KKR Global Institute examines how private equity can reshape traditional portfolios in a new macro regime where stocks and bonds move together. The authors argue that higher and less predictable inflation, tighter liquidity and elevated stock bond correlation justify larger roles for private alternatives. They focus on why private equity has historically earned an illiquidity premium and how different allocator types might size exposures.
Regime Change: The Role of Private Equity in the ‘Traditional’ Portfolio
KKR
Research
22 Pages
Key Takeaways
New regime context: Private equity can complement public equities within a more inflation aware regime, especially when stock bond correlation remains positive.
Return contribution: Historic data suggests private equity improved portfolio return and risk adjusted profile in many environments while adding illiquidity.
Implementation choices: Authors present institutional and private wealth allocations that pair private equity with private credit and real assets.
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