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Ultra-Wealthy Investors Facing Lower Returns Ahead, KKR Says

Gains could fall to 5.3 percent from 9.3 percent "unless portfolios are repositioned for the environment we think that we are entering."

By Katya Kazakina

(Bloomberg) --Returns for ultra-high-net-worth investors such as wealthy families may be poised to decline, according to a new report by KKR & Co.

Gains could fall to 5.3 percent from 9.3 percent historically “unless portfolios are repositioned for the environment we think that we are entering,” wrote the authors, including Henry McVey, KKR’s head of global macro and asset allocation. “Ultra HNW investors must find new opportunities to harness complexity and dislocation to their benefit, allowing them to earn better returns than what typical indexes may deliver during the next five years.”

The New York-based investment firm surveyed more than 50 family offices and other ultra-high-net-worth clients, defined as those with $30 million or more in investable assets, for the report, “The Ultra High Net Worth Investor: Coming of Age.” The respondents’ average net worth was $1.5 billion.

“What struck us was the sheer size,” McVey said Wednesday in an interview on Bloomberg Television. “Unlike an endowment that might be paying out 5 percent per year, there’s constant cash flow coming in. So they are looking for ways to deploy that money.”

 

 

To contact the reporter on this story: Katya Kazakina in New York at kkazakina@bloomberg.net To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net Josh Friedman, Dan Reichl

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