On January 9, 2007, Steve Jobs took the stage at Macworld and unveiled the iPhone, forever altering the trajectory of technology. This moment is often regarded as one of the most pivotal product launches in tech history. The launch of the iPhone wasn’t just the debut of a new product; it was the dawn of a new paradigm. By seamlessly integrating music, communication, and web access into a single device, Apple did not just enhance a device, they redefined it. As Jobs said, “Innovation distinguishes between a leader and a follower.” This principle of synthesizing ideas and creating meaningful connections to address complex challenges is as relevant today as it was then. At KKR, we call it connecting the dots.
Today, the global credit markets are undergoing their own transformation. As we have previously noted, the old paradigm of siloed, fragmented products is giving way to a new era of diversified income solutions across multi-asset credit platforms. We believe these solutions represent the “iPhone moment” for credit—unifying diverse capital strategies, fostering agility, and empowering investors and companies alike to navigate complexity with more clarity and confidence. While the scale of innovation does not rival the groundbreaking transformation of the technology sector, the shift in credit markets is significant, fundamentally redefining how capital is accessed and deployed. As highlighted in our Q3 Market Review, we believe constructing a multi-asset credit portfolio with an eye toward a materially larger diversification strategy, is a proactive approach to “future-proofing” a portfolio.
Just as the App Store revolutionized access to tools and experiences through a centralized platform, we believe the integration of diverse asset classes to enhance income diversification has become a cornerstone of modern portfolio strategy. And while we have seen significant asset performance across the credit and equity markets in 2024, we are mindful of notable market tea leaves: heightened geopolitical tensions, ballooning government deficits, tariffs, sustained inflationary pressures, and most recently rising bond yields. We are focused on understanding how job growth and productivity trends might face challenges, as these factors play a critical role in shaping broader economic stability. This aligns with what Henry McVey describes as the “regime change,” requiring a shift from traditional investment approaches to strategies that prioritize income, resilience, and adaptability. As dispersion remains elevated and the total addressable market for global credit continues to expand – we believe exposure to diversified credit as an asset class has gone from a “nice to have” to a “must have” on a risk-adjusted basis.
Asset performance in 2024 highlighted the critical role income can play in driving returns, reaffirming the enduring value of consistent, compounding income in a higher-for-longer rate environment. This underscores the importance of income-focused strategies that capitalize on stable cash flows, even amidst economic uncertainty. At the same time, credit markets continue to evolve, fueled by the continued growth of private credit in direct lending and asset-based finance (ABF) markets, alongside the re-emergence of private placements, the expansion of insurance mandates, and alternative private capital solutions. These trends are reshaping the traditional financing ecosystem, providing issuers and investors with more innovative tools to navigate today’s complex financial landscape. We will discuss this trend in more detail in this note.
While credit markets have been evolving for decades, we see 2025 as a pivotal moment. Just as the mobile phone advanced, we believe the forward landscape will continue to feature more multi-asset portfolios designed to provide global and diversified income within a single, scaled operating environment. Steve Jobs envisioned the iPhone as a singular device designed to simplify and enhance outcomes. Integrated platforms that provide credit solutions spanning public and private markets provide a similar reinvention: a unified, aligned approach to address business needs, setting a new standard for efficiency, flexibility, and strategic value. Much like the iPhone streamlined how people interact with technology, customized investment solutions are transforming how businesses access and optimize capital. This is our “iPhone moment,” and we are ready to lead the charge, connecting the dots for our investors and delivering the strategies needed to thrive in this dynamic era.
With this framework in mind, we address the following themes that shaped our perspective this quarter:
