Interval funds and other private market investment vehicles are drawing lots of attention from the folks at a key publicly traded investment research giant and ally to financial advisors.

Kunal Kapoor Morningstar CEO

Kunal Kapoor, CEO of Morningstar, highlights "public and private market convergence" as one of "three forces reshaping the investment landscape," (with "expanding choice" and "personalization at scale" as the other two forces). Kapoor shares his thoughts on the subject in a keynote address on the main stage at day one of the 2025 Morningstar Investment Conference, at the Navy Pier in M*'s hometown of Chicago. (The speech was also livestreamed on LinkedIn, and Kapoor's intro to the stage was the Chicago Mass Choir singing "data.")

"In our recent survey, we heard that nearly a third of advisors are thinking about offering these vehicles but do not want to because they're so complex," Kapoor tells FAs. "That 's like a Morningstar bat signal ... We want to bring clarity to complexity in all we do. It's our rallying cry."

There are now about 140 semiliquid interval funds, with more than $100 billion in combined AUM, Kapoor notes. He notes that, although interval funds were first created in 1993, which is also the birth year of ETFs, the pace of development has dramatically accelerated recently.

"In the past five years, we've had more launches in this space than in the preceeding 27 years," Kapoor says. "In 2025, we're already on pace for a record year for new launches." (He also highlights a new "The State of Semiliquid Funds" report, which the M* team released yesterday.)

Yet Kapoor cautions FAs that, as Milton Friedman wrote, there's no such thing as a free lunch.

"Private investments do in fact come with higher fees, less transparency, and, importantly, less liquidity. They're complex. They're not as easy to understand," Kapoor says. "The average semiliquid fund today is charging more than three times the fees of a typical mutual fund or ETF ... And pay attention to incentive fees applied to the entire total returns."

Watch for the M* team "to help demystify all of this," Kapoor adds:

We've got a time-tested process for creating transparency and fighting for the investments. It boils down to four ingredients: 1) actionable data, 2) standardized analytics, 3) independent IP, and 4) unified workflow tools.

"This is a snowball coming down the hill ... Expect that there will be a lot of marketing at you in the next few years to get you to think about this convergence," Kapoor says. "It's ok to come to it with a skeptical lens, but we're going to be your partner in helping you do it with an independent voice that provides a common language and a critical eye."

To that end, FAs and others who use the Morningstar Direct service now have a new metric with which to evaluate both traditional mutual funds and interval funds.

"We rolled out a new percent private data point," Kapoor says, revealing that Morningstar Direct will now reveal what percentage of a fund's underlying investments are in private markets.

Kapoor also notes that, as the M* team revealed early last month, they're extending their Morningstar Medalist Ratings to semiliquid funds (i.e. interval funds). 

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