[Edaily Marketin KIM SUNG-SOO Reporter] The global asset management industry has entered a new competitive race to blur the lines between public and private investments.

Kohlberg Kravis Roberts (KKR), the world’s largest private equity firm, and Capital Group, a powerhouse in public asset management, have jointly launched a product for retail investors that combines public and private assets, signaling a new trend in the alternative investment market.

Launch of a Product Combining “Public and Private Assets”

According to the financial investment industry on the 23rd, KKR and Capital Group recently unveiled an investment product that blends public and private assets. This strategy aims to expand access to private equity—which has traditionally been centered on institutional investors—to retail investors as well.

The flagship product features a structure that combines publicly traded and private equity holdings. It is designed to allocate approximately 60% to publicly traded equities managed by Capital Group and approximately 40% to private equity managed by KKR.

The two firms also launched a product combining public and private bonds. The “Capital Group KKR Global Multi-Sector+,” which focuses on credit investments, is being marketed to investors in Europe and Asia and is composed of 60% public bonds and 40% private bonds.

Reflecting the demand from investors and asset managers, this fund employs a strategy that simultaneously pursues “diversification” and “high returns.” Approximately 40% of total assets are allocated to private credit assets managed by KKR.

“Private credit” refers to a lending strategy in which non-bank institutions, such as private equity funds, provide funding directly to companies and real assets—without going through banks—and earn interest income.

Furthermore, the fund is managed by Capital Group with advisory services provided by KKR, and allows for redemptions of up to 3% of the fund’s assets each month, offering higher liquidity than typical private equity funds. Capital Group and KKR have previously launched two public-private credit investment products and one public-private equity investment product in the United States.

Lowering the Barrier to Alternative Investments for Retail Investors

The approach of combining public and private assets into a single product is a rare structure in the global asset management industry. Until now, retail investors had to invest in public funds or invest in unlisted assets through separate private funds.

In contrast, this product is characterized by combining the two areas into one to enhance the benefits of diversification. Industry observers view this collaboration as a “win-win strategy” that maximizes the strengths of both companies.

Capital Group has strengths in managing global public equities and public bonds, but its private investment network has been relatively limited. KKR, on the other hand, is expanding its business scope from private equity to private debt, leveraging its strength as a world-class private equity fund (PEF) manager.

In particular, the private debt market has grown rapidly, driven by corporate demand for alternative financing. As private debt has established itself as a corporate financing tool to replace bank loans amid the prolonged global high-interest-rate environment, major global asset managers have also been entering this market.

However, as the market has grown rapidly, competition has also intensified. While most global asset managers actively expanded their private debt investments last year, investment enthusiasm appears to have cooled somewhat this year.

Industry experts believe that, given the significant increase in market participants, the expected returns on private placement bonds are likely to gradually decline in the future. Nevertheless, the long-term growth potential is still considered valid, as there is steady investment demand from those seeking stable cash flows and diversification benefits.

An official from the financial investment industry stated, “Products that combine public and private offerings are a new initiative that can significantly improve retail investors’ access to alternative investments,” adding, “It is highly likely that hybrid products developed through collaboration among global asset managers will increase in the future.”