There is an old but trusted adage in investing – don’t invest in something that you don’t understand. And for many investors who contemplate investing in the new $750m KKR Credit Income Fund, this could well prove to be the case because this is a complex investment.
The investment objective, however, is relatively straightforward. This ASX listed investment trust aims to provide investors with attractive, risk adjusted returns and access to a diversified portfolio of income generating alternative credit investments with a focus on capital preservation through geographic and asset class diversification. The trust targets a net return of 6% to 8% pa. with a target cash yield of 4% to 6% pa through the market cycle.
But the complexity comes from the Trust investing in two quite different KKR (Kravis Kohlberg Roberts) managed funds, different times as to when the funds are deployed, the second fund being quite illiquid, and the delay investors will face in being appraised of the fund’s true NTA (net tangible asset value). Further, it is riddled with conflicts of interest.