KKR & Co liquidates two funds focused on individual investors
In what is seen as a setback to its efforts to enhance their appeal beyond pension funds, insurance firms and other institutional investors, KKR & Co will be pulling out two funds geared for individual investors, Reuters reported.
History has shown that private equity companies like KKR, Blackstone Group and Carlyle Group have found it hard to craft offerings for retail investors since the average buyout fund is not liquid and has a usual life span of 10 years, the report said.
However, as these firms have tried to diversify their offerings with alternative assets like credit and hedge funds which are seen as more liquid, they have also entered in a race to offer products for mutual fund investors that want lucrative returns, the report said.
In a statement, KKR said, "We are adjusting our product mix and packaging on the Schwab platform and we have a number of other offerings for individual investors, including private equity, under development for launch this year."
Filings with the US Securities and Exchange Commission showed that KKR would be liquidating its KKR Alternative Corporate Opportunities Fund and its KKR Alternative High Yield Fund without giving any reason. The ACOF is focused on "special events" worldwide, like the debt crisis in Europe and distressed firms. A source told Reuters that the closed-end fund was pulled out due to a flaw in the "design." The source added that the fund did not have the daily liquidity that a lot of mutual fund investors expect of the fund and that its arduous application process was an obstacle to its distribution, the report said.
Meanwhile, the KKR High Yield Fund focuses its investments in a mixture of high-yield bonds, notes, convertible securities, debentures and preferred stock. The source added that the mutual fund could not compete with other products that gave investors daily liquidity because it was not differentiated enough, the report said.