Capital Group, KKR eye first public-private equity fund in SEC filing

Capital Group is moving to expand access to private markets for US investors, announcing a new public-private equity fund in partnership with KKR.

The proposed Capital Group KKR US Equity+ fund, expected to launch in early 2026 pending regulatory approval, would blend public and private equity exposures in a single interval fund structure.

The filing marks the latest step in the partnership between Capital Group and KKR, following the April debut of two public-private credit interval funds.

In a statement Wednesday, Capital Group said the new fund aims to offer growth and diversification by allowing investors to seek opportunities across a broader spectrum of companies, including those not typically available through traditional public markets.

As of June 30, Capital Group managed more than $3 trillion in equity and fixed income assets for individuals and institutions worldwide.

The firm said its proposed Capital Group KKR US Equity+ is designed to provide access to both public and private equity markets with lower minimums and no investor accreditation requirements.

The fund would allow investors to redeem up to 5% of outstanding shares each quarter. In an interview with Bloomberg, Capital Group said it will not use leverage to boost returns. The company plans to benchmark the fund’s performance against the S&P 500.

In its filing with the Securities and Exchange Commission, submitted Tuesday, Capital Group said the fund will invest as much as 40% of its assets in private equity investments or funds managed by KKR.

Roughly 30% of assets would be allocated to K-PEC, an existing KKR private equity fund, with no more than 10% in direct co-investments alongside other KKR strategies. The remaining 60% would be invested primarily in medium and large US stocks.

“There are fewer publicly available companies to invest in, which underscores the need to broaden access to private equity investments to round out an investor’s portfolio,” Holly Framsted, head of product group at Capital Group, told Bloomberg. "We believe there’s value in investor portfolios both on the public side and the private side, and that the marrying of the two together are a really powerful investment proposition for mainstream wealth clients.”

The initiative comes as asset managers seek to broaden their reach beyond institutional and high-net-worth clients. Empower is also pushing to give 401(k) participants access to private-market options in partnership with Apollo, Franklin Templeton, and other managers, a move that's been met with skepticism from Democratic Senator Elizabeth Warren.

Earlier this month, Blue Owl Capital announced its own partnership with Voya Financial, which seeks to put private market strategies in collective investment trusts within managed accounts on the Voya retirement platform.

Capital Group has set the minimum investment for most share classes in its proposed fund at $1,000, and the new fund is expected to be distributed through investment advisers and independent brokerage platforms. Capital Group and KKR are also exploring ways to integrate private market strategies into model portfolios and target date funds.

“We have a responsibility to design thoughtful, deliberate solutions that can stand the test of time based on what financial advisors have told us they need. Equally important is helping advisors understand how to integrate these private market exposures into their clients' portfolios,” said Matt O’Connor, CEO of Capital Group’s client group.

While many voices may see the push of private investments into the 401(k) world as an inevitable win, a recent note from Fitch Ratings struck a cautionary tone, highlighting how the growth in assets may also bring heightened regulatory, legal, and reputational risks for the firms involved. 

"Conflicts of interest regarding self-dealing may arise if Alt IMs give institutional investors preferential treatment ahead of their fiduciary responsibilities for retail investors, who may be relatively unsophisticated regarding illiquidity, valuations or layered fee structures," analysts at the ratings agency wrote. "Private investments can be more subjectively valued and are meaningfully less liquid than publicly traded investments, which can lead to higher litigation and reputational risks."