Morningstar PitchBook Index Unveils Comprehensive Insight into Public and Private Asset Exposure—A Game-Changer for Savvy Investors Seeking Diversified Portfolio Strategies

The investment landscape is evolving—and fast. Investors are no longer content with just public equities; private market exposure is becoming a must-have for a truly modern portfolio. Recognizing this seismic shift, Morningstar has launched a groundbreaking benchmark: the Morningstar PitchBook US Modern Market 100 Index, or simply, the Modern Market 100. This is the first-ever index designed to blend the best of both worlds—public and private equity—into one comprehensive performance gauge.

Why This Matters: The Rise of the Private Market

Traditionally, public markets have dominated the investment universe, with the U.S. stock market valued at around $60 trillion. Private equity, by comparison, is a smaller but rapidly growing $8 trillion sector. What’s crucial here is that private companies like OpenAI and Stripe, often valued in the hundreds of billions, are staying private longer than ever before. This trend reflects a broader shift in how companies raise capital and grow, bypassing traditional IPO routes to tap into private funding pools.

Morningstar’s 90/10 split—90% public, 10% private—reflects this “modern asset universe.” Sanjay Arya, Morningstar’s head of innovation for index products, points out that ignoring these private giants means missing out on some of the fastest-growing, most dynamic companies shaping the future economy.

The Big Win for Private Assets: What Investors Need to Know

The timing couldn’t be more perfect. This summer, President Donald Trump signed an executive order paving the way for alternative assets, including private equity, to be included in 401(k) plans. This regulatory shift could dramatically increase retail investor access to private markets, traditionally the domain of institutional investors and ultra-wealthy individuals.

Since 2021, crossover investors—sovereign wealth funds, private equity buyout firms, hedge funds—have engaged in about 5,000 private market deals worth $450 billion. This surge underscores the growing appetite for private market exposure, and the Modern Market 100 offers a much-needed benchmark to help investors measure performance across these blended asset classes.

Challenges and Innovation in Index Construction

Building an index that marries public and private equities is no small feat. Pricing private assets is notoriously difficult due to limited liquidity and infrequent transactions. Morningstar tackled this by leveraging data from secondary trading platforms like Caplight and Zanbato, applying rigorous liquidity screens, and conducting quarterly rebalances with daily calculations. This rules-based approach ensures transparency and reliability, setting a new standard for hybrid benchmarks.

Risks and Rewards: What Investors Should Watch

The Modern Market 100 leans heavily into growth, tech-driven companies—both public giants like Microsoft, Nvidia, Apple, Amazon, and Meta, and private disruptors such as SpaceX, OpenAI, xAI, and Stripe. This concentration means the index carries inherent risk, especially if the tech sector faces a downturn. Many investors worry that mega-cap tech stocks are priced for perfection, making the index vulnerable to corrections.

However, the flip side is compelling. Morningstar’s white paper reveals the Modern Market 100 delivered a 28.2% return over one year, outperforming the S&P 500’s 20% gain in the same period. This suggests that blending private and public equities may offer superior growth potential, capturing innovation-driven opportunities missed by traditional benchmarks.

What This Means for Investors and Advisors

For investors and advisors, the Modern Market 100 signals a strategic pivot. Traditional benchmarks like the S&P 500 no longer tell the full story of economic growth. Private companies, particularly in late-stage venture, represent a vital slice of the innovation economy that’s reshaping industries.

Actionable Insight: Advisors should consider incorporating private market exposure into client portfolios—not just as a niche allocation but as a core component of growth strategies. This means seeking out funds or vehicles that provide access to late-stage private companies or crossover deals. Additionally, monitoring hybrid benchmarks like the Modern Market 100 can offer a clearer picture of market dynamics and emerging opportunities.

What’s Next? Forecasting the Future of Hybrid Investing

As private companies continue to delay IPOs, and regulatory barriers to private market access fall, hybrid indexes will become increasingly important. Expect more asset managers to develop products tracking these blended benchmarks, and more 401(k) plans to offer alternative asset options.

A recent report from McKinsey highlights that private equity and venture capital assets under management could double by 2030, driven by technological innovation and investor demand. This growth will likely fuel further innovation in index design and portfolio construction.

Unique Perspective: The Hidden Power of Private Market Data

One underappreciated advantage of indexes like the Modern Market 100 is their ability to illuminate economic trends early. Public markets react quickly but often reflect established realities. Private market data, sourced from secondary trades and funding rounds, can signal shifts in technology adoption, consumer behavior, and sector growth before they hit the public radar.

For example, OpenAI’s valuation surpassing ExxonMobil’s market cap is a stark illustration of where the economy is headed—toward AI-driven transformation. Investors who track these signals can position portfolios ahead of the curve.

In Summary: The Modern Market 100 isn’t just a new index—it’s a paradigm shift. By bridging public and private markets, it offers investors and advisors a more holistic, forward-looking view of where real growth is happening. The key takeaway? Embrace the private market revolution now, integrate hybrid benchmarks into your analysis, and prepare for a future where private and public equity coalesce as the new normal in investing.

For those ready to lead rather than follow, this is your moment to rethink portfolio construction and seize the innovation economy’s full potential. Stay tuned to Extreme Investor Network for the latest insights and strategies to navigate this exciting frontier.

Source: Morningstar PitchBook index tracks exposure to public and private assets