KKR presents a macro outlook shaped by structural regime shifts, arguing that investors may be entering a period defined by lower returns, higher volatility, and greater dispersion across assets. The paper suggests that traditional 60/40 portfolios may struggle, with forward returns potentially falling to around 4–5%.
2021: Another Voice
KKR
Henry McVey
Research
46 Pages
Key Takeaways
60/40 Under Pressure: Expected returns for 60/40 portfolios may decline to ~4–5%, down from ~8–10% historically due to lower yields and valuations.
Higher Volatility Regime: Market volatility is projected to rise, with drawdowns potentially exceeding 20% more frequently than in the past decade.
Private Assets Appeal: Private markets have historically delivered ~300–500 bps excess returns over public equities, attracting increased institutional allocation.
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