Insurance CIOs Embrace Non-Traditional Assets, Says KKR’s Henry McVey

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KKR, a prominent global investment firm, has unveiled insights from Henry McVey, Chief Investment Officer (CIO) of KKR’s Balance Sheet and Head of Global Macro and Asset Allocation (GMAA), in a report titled “No Turning Back.”

The report, based on a proprietary survey of nearly 50 Chief Investment Officers overseeing assets exceeding $8 trillion, delves into how leading insurance companies are adjusting their asset allocation strategies amid a volatile interest rate landscape. McVey highlights that allocations to non-traditional investments have remained robust, even amidst significant interest rate fluctuations. This resilience stems from CIOs’ growing confidence in the diversification and return potential of such assets across varying interest rate environments. Moreover, there’s a notable trend towards utilizing both liquid and illiquid allocations to construct more resilient portfolios capable of weathering market disruptions and accessing new opportunities.

Allocations to Investment Grade debt have risen with the surge in interest rates but have not yet reached the peak levels observed in 2017. Despite the interest rate hikes, allocations to non-traditional investments, notably Alternatives, have seen a marginal decline to 28.9% in 2024 from 31.8% in 2021, yet remain notably higher than the 20.3% recorded in 2017.