a member of the board of trustees
for Emory University and sits on the Investment Committee for the
University’s Endowment. He is a member of the board of trustees for the
Convent of the Sacred Heart in New York; a member of the board of
trustees for the Harvard Business School Club of New York; and is a
former trustee both of The McCallie School in Chattanooga, Tennessee,
and the Emory College Alumni Board.
About KKR
KKR is a leading global investment firm that manages investments across
multiple asset classes including private equity, energy, infrastructure,
real estate, credit and hedge funds. KKR aims to generate attractive
investment returns by following a patient and disciplined investment
approach, employing world‐class people, and driving growth and value
creation at the asset level. KKR invests its own capital alongside its
partners’ capital and brings opportunities to others through its capital
markets business. References to KKR’s investments may include the
activities of its sponsored funds. For additional information about KKR
& Co. L.P. (NYSE:KKR), please visit KKR’s website at www.kkr.com
and on Twitter @KKR_Co.
The views expressed herein are the personal views of Henry McVey and
Jim Burns of KKR and do not necessarily reflect the views of KKR. This
information is not research and should not be treated as research. It
does not represent valuation judgments with respect to any financial
instrument, issuer, security or sector that may be described or
referenced herein and does not represent a formal or official view of
KKR. It is being provided merely to provide a framework to assist in the
implementation of an investor’s own analysis and an investor’s own views
on the topic discussed herein. There can be no assurance that an
investment strategy will be successful. Historic market
trends are not reliable indicators of actual future market behavior or
future performance of any particular investment which may differ
materially, and should not be relied upon as such. This
information should not be viewed as a current or past recommendation or
a solicitation of an offer to buy or sell any securities or to adopt any
investment strategy. References to a target portfolio and allocations
are hypothetical allocation of assets and not reflect an actual
portfolio. The views expressed herein and discussion of any target
portfolio or allocations may not be reflected in the strategies and
products that KKR offers or invests, including strategies and products
to which Messrs. McVey or Burns may provide investment advice to or on
behalf of KKR. It should not be assumed that Messrs. McVey or Burns has
made or will make investment recommendations in the future that are
consistent with the views expressed herein, or use any or all of the
techniques or methods of analysis described herein in managing client or
proprietary accounts. This release may contain projections or other
forward‐looking statements. Neither KKR nor Messrs. McVey or Burns
assumes any duty to update such statements.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170510005513/en/
KKR
U.S.
Kristi Huller or Cara Kleiman
212-750-8300
media@kkr.com
Source: KKR