Morningstar launches industry's first unicorn indices

Morningstar has launched a set of eleven indices that track unicorns at a global, regional and single country level.

The Morningstar PitchBook Global Unicorn indexes aim to provide insights into privately held venture capital companies with valuations of over $1bn.

The firm said that this is the first index series to "provide daily insights into the behaviour and performance" of late-stage venture capital backed companies.

"In today's market, investors are increasingly looking to non-traditional asset classes like private markets for portfolio diversification and investment opportunity," said Ron Bundy, president of Morningstar Indexes.

Private capital markets have grown substantially in the last decade, as more companies stay private longer. The growth of unicorns such as Instacart, Stripe and ByteDance has attracted attention, but are often only accessible to sophisticated or institutional investors

Morningstar said the market has been difficult for index providers to track due to its illiquidity, lack of reporting standards and no mark-to-market pricing capability.

Using a three factor mark-to-model pricing methodology to provide more frequent valuations for the asset class, the indices use a range of valuation measures and comparable data from private and public market peers.

"Our new unicorn indexes will go a long way toward bringing transparency to what has become a significant segment of the capital markets," added Sanjay Arya, head of innovation for Morningstar Indexes.