(Reuters) -KKR and Capital Group will launch a fund that will give investors exposure to both private and public equity, the investment firms said on Wednesday, as appetite rises for diversification beyond traditional assets.

The fund will be launched in early 2026 in the U.S., pending approval from regulators. It is structured as an interval fund, which allows investors to exit only during set windows, and will have low minimum investment thresholds.

With high-profile companies remaining private for longer, investment firms are seeking new ways to meet rising demand for exposure to private markets.

The potential for outsized returns from privately held companies has drawn interest from retail investors. These assets are also less sensitive to the economic swings that impact public markets, making them useful for diversification.

"Private market investments can enhance returns and add diversification within a portfolio, yet have historically been out of reach for everyday investors given accreditation requirements and higher investment minimums," said Holly Framsted, head of product group at Capital.

The new fund will deepen the partnership between KKR and Capital, which in April launched two funds focused on a mix of public and private credit.

These funds have pulled in $100 million in flows in the first three months, the companies said.