Morningstar’s Medalist Rating for Semiliquid Funds: A New Era of Transparency in Private Markets

The private markets have long been a realm of mystique for many investors, offering exposure to assets like real estate, infrastructure, and private equity—but often shrouded in opacity. Now, Morningstar is aiming to pierce that veil with its new Medalist Rating™ for Semiliquid Funds, a groundbreaking system designed to evaluate vehicles that straddle the line between public and private markets. Launched in 2025, this initiative addresses a critical gap in investor tools, as semiliquid funds—such as interval funds, nontraded REITs, and European ELTIFs—grow in popularity but remain notoriously hard to assess.

Why Semiliquid Funds Matter
Semiliquid funds offer investors a middle ground between fully liquid public markets and illiquid private investments. They provide periodic liquidity (e.g., quarterly redemptions for interval funds) while investing in assets like private real estate or infrastructure. However, their hybrid nature complicates evaluation. Metrics like net asset value (NAV) are often estimates, and performance can be opaque. This is where Morningstar’s new rating steps in.

The Medalist Methodology: A Qualitative Deep Dive
The Medalist Rating for Semiliquid Funds uses a five-tier scale (Gold, Silver, Bronze, Neutral, Negative) to assess a fund’s likelihood of outperforming benchmarks and peers over the long term. Unlike traditional ratings that focus on creditworthiness, this system evaluates three pillars:
1. People: Manager expertise and track record.
2. Process: The investment strategy’s logic and adaptability.
3. Parent: The firm’s support structure and stability.

The ratings are qualitative, relying on Morningstar’s analyst teams to weigh these factors. Laura Lutton, Morningstar’s global head of manager research, emphasized that the goal is to “help investors navigate complexity” rather than guarantee returns.

A Growing Market, A Timely Solution
The timing of this launch is no accident. U.S. interval funds, a key focus of the initial rollout, have surged in popularity, growing at an annualized rate of nearly 40% since 2014, driven by demand for income-generating assets. Yet this growth has outpaced investor confidence in the funds’ transparency.

Morningstar’s move is part of a broader strategy to unify public and private market analysis. Over the past year, the firm has:
- Expanded Morningstar Categories to distinguish public and private investments.
- Launched the PitchBook Unicorn 30 Index to track private company valuations.
- Acquired Lumonic to enhance monitoring of private credit portfolios.

These efforts reflect a recognition that private markets are no longer niche—they’re a mainstream opportunity requiring standardized tools.

Implications for Investors
The Medalist Rating could reshape how investors approach semiliquid funds. By flagging funds with strong management, robust processes, and stable backing, it reduces the risk of “black box” investing. For example, a Bronze-rated fund might signal a solid but unremarkable strategy, while a Gold rating could highlight a standout opportunity.

However, investors must remember that ratings are forward-looking assessments, not guarantees. Morningstar stresses that semiliquid funds still carry risks, including liquidity constraints and valuation uncertainties. The Medalist Rating should complement—not replace—due diligence.

Conclusion: A Bridge to the Future of Investing
Morningstar’s new system arrives at a pivotal moment. With semiliquid assets under management set to grow further—particularly as interest rates stabilize and investors seek alternatives to low-yielding bonds—the Medalist Rating provides a critical framework for decision-making.

The data underscores the urgency: the 40% annual growth of interval funds since 2014 highlights investor hunger for accessible private market exposure. By standardizing evaluation, Morningstar is not just addressing complexity—it’s enabling a more informed, confident investor base.

As Laura Lutton noted, the Medalist Rating for Semiliquid Funds “bridges the gap between public and private markets.” In doing so, it may just redefine how investors navigate the evolving landscape of modern finance.