April 29 (Reuters) - KKR and Capital Group

launched two funds that would target investments in a blend of

public and private credit, tapping into a vast pool of retail

investors looking beyond traditional assets for diversification.

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, the companies said

on Tuesday.

"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 growing class of asset managers is looking to tap into the

high demand for private credit - loans typically made by

non-bank institutions.

The market is estimated to grow to $2.8 trillion by 2028, up

from nearly $1 trillion in 2020, according to Morgan Stanley, as

banks continue to retreat from riskier forms of lending.

Being relatively insulated from the volatility of public

debt markets, private credit can be a crucial source of

portfolio diversification.

So far, however, these assets have mostly been the domain of

institutional investors such as pension funds, insurers and

family offices.

Limited liquidity, looser regulatory oversight and higher

barriers to entry have kept them out of the reach of everyday

investors.

The new funds "will extend KKR's presence beyond qualified

and accredited segments, into the mass affluent," TD Cowen

analysts wrote in a note.

They will allow investments starting at $1,000, lower than

the typical $2,500 to $10,000 minimum investments such funds

have, according to Morningstar.

The funds will offer redemptions periodically, allowing

shareholders to sell up to 10% of their outstanding shares every

quarter, under normal conditions. Low annual fees will also

appeal to retail investors, KKR said.