Why ETFs prefer traditional over alternative asset managers
KKR: A global investment company with expanding assets and strong performance (Part 16 of 16)
Leverage and flexibility
Since KKR & Co. L.P. (KKR) went public in 2010, KKR stock has generated approximately 22% CAGR (compound annual growth rate) return for its investors. The company has also paid dividends with yields of 7% to 8% in the last four years.
KKR’s ownership is more 90% owned by investment advisors, private equity, and hedge funds.
ETFs prefer traditional asset managers over alternative asset managers. Some traditional asset managers include BlackRock (BLK), BNY Asset Management (BK), and State Street (STT). Together they make up 4.07% of the of the Financial Select Sector SPDR Fund (XLF).
Alternative asset managers have less flexibility to alter their investments in portfolio companies combined with leverage that’s impacted during downturns.
ETF options for alternative asset managers
Alternative asset managers have gone public as late as 2010. ETFs started covering them in 2011.
Major ETFs in the segment include the IQ Hedge Multi-Strategy Tracker ETF (QAI) and the SPDR SSGA Multi-Asset Real Return ETF (RLY).
The theme-based ETF iShares S&P listed Private Equity (IPRV) from BlackRock has invested 8.1% of its funds in the stock. This is slightly lower than the holdings in The Blackstone Group (BX). Other major holdings by ETFs with exposure in KKR are the Guggenheim Mid-Cap Core ETF (CZA) and the Powershares Global Listed Private Equity (PSP).
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