Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., August 14, 2025.
Brendan McDermid | Reuters
With the desire to have private market exposure alongside publicly traded stocks gaining traction among investors, Morningstar has developed a benchmark to reflect the trend.
The Morningstar PitchBook US Modern Market 100 Index, or the Modern Market 100, is the first to combine public and private equity exposure in one index, the investment research company announced Wednesday. The benchmark is meant to capture the performance of 100 of the largest U.S. companies, broken down to 90 public firms and 10 venture-backed companies, the firm said.
The 90/10 skew is designed to reflect what Morningstar considers the modern asset universe, which is one where opportunities are expanding in the private markets and companies such as OpenAI and Stripe are able to stay private for longer.
“Companies don’t feel the urge to go public because they can raise a lot of capital,” Sanjay Arya, head of innovation, index products, at Morningstar. “So, to ignore them, I think you’re missing out on some of the fastest, most dynamic companies out there.”
The private equity universe is dwarfed by the value of publicly held companies. The U.S. public stock market is worth roughly $60 trillion, while the U.S. private equity universe is roughly $8 trillion, Arya said. However, private companies may reflect where the economy is heading.
“The indexes are supposed to give you an indication about what the economy is, or the market sentiment is, or where people investors should be looking for opportunities,” Arya said. “And you can’t do that on public markets alone if a big chunk of it is outside public markets.”
The trend may become even more pronounced. Alternative asset managers notched a big win this summer after President Donald Trump in August signed an executive order clearing the path for alternative assets to be added into 401(k)s.
Yet exposure to private assets has been growing for years. According to Morningstar, since 2021, crossover investors including sovereign wealth funds, private equity buyout firms, and hedge funds have been involved in roughly 5,000 private market transactions totaling $450 billion. Arya is hoping the Modern Market 100 will give investors a framework to benchmark performance across both asset classes.
It isn’t without its challenges, however. The work started roughly four years ago, Arya said, explaining that the firm needed to develop a rules-based process for a public-private benchmark, given the challenge in pricing securities for private assets. He said his team relied on secondary trading platforms such as Caplight and Zanbato to aggregate pricing transaction data. The index also applies liquidity screens, quarterly rebalances and daily calculations.
More risk
The index is also tracking companies with inherently more risk given their preference for the largest cap companies, which tend to skew toward big tech. The top 10 public constituents in the modern market index include Microsoft, Nvidia, Apple, Amazon and Meta Platforms. The top 10 private constituents include SpaceX, OpenAI, xAI and Stripe.
In other words, there’s a preference for growth companies with more inherent risk. That could mean the index is vulnerable to a pullback if the tech sector starts to falter — especially at a moment when many investors fear the megacaps are priced for perfection.
On the other hand, it could mean the benchmark is poised to capture more outperformance. In a white paper, Morningstar showed that the 1-year return for the Modern Market index is 28.2%. Over the same time period, the S&P 500 jumped 20%.
According to Arya, the index allows investors to track a very different opportunity than what is captured in major benchmarks. After all, OpenAI, a company reportedly valued at $500 billion, is bigger than Exxon Mobil, Palantir or Procter & Gamble, and yet it’s a name that most investors have little exposure to in their portfolios.
He noted that benchmarks have evolved over time to better reflect the drivers of economic growth, starting with the railroad companies that defined the Dow Jones Industrial Average at its inception in the late 1800s to the innovation economy of today.
“We have this big component of innovation economy, and not being able to fully capture that, which is mostly right still in the late-stage venture space, I think it just kind of provides a fuller picture.” Arya said.
“That actually helps you understand how these contours are kind of shifting over time,” he continued. “I think, provides great insights for investors.”
Fixed-income markets recorded significant re-pricing during the week ending July 25, 2026, as a convergence of strong labor market metrics and surging energy costs drove U.S. Treasury yields higher across all maturities. The benchmark 10-year Treasury yield climbed toward 4.70%, reaching its highest point in several months. Institutional bond investors rapidly adjusted portfolio durations as expectations for near-term interest rate cuts by the Federal Reserve faded in response to inflation concerns.
