Welcome back to the Alt Goes Mainstream podcast.
Today’s podcast was a conversation that was recorded live at Morningstar’s Investment Conference in Chicago earlier this year.
Morningstar CEO Kunal Kapoor took time out of his packed schedule at the event to sit down with me for a thought-provoking conversation that dove into the nuances of many of the trends that are shaping private markets today.
Morningstar and Kunal have quite an interesting perch in the market. They occupy a critically important function in the market: helping investors understand the data, structures, and trends in public and private markets. They provide fund ratings, investment analysis, and market data to both individual and institutional investors.
As public and private markets experience increasing convergence, Morningstar finds itself at the intersection of markets that are undergoing rapid evolutions across product structures, asset allocation frameworks, and weighty questions around conceptual frameworks of liquidity, risk, volatility, concentration that are on the minds of many. Amongst the wide range of topics Kunal and I covered, one stood out: Morningstar is fiercely on the side of the investor.
If there’s anyone who has a deep understanding of Morningstar’s DNA, it’s Kunal. Kunal started at Morningstar in 1997 as a data analyst, holding a variety of roles at the firm, including leadership positions in research and innovation. He served as director of mutual fund research and was part of the team that launched Morningstar Investment Services, Inc., before moving on to other roles including director of business strategy for international operations, and later, president and chief investment officer of Morningstar Investment Services. During his tenure, he has also led Morningstar.com® and the firm’s data business as well as its global products and client solutions group.
Kunal and I had a fascinating and lively conversation. We covered a number of the most pressing topics in private markets today: the convergence of public and private, liquidity vs illiquidity, investor education, the importance of transparency, and the why, what, and how behind evergreen funds.
Thanks Kunal for coming on the show to share your wisdom, expertise, and passion for public and private markets.
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Clip #1: Is Wall Street smarter than Main Street?
Clip #2: What it means to fight on behalf of the investor.
Clip #3: When should people start to think about working with a financial advisor?
A word from AGM podcast sponsor, Ultimus Fund Solutions
This episode of Alt Goes Mainstream is brought to you by Ultimus Fund Solutions, a leading full-service fund administrator for asset managers in private and public markets. As private markets continue to move into the mainstream, the industry requires infrastructure solutions that help funds and investors keep pace. In an increasingly sophisticated financial marketplace, investment managers must navigate a growing array of challenges: elaborate fund structures, specialized strategies, evolving compliance requirements, a growing need for sophisticated reporting, and intensifying demands for transparency.
To assist with these challenging opportunities, more and more fund sponsors and asset managers are turning to Ultimus, a leading service provider that blends high tech and high touch in unique and customized fund administration and middle office solutions for a diverse and growing universe of over 450 clients and 1,800 funds, representing $500 billion assets under administration, all handled by a team of over 1,000 professionals. Ultimus offers a wide range of capabilities across registered funds, private funds and public plans, as well as outsourced middle office services. Delivering operational excellence, Ultimus helps firms manage the ever-changing regulatory environment while meeting the needs of their institutional and retail investors. Ultimus provides comprehensive operational support and fund governance services to help managers successfully launch retail alternative products.
Visit www.ultimusfundsolutions.com to learn more about Ultimus’ technology enhanced services and solutions or contact Ultimus Executive Vice President of Business Development Gary Harris on email at gharris@ultimusfundsolutions.com.
We thank Ultimus for their support of alts going mainstream.
Show Notes
00:00 Ultimus Sponsor Message
01:18 Welcome to Alt Goes Mainstream
01:55 Welcome to the Morningstar Investment Conference
02:33 Convergence of Public and Private Markets
03:15 Challenges in Transitioning to Private Markets
03:32 Morningstar's Evolution and Impact
04:29 Generating Alpha in Private Markets
04:43 Importance of Time Horizon in Investments
06:51 Morningstar's Role in Investor Empowerment
07:15 Cost Reduction and Ownership in Mutual Funds
08:34 Evergreen Funds and Transparency
09:07 Challenges in Private Market Accessibility
09:41 Liquidity and Fee Structures in Private Markets
17:00 Role of SEC in Standardizing Documentation
19:06 Investor Education and Common Language
19:50 Data Availability and Analysis
20:44 Evaluating Different Investment Structures
21:32 Public-Private Partnerships in Investment
22:21 Philosophical Questions on Private Markets
23:43 Behavioral Aspects of Illiquidity
24:26 Evergreen Funds as Buy and Hold Vehicles
25:01 Asset Allocation and Evergreen Structures
26:07 Investor Behavior and Portfolio Construction
26:22 Comparing Individual Investors and Advisors
27:20 Stability of Retail Assets
27:57 Crypto Trading: 24/7 Market Dynamics
28:09 Impact of Social Media on Young Investors
28:31 Comfort with High-Risk Ventures
28:49 Market Resilience and Drawdowns
29:13 Future of Financial Advisors
29:52 Investor Behavior Across Age Groups
31:03 Validation and Information Overload
31:48 Morningstar's Independent Voice
33:02 Transparency in Private Markets
33:24 PitchBook's Role in Market Data
33:51 Challenges in Data Transparency
34:30 Tipping Point in Transparency
35:12 Flywheel Effect in Market Data
35:42 Private Market Indices
36:44 Challenges in Benchmarking Private Markets
37:37 Evolution of Market Structure
38:25 Public vs. Private Market Dynamics
38:58 Future of Private Market Investments
39:54 Fee Structures and Competition
40:51 Operational Burdens in Private Markets
42:11 Pre-Trade Market Structure
42:28 Access to Private Markets
49:01 Brand vs. Performance in Investments
49:18 Morningstar's Role in Investor Education
51:06 Future of Alternative Investments
Editing and post-production work for this episode was provided by The Podcast Consultant.
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