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KKR Releases “Testing the Limits of Reflation” by Henry McVey

By: via Business Wire

New Macro Insights Report Emphasizes Reflationary Tilt to Portfolio Construction

KKR today announced the release of Testing the Limits of Reflation by Henry McVey, Head of Global Macro and Asset Allocation (GMAA). In the new Insights piece, McVey and his team delve into several key macro areas that they believe warrant particular attention from investors in a period of pronounced reflation.

“A strong global recovery is unfolding, and while the current macroeconomic environment is complex, the combination of looser monetary and fiscal policy, faster nominal GDP growth, and accommodative financial conditions gives us even more confidence in our ‘Another Voice’ investment thesis for 2021. Against this backdrop, our bottom line remains: investors must now look to create portfolios that can not only endure but also thrive as the global economy tests the limits of reflation,” said Henry McVey.

In the report, McVey updates his team’s macro and asset allocation framework to include the following:

  • An upgrade to both the GMAA team’s earnings forecast and year-end target for the S&P 500, reflecting stronger growth in nominal GDP.
  • A more conservative approach to interest rate assumptions as a result of faster growth and more government spending, as well as complications linked to supply chain disruptions, though the team does not see rates getting unglued at the long-end of the curve.
  • A view that while nominal rates are increasing, real rates – which the team believes are key to financial conditions – will remain at attractive levels through 2022, despite growing caution that a near-term pullback is likely.
  • A refreshed expected return forecast for the next five-year period, which suggests a lower return forecast must be offset by more creative macro and asset allocation strategies.

Links to access this report in full as well as an archive of Henry McVey's previous publications follow:

  • To read the latest Insights, click here.
  • To download a PDF version, click here.
  • For an archive of previous publications please visit

About Henry McVey

Henry H. McVey joined KKR in 2011 and is Head of the Global Macro and Asset Allocation team. Mr. McVey also serves as Chief Investment Officer for the Firm's Balance Sheet and oversees Firmwide Market Risk at KKR. As part of these roles, he sits on the Firm's Investment Management & Distribution Committee and the Risk & Operations Committee. Prior to joining KKR, Mr. McVey was a managing director, lead portfolio manager and head of global macro and asset allocation at Morgan Stanley Investment Management (MSIM). Learn more about Mr. McVey here.

About KKR

KKR is a leading global investment firm that offers alternative asset management and capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of The Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at and on Twitter @KKR_Co.

The views expressed in the report and summarized herein are the personal views of Henry McVey of KKR and do not necessarily reflect the views of KKR or the strategies and products that KKR offers or invests. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. This release is prepared solely for information purposes and should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. This release contains projections or other forward-looking statements, which are based on beliefs, assumptions and expectations that may change as a result of many possible events or factors. If a change occurs, actual results may vary materially from those expressed in the forward-looking statements. All forward-looking statements speak only as of the date such statements are made, and neither KKR nor Mr. McVey assumes any duty to update such statements except as required by law.



Cara Major or Miles Radcliffe-Trenner


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