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KKR Report Says Leading Family Offices Plan to Allocate More to Alternatives in 2024

KKR Report Says Leading Family Offices Plan to Allocate More to Alternatives in 2024. Research, survey, KKR, alternative investments, private equity, real assets

Based on a proprietary survey of more than 75 chief investment officers who oversee more than $3 billion in assets, on average, a new report authored by Henry McVey, CIO of KKR’s Balance Sheet and head of global macro and asset allocation at KKR – a global investment firm – examines how family office CIOs are leveraging longer-term focus and goals to create a sustainable competitive advantage.

“…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.”

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.’

Family offices are allocating more to alternative investments, according to the survey, with 52% of assets allocated to alternatives on average, up 200 basis points since 2020. Within alts, there is meaningful diversification including a significant jump in allocations to real assets.

Other report insights include the following.

  • Family offices are planning to allocate more to private credit, infrastructure and private equity at the expense of public equities and cash.
  • There are differences 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.
  • CIOs are identifying value-based private market opportunities, especially in the oil, gas, and industrial sectors.
  • 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.

KKR is a global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds.

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