KKR examines the post-COVID macro regime, arguing that structurally lower rates, higher fiscal spending, and rising geopolitical tension will reshape asset allocation for years. The paper leans into a more inflationary outlook, suggesting investors may be underestimating regime change risk while over-relying on past disinflation trends.
The Road Ahead
KKR
Henry McVey
Research
26 Pages
Key Takeaways
Lower For Longer Rates: KKR expects real interest rates to remain negative across developed markets, with policy rates anchored near 0% through at least 2023, supporting risk assets but distorting valuations.
Inflation Regime Shift: The authors highlight a potential move toward 2–3% sustained inflation in the U.S., driven by fiscal stimulus exceeding 10% of GDP and supply chain reshoring.
Asset Allocation Shift: Alternatives could rise from ~25% to over 40% of portfolios as investors seek yield and diversification in a world where 60/40 returns may fall below 5%.
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