KKR & Co. executives see a big opportunity managing capital in 401(k) plans, they said during the firm’s Oct. 24 earnings call.
KKR reported $624 billion in assets under management, up 18% year over year. KKR manages $14 billion in its K-Series suite of products, which are designed for individual investors, up from $5 billion, a year ago, Craig Larson, a partner and head of investor relations, said during the earnings call.
The majority of new dollars going into 401(k) plans are going through target date funds, which is where KKR executives expect private market assets will be first introduced, Larson said.
“I believe that percentage is north of 60%, and we've talked to some participants who've indicated that percentage is actually well north of 60%,” he said. “And at the same time, you probably won't be surprised to hear that we think there's a lot of industrial logic to introducing alternative strategies into target-based strategies as individuals invest behind their continued retirement."
KKR’s largest business by AUM as of Sept. 30 was credit and liquid strategies with $271.4 billion, up 3% from three months earlier and an 18% increase from $229.4 billion from a year earlier. KKR's private equity business was its second largest with $190.2 billion at the end of the third quarter, up 3% from the end of the prior quarter and up 9.6% from the end of the year-earlier quarter.
Real assets had $162.8 billion in AUM as of Sept. 30, up 7.5% from June 30 and a 31% increase from Sept. 30, 2023.
In the third quarter, KKR closed on a $3 billion real asset strategic partnership with a large sovereign wealth fund, "which we expect will positively impact both our infrastructure and real estate platforms for two-plus decades," said Robert Lewin, KKR's chief financial officer, during the call.
Indeed, KKR executives are "leaning in" to real estate equity, said Scott Nuttall, KKR's co-CEO, during the call.
"Part of the reason that we've leaned in so much this year ... is our view that the bottom was behind us. And I think that perspective is starting to be shared by others," Nuptall said.
He said he thinks there is an emerging perspective that this is a good time to invest in real estate.
