Outlook for 2019: The Game Has Changed

KKR

Henry McVey

Research

64 Pages

KKR explores how a late-cycle global economy is shifting the investment playbook, arguing that slower growth, tighter liquidity, and structural changes are reshaping asset allocation decisions. The paper suggests traditional 60/40 portfolios may struggle, while alternatives and income-oriented strategies could play a larger role amid a projected global growth slowdown toward ~3%.

Key Takeaways

Global Growth Slowing: KKR expects world GDP to decelerate toward ~3%, down from ~3.8%, signaling a late-cycle environment with more muted return expectations.
60/40 Under Pressure: Lower forward returns imply a traditional 60/40 portfolio may deliver only ~4–5% annually, versus ~8–10% historically.
Alternatives Gaining Share: Private markets and real assets allocations could rise by 5–10 percentage points as investors seek income and diversification.
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