UPDATE 1-KKR catches up on mutual funds

Thu Jul 19, 2012 5:20pm EDT

Related News

* KKR Alternative Corporate Opportunities Fund will be closed-ended

* KKR Alternative High Yield Fund will be open-ended

* Blackstone, Apollo also run mutual funds

July 19 (Reuters) - Private equity giant KKR & Co LP has submitted regulatory filings to market two mutual funds that will invest in credit products, joining others peers that target retail investors through their institutional asset management platforms.

Diversified alternative asset managers take money from large institutional investors such as pension plans and sovereign wealth funds to invest in a range of credit products, from high-yield bonds to senior loans. Launching mutual funds allows them to pocket more management fees for up-and-running platforms.

KKR has not yet disclosed the management fee it will receive for its two mutual funds or the minimum investment threshold for retail investors, although this amount in the mutual fund industry usually runs in the thousands of dollars, in contrast to the millions of dollars institutional investors have to commit to alternative asset funds.

Blackstone Group LP already has two closed-ended mutual funds that are publicly listed -- the Blackstone/GSO Long-Short Credit Income Fund and the Blackstone/GSO Senior Floating Rate Term Fund,

Competitor Apollo Global Management LLC also runs a closed-end listed fund, the Apollo Senior Floating Rate Fund Inc . Shares of closed-end investment companies typically trade at a discount to their net asset value.

One of the KKR mutual funds, the KKR Alternative Corporate Opportunities Fund will be closed-ended with a quarterly redemption opportunity while the KKR Alternative High Yield Fund will be an open-ended fund, allowing daily redemptions. None of them will be listed.

The KKR Alternative Corporate Opportunities Fund will focus on 'special events' around the globe, such as Europe's debt crisis, and distressed companies. Redemptions will be possible through quarterly tenders for up to 20 percent of the net assets of the fund.

The KKR Alternative High Yield Fund will invest in a mix of high-yield bonds, notes, debentures, convertible securities and preferred stock.

KKR invests in credit through its public markets segment, which had $16.3 billion in assets under management as of the end of March. Thanks to more capital piling in from institutional investors, the business was the only one of KKR's three segments to post a rise in fee-related earnings in the first quarter.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.