(Reuters) - KKR and Capital Group launched two funds on Tuesday, which would allow retail investors to invest in both public and private credit.

The funds, Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+, will allocate 60% of their assets to public fixed income and the rest to private credit.

Private credit - loans typically made by non-bank institutions - have surged in popularity in recent years as banks retreat from riskier forms of lending.

Being relatively insulated from the volatility of public debt markets, private credit can be a crucial source of diversification for investors.

So far, however, these assets have mostly been limited to institutional investors.

"We are aiming to unlock the benefits of private investments for the 95% of individual investors who have not historically been able to invest in the private markets," KKR co-CEOs Joe Bae and Scott Nuttall said.

A report from Moody's earlier this year estimated the private credit market could grow to $3 trillion by 2028.

The new funds will allow investments starting at $1,000, lower than the typical minimums for such funds, to attract retail investors.