In a significant shift toward private credit, Capital Group is advancing its partnership with KKR, positioning this alternative investment segment as a core growth area. Capital Group, known for its American Funds franchise and a focus primarily on public markets, is now targeting both retirement savers and mass-affluent retail clients with this strategy.
The two firms have already introduced two co-branded funds: Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+, which allocate approximately 40% of their assets to privately originated credit, including direct lending and asset-backed private debt. Collectively, these funds have attracted over $500 million in investments, showcasing strong initial interest from the market.
Looking ahead, the partnership is set to evolve further by 2026 with the launch of additional strategies that will incorporate private equity and real assets. Notably, Capital Group is also planning to introduce its first target-date retirement fund that includes exposure to private markets, marking a pivotal development for a firm that serves more than 20 million households in the United States and has established connections across financial advisor networks.
For KKR, valued at $3 trillion, this collaboration offers access to one of the largest retail distribution platforms in the U.S., significantly enhancing its reach in the retail market. For Capital Group, it represents an immediate scale in private credit, an area that Chief Executive Mike Gitlin noted would have taken the firm “50 years to build on its own.”
The new products are designed to integrate private credit into broader portfolio solutions rather than positioning them as standalone offerings. The fee structures for these co-branded funds are also tailored for the retail market, ranging from 0.84% to 0.89% with no performance fees—considerably lower than the typical fees associated with private wealth-oriented KKR funds. Capital Group believes that this more accessible pricing model will encourage quicker adoption among financial advisors.
As this partnership unfolds, both companies will navigate the regulatory landscape to ensure compliance with any necessary approvals related to their expanding offerings. The integration of private credit into Capital Group's portfolio is set to impact not only their shareholders but also the broader market, potentially reshaping investment strategies for millions of retail clients. With these developments, Capital Group is poised to redefine its market presence, leveraging KKR's expertise in alternatives while providing innovative investment solutions tailored to a wider audience.