Brian Moriarty and Jack Shannon: Putting Private Markets Funds Through Their Paces

Why It Matters

As demand for private‑market exposure grows, research‑driven signals help advisors allocate capital responsibly and avoid hidden liquidity or valuation traps.

Key Takeaways

• Semiliquid funds offer more private market access than traditional funds
• Morningstar evaluates liquidity risk using cash‑flow and redemption modeling
• Valuation transparency hinges on independent pricing and audit standards
• Fee structures are dissected to reveal incentive misalignments
• Medalist ratings guide advisors on risk‑adjusted performance expectations

Pulse Analysis

The private‑market segment, once the preserve of large institutions, is expanding rapidly as high‑net‑worth individuals and retail advisors seek higher returns and diversification. Semiliquid vehicles—closed‑end funds, interval funds, and listed private‑equity ETFs—bridge the gap between fully illiquid commitments and traditional mutual funds, offering periodic liquidity while still exposing investors to venture capital, buyout, and real‑asset strategies. This evolution has created a new asset class that promises attractive risk‑adjusted returns but also introduces valuation opacity and redemption uncertainty. Consequently, investors demand rigorous, independent analysis to separate genuine opportunities from structural pitfalls.

Morningstar’s Manager Research team applies its proprietary due‑diligence framework to these semiliquid products. Analysts like Brian Moriarty and Jack Shannon assess liquidity by stress‑testing cash‑flow projections against worst‑case redemption scenarios, ensuring that fund managers maintain sufficient liquid buffers. Valuation scrutiny involves comparing disclosed NAVs with third‑party pricing, audit quality, and the frequency of independent appraisals. The team also deconstructs fee hierarchies—management, performance, and payment‑in‑kind arrangements—to expose incentive misalignments that could erode investor returns. Their Medalist rating synthesizes these dimensions into a clear, actionable signal for advisors.

For financial advisors, Morningstar’s transparent methodology translates into a practical decision‑making tool. A high Medalist rating can justify allocating a modest portion of a client’s portfolio to private‑market exposure, while a lower rating flags liquidity or valuation concerns that may require tighter position limits. As regulatory scrutiny intensifies and more firms launch semiliquid offerings, the market will likely see tighter fee disclosures and standardized reporting, further empowering investors. Ultimately, disciplined research and clear ratings help democratize private‑market access without sacrificing the risk controls traditionally reserved for institutional players.

Original Description

Morningstar’s Manager Research team has cast its gaze on a newer class of funds that aims to widen investors’ access to private markets. We discuss the process the team plies in doing its due diligence on these funds, their prospective risks and rewards, and the overarching objective of the team’s research—sending clear and actionable signals to investors.

Today’s guests are Morningstar’s Brian Moriarty and Jack Shannon. Brian is a principal, fixed-income strategies, for Morningstar. Before assuming his current role in 2015, Brian was a client solutions consultant for Morningstar Office, a practice and portfolio management system for independent financial advisors. Before joining Morningstar in 2013, he was a research assistant for DePaul University’s religious studies department. Brian holds a bachelor’s degree in political science from Michigan State University and a bachelor’s degree in Islamic world studies from DePaul University.

Jack Shannon is a principal, equity strategies, for Morningstar. He focuses on actively managed equity strategies and is the lead analyst for MFS and Artisan Partners, among other firms. Before joining Morningstar in 2020, Jack worked in commercial banking and was a consultant providing subject-matter expertise on complex financial litigation. Jack holds a bachelor’s degree in economics and history from James Madison University. He also holds a master’s of business administration in investments and corporate finance from the University of Notre Dame’s Mendoza College of Business.

Episode Highlights

00:02:06 What are Private Markets, and What Investment Opportunities Do They Provide?

00:03:13 Do Semiliquid Funds Provide Easier Access to Private Markets?

00:05:57 Applying Morningstar Processes to Evaluate Private Markets

00:09:50 Managing Liquidity in Private Market Investments

00:18:48 Valuation and Transparency: Putting Private Assets Under the Microscope

00:24:07 Payment in Kind as a Valuation Concern

00:28:02 Public vs. Private Markets: Understanding Risk, Language, and Infrastructure Differences

00:39:28 Building Methodology to Explain Private Asset Fees and Incentive Structures

00:44:22 What Morningstar Medalist Ratings Signal for Semiliquid Funds

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