In its midyear outlook, KKR outlines changes to its Global Macro & Asset Allocation halfway through 2014.
The firm says it sees opportunities in developing markets (particularly in Asia) pertaining to corporate restructurings and deleveraging – and is therefore increasing its target allocation to distressed debt/special situations 200 basis points to 9%.
Conversely, it is trimming its target to actively managed opportunistic credit – which allows a manager “to toggle between high yield and bank loans” – by the same 200 basis points. The firm cites strong performance in the first half, coupled with tightening spreads and increased issuance for reasons to take profits and dial back exposure. KKR says it favors an even split between high yield and bank loans for its remaining allocation.
Target allocations to public equities and real assets remain unchanged.