Retail investors will drive the next phase of private market growth, says Morningstar’s Laura Pavlenko Lutton

Retail investors, rather than large institutions, are expected to drive the next wave of growth in private markets over the coming years, according to Laura Pavlenko Lutton, Global Head of Manager Research at Morningstar. Speaking at the Morningstar Investment Conference in Mumbai on November 4, 2025, Lutton said the convergence between public and private markets is creating a new era of opportunity for individual investors worldwide.

“Being here with us, I’m going to go over some global trends in public-private convergence,” Lutton began, explaining that her colleagues at PitchBook — Morningstar’s private market research arm — see immense scope in private assets. “When you look at publicly traded equities in the US, they dwarf the valuation of private companies. But it’s important to remember there are 16 times as many private firms receiving venture or private equity investments,” she said.

According to Lutton, that imbalance presents a significant opportunity. “By the end of 2029, PitchBook estimates that assets in private capital will reach $24 trillion, with about $5 trillion coming from private credit,” she said. “That’s a 48% increase in assets under management within just a few years.” She noted that this growth will be largely retail-driven. “It’s unlikely to come from institutional investors. The retail investor is likely to drive growth from here,” she added.

Lutton said Morningstar is closely tracking five types of semi-liquid funds — interval funds, tender offer funds, non-traded REITs, non-traded business development corporations, and long-term asset funds (LTAFs). “PitchBook estimates that those five fund types will reach $1 trillion by the end of the decade,” she said, highlighting the global momentum behind these structures, which blend private and public assets.

“In the US, these funds are becoming easily available through broker-dealers and wealth platforms,” Lutton said. “Regulators are even considering allowing them in employer-sponsored retirement plans.” She added that similar moves are underway in Europe and the UK, while in India, new CIF funds are being registered to give affluent investors access to private credit and other alternatives.

However, she cautioned investors to be mindful of costs. “Semi-liquid funds are expensive — some charge up to 7% annually,” Lutton said. “That significantly reduces returns and raises the question of what investors are willing to give up in liquidity for slightly higher yields.” She said, “Transparency and alignment of fees remain challenges, which is why we have extended our Medalist Ratings to these funds — to help investors identify which strategies can truly outperform over the long term.”