Lucas Jackson | Reuters
A trader works on the floor of the New York Stock Exchange as a television screen displays coverage of U.S. Federal Reserve Chairman Janet Yellen shortly after the announcement that the U.S. Federal Reserve will hike interest rates in New York, December 14, 2016.
The central bank has indicated it expects three increases in 2018. It last hiked rates in December, pushing the target range to 1.25 percent to 1.5 percent.
KKR isn’t the only firm bullish on the Fed’s rate path. On Wednesday, Swiss bank UBS upped its projection of two hikes to three for 2018. It also anticipates two increases in 2019.
To take advantage of central bank normalization, McVey said, KKR likes names that have “complexity” or have been “left behind.” He’d stay away from growth stocks.
“We’ve been most struck by what’s going on in the growth part of the market. If you look at the Russell Growth it’s now back to ’99’s levels,” he said.
Instead, assets such as MLPs — master limited partnerships — have been “left for dead,” he noted.
“They’re the only instrument right now that has a yield above average.”
McVey said he also likes mortgage servicing and financials and said KKR is still active in Japan.
source : CNBC