KKR CIO Henry McVey on Shielding Portfolios Amid Market Uncertainty and Tariffs

Portfolio Protection Against Tariffs

• 🎯 KKR's Balance Sheet CIO, Henry McVey, states that 90% of the firm's portfolio is protected from direct tariffs.
• 💡 This protection is a result of proactive diversification of supply chains and a focus on building resiliency into the portfolio over time.
• 📈 McVey likens the impact of tariffs to oil prices jumping to $150 a barrel, highlighting their significant economic effect.

The 'Security of Everything' Investment Theme

• 🔒 The concept of 'security of everything' emerged post-COVID, emphasizing the need for cybersecurity, transportation security, data security, water, and food.
• 💰 KKR is deploying its $600 billion in assets under management to invest in themes that build resiliency, spanning infrastructure, private equity, and technology.
• 🌍 This theme has gained momentum due to increasing geopolitical tensions globally.

Global Investment Opportunities: Japan and India

• 🇯🇵 Japan is highlighted as an attractive market due to cheap valuations, corporate carve-out activity, and robust financing, with KKR being a major player in private equity and real estate there.
• 🇮🇳 India is also seen as an opportunity, with Apple's Tim Cook suggesting future iPhones will be manufactured there, indicating a shift away from China.
• 🇺🇸 The US and Japan have a logical trade agreement due to Japan being the largest owner of US treasuries and their status as national security allies.

Innovations in Private Investing

• 🤝 KKR has partnered with Capital Group to launch new funds with significantly lower fees (80-85 basis points) to make private investing more accessible.
• 🚀 The goal is to combine the best of private and public markets, generating alpha through Capital Group's liquid strategies and KKR's illiquidity premium.
• 📈 These new vehicles aim to provide individual investors with a safe way to achieve excess returns and compound capital over the long term, addressing retirement security concerns.