The upward shift in sovereign yields reflects a broader fundamental reassessment of global monetary policy. Earlier in the quarter, money markets had priced in a series of rate reductions designed to support economic activity. However, with initial jobless claims falling to 187,000 and crude oil breaching $100 per barrel, fixed-income traders are pricing in a ‘higher-for-longer’ interest rate environment. The inversion between short-term Treasury bills and long-term bonds narrowed, indicating a shift toward term premium expansion.
Rising Treasury yields present both challenges and opportunities for institutional wealth managers. While commercial lenders and mortgage origination volumes face headwinds from elevated borrowing costs, fixed-income investors are locking in attractive real yields on high-quality sovereign and investment-grade corporate bonds. Institutional debt issuers, conversely, are recalibrating their capital structures, opting for shorter-term refinancing instruments or private credit facilities to avoid committing to elevated long-term coupon rates.
Navigating the current bond market landscape demands strict duration management and credit selection. Wealth advisors recommend maintaining flexible fixed-income allocations, combining short-duration Treasuries with inflation-protected securities (TIPS) to shield capital against potential energy-driven inflation spikes while earning dependable nominal income.
Private credit markets reached a pivotal milestone during the week ending July 25, 2026, as non-bank direct lending consortiums captured a record share of middle-market corporate debt originations. With commercial banks maintaining conservative credit standards and public bond yields remaining elevated, corporate borrowers are increasingly turning to private fund managers for customized capital solutions. This expansion marks a permanent structural shift in enterprise finance, establishing private credit as a primary pillar of institutional corporate liquidity.
The acceleration of private credit deals is driven by speed, deal certainty, and flexible terms. Unlike traditional syndicated bank loans that require lengthy underwriting, credit rating approvals, and public roadshows, private direct lenders can structure tailored financing packages within days. Middle-market firms facing upcoming debt maturities are utilizing private debt facilities to execute recapitalizations, strategic acquisitions, and growth capital deployments without risking execution delay in public markets.
However, financial regulators and central bank supervisors are scrutinizing the sector’s rapid growth. Supervisory agencies are evaluating potential systemic risks associated with non-bank leverage, valuation transparency, and liquidity mismatches during economic downturns. Despite regulatory interest, major pension funds, insurance firms, and sovereign wealth entities continue to expand capital allocations to private credit funds, attracted by reliable floating-rate yields that outperform public fixed-income benchmarks.
As private credit matures into a dominant asset class, corporate chief financial officers must evaluate non-bank lenders alongside traditional banking relationships. Direct lending partnerships provide valuable balance sheet resilience, enabling companies to secure flexible financing terms even during periods of public market turbulence.
The landscape of institutional debt markets is undergoing a profound structural shift on July 21, 2026, as major corporate issuers and commercial banks rapidly accelerate the deployment of tokenized debt instruments. Data published by leading capital market consortiums indicates that primary issuances of digital commercial paper and tokenized corporate bonds have reached record volumes this month. By moving legacy debt origination, underwriting, and secondary distribution onto permissioned distributed ledgers, corporate treasurers are unlocking unprecedented operational flexibility and instantaneous cross-border liquidity.
The adoption of tokenized debt is fundamentally altering how enterprise balance sheets manage short-term liquidity needs. Traditional corporate bond settlement cycles historically required multi-day clearing processes involving numerous intermediaries, custodial entities, and clearinghouses. Through programmable smart contracts on distributed ledgers, issuers can now execute atomic settlement—enabling continuous, 24/7 access to institutional capital pools. This instantaneous clearing mechanism drastically reduces counterparty risk, eliminates costly settlement friction, and allows treasury teams to dynamically optimize working capital in real time.
A major catalyst driving this institutional migration is the establishment of comprehensive digital asset regulatory frameworks across major financial hubs. Clear legal guidelines regarding ledger-based securities ownership have provided institutional compliance officers with the regulatory confidence necessary to transition multi-billion-dollar liquidity facilities onto digital platforms. Furthermore, the integration of automated regulatory reporting directly into token smart contracts simplifies ongoing compliance audits, ensuring that secondary market trades automatically enforce investor accreditation limits and tax withholding requirements.
For chief financial officers and institutional portfolio managers, tokenized debt represents a fundamental evolution in fixed-income strategy. Companies that embrace ledger-based debt structures gain direct access to a broader, global base of digital-native institutional investors while substantially reducing borrowing overhead. As ledger interoperability continues to improve across global exchanges, tokenized debt is poised to become the standard infrastructure for global corporate finance.
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