Breaking into the retail business isn't easy. KKR is learning that the hard way.
The private equity giant is closing two mutual funds after launching them less than two years ago.
Why the sudden closures? Investors we turned off by the Alternative Corporate Opportunities Fund's quarterly liquidity offering--most mutual fund investors expect daily liquidity.
Meanwhile, KKR's Alternative High Yield Fund offered daily liquidity but it wasn't able to compete with other similar finds with longer track records.
The two funds are no longer selling shares and will liquidate by around March 31, according to regulatory filings. The funds have roughly $33 million in assets, not including $125 million KKR added of its own money to get the funds started.
The move is a setback for KKR which has been looking for ways to enter the multi-trillion dollar retirement 401(k) market. Back in 2012, one of KKR’s billionaire founders, George Roberts, joined Chuck Schwab at the brokerage's annual conference before thousands of independent financial advisors. Roberts was there to familiarize the retail crowd with his firm's new mutual fund products.
There are huge pools of capital there, Roberts told Forbes last year. “I talked to one fellow that managed $800 million and another that managed $5 billion.”
News of KKR's foray into the retail market surprised some considering the firm's typical products have multi-million dollar minimums.
Don't expect KKR to exit the retail space just yet. It's still got about $2.6 billion in assets between its Corporate Capital Trust and KKR Income Opportunity fund.
Expect KKR to try again.
