KKR proposes alternative to 60/40 portfolio with a focus on private credit

KKR & Co. Inc. on Wednesday released a macroeconomic report called, Regime Change: The Benefits of Private Credit in the ‘Traditional’ Portfolio. KKR said the the traditional 60/49 portfolio of 60% stocks and 40% bonds “could snap back in the short-term” but that greater use of alternatives, particularly private credit, would provide more diversification and inflation protection. KKR is promoting a 40/30/30 equities-bonds-alternatives allocation. The alternatives allocation includes a 10% portfolio holding in private credit, KKR said. “Now is a particularly attractive time to allocate capital to private credit, which is benefitting from a variety of factors, including traditional lenders pulling back, improved lending terms, higher absolute yields and access to higher quality counterparties,” KKR said. Shares of KKR are down 33% in 2022, compared to a 15.7% loss by the S&P 500 .

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