Emerging Investment Trends: Morningstar Launches the First Public-Private Equity Benchmark

In a dynamic shift within the investment landscape, Morningstar has unveiled a groundbreaking benchmark designed to capture the growing interest in private market exposure alongside traditional publicly traded stocks. The newly launched Morningstar PitchBook US Modern Market 100 Index, referred to as the Modern Market 100, combines both public and private equity in a single index, offering investors a comprehensive perspective on the evolving market.

What is the Modern Market 100 Index?

The Modern Market 100 Index is unique in its composition, featuring 90 publicly traded companies and 10 venture-backed firms, showcasing the largest U.S. companies across both domains. This 90/10 split reflects the current investment climate where private capital avenues are gaining traction. Companies such as OpenAI and Stripe are remaining private for extended periods, capitalizing on available funding without the urge to go public.

Sanjay Arya, the Head of Innovation for Index Products at Morningstar, has noted the significance of incorporating these private firms into a benchmark. He explains, “To ignore them is to miss out on some of the fastest, most dynamic companies out there.”

The Market Landscape: Public vs. Private Equity

In terms of market size, the contrast between public and private equity is significant. The U.S. public stock market’s value hovers around $60 trillion, while private equity stands at approximately $8 trillion. This disparity emphasizes the importance of including private companies when evaluating market sentiment.

Investor Sentiment and Economic Projections

Arya further elaborates, stating that indices serve as barometers for economic direction. Understanding the full scope of investment opportunities requires insight into both public and private markets. “You can’t assess market sentiment based solely on public investments if a substantial portion of the economic landscape resides outside these markets,” he asserts.

The trajectory towards combining public and private equity has already gained momentum. In August 2025, an executive order signed by President Donald Trump paved the way for alternative asset inclusion in 401(k) plans, signifying a growing acceptance of private investments.

Crossover Investments on the Rise

The influx of capital into private markets isn’t a new phenomenon. Since 2021, crossover investors—including sovereign wealth funds, private equity firms, and hedge funds—have engaged in around 5,000 private market transactions, amassing a total of $450 billion. Arya aims to provide a framework through the Modern Market 100, allowing investors to benchmark performance across both asset classes effectively.

Challenges in Creating the Index

Crafting a cohesive public-private benchmark hasn’t been without hurdles. Arya’s team undertook the task approximately four years ago, needing to establish a rules-based process adept at pricing private securities. Utilizing secondary trading platforms like Caplight and Zanbato for pricing data, the index incorporates liquidity screens and conducts quarterly rebalances alongside daily updates.

Risk and Growth Potential

One notable aspect of the Modern Market 100 Index is its focus on high-cap companies, which inherently carry greater risk—particularly from the tech sector. The top ten public companies include industry giants such as Microsoft, Nvidia, Apple, Amazon, and Meta Platforms. Meanwhile, private constituents include innovative entities like SpaceX, OpenAI, xAI, and Stripe.

This emphasis on growth-oriented companies means the index could be susceptible to volatility, especially if market conditions change.

Comparing Performance

Remarkably, the Modern Market Index has shown substantial returns, registering a 28.2% increase over the past year, outpacing the S&P 500, which rose by 20% during the same timeframe. Arya highlights the index’s potential to uncover investment opportunities that are often overlooked, as firms like OpenAI have a valuation exceeding $500 billion—greater than many traditional publicly traded companies.

The Evolution of Benchmarks

Investment benchmarks have historically adapted to reflect economic growth drivers, transitioning from the railway companies of the late 1800s to today’s innovation-driven economy. Arya emphasizes the importance of fully capturing these emerging trends, stating, “Incorporating late-stage venture firms provides a more comprehensive view of market evolution.”

By recognizing how investment contours shift over time, the Modern Market 100 serves as a valuable tool for investors seeking to navigate an increasingly complex landscape. Anathematically, this pioneering index equips investors with deeper insights into the unfolding economic landscape, showcasing the dynamic interplay between public and private equity.

Conclusion

As investors seek to diversify their portfolios with both public and private market exposure, the Morningstar PitchBook US Modern Market 100 Index is poised to become an essential resource. By accurately reflecting the modern investment universe, it empowers today’s investors to harness the potential of innovative companies redefined by private market growth. Explore this dynamic index and stay informed on the rapidly evolving investment opportunities that lie ahead!