Morningstar Inc., a provider of independent investment research and data, introduced the Morningstar Medalist Rating for Semiliquid Funds, expanding its established medalist rating framework to the growing segment of semiliquid investment vehicles. As public and private markets converge and product offerings become more complex, Morningstar said the new rating is meant to bring greater transparency and due diligence to private markets.
“Semiliquid funds are becoming more accessible and gaining traction in the investment landscape, but their unique structures present challenges that warrant a reliable framework for evaluation,” said Laura Lutton, Morningstar’s global head of manager research. “Morningstar has a long track record of helping bring clarity to complex areas of the market. With this new rating, we are applying that same rigorous approach to help investors assess these strategies with confidence and make well-informed decisions.”
This new rating expands on the Morningstar Medalist Rating – the firm’s forward-looking ratings methodology used for mutual funds and exchange-traded funds – to a range of vehicles with limited liquidity and/or exposure to private market assets. These include interval funds, tender-offer funds, nontraded real estate investment trusts, and non-traded business development companies in the United States, as well as several investment options overseas.
Investor interest in semiliquid structures has accelerated in recent years, with U.S. interval funds alone growing at an annualized rate of nearly 40% over the past decade through May 2024, according to Morningstar research.
The methodology is tailored to account for the distinct structures, liquidity constraints, and potential private asset exposures of semiliquid vehicles. Ratings will use Morningstar’s five-tier scale – gold, silver, bronze, neutral, and negative – to express conviction in a strategy’s potential to outperform over the long term.
The Morningstar Medalist Rating for Semiliquid Funds is designed to:
- Identify strategies expected to outperform relevant public market benchmarks, private market indexes, and peer groups over the long term, and flag strategies likely to underperform;
- Assess a strategy’s suitability to an investor’s goals, liquidity needs, and risk profile;
- Provide key context on factors like fees, manager tenure, asset size, and investment approach; and
- Monitor ongoing changes in strategies that could materially impact performance or alignment to investor expectations.
Morningstar said it will begin assigning ratings under the new methodology in the third quarter of 2025, starting with U.S.-based semiliquid strategies. The ratings will be displayed on Morningstar.com as well within products in its direct platform, including Morningstar Direct, Direct Advisory Suite, and in data feeds associated with select interval funds.
The launch of the Medalist Rating for Semiliquid Funds, according to Morningstar, is its latest activity to construct a common investment language across public and private markets and empower investors to evaluate investments and portfolios with actionable data, standardized analytics, and unified workflow tools.
Morningstar is a global provider of independent investment insights offering an extensive line of products and services for individual investors, financial advisers, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $341 billion in assets under management and administration as of March 31, 2025.
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