Morningstar Debuts Semiliquid Fund Ratings: Most Neutral, Few Standouts
Morningstar Inc. — a leading global provider of independent investment research best known for its widely followed mutual fund and ETF ratings — has issued its first Morningstar Medalist Ratings for semiliquid funds. The move, which AltsWire first reported on in the spring, extends Morningstar’s due diligence framework into the fast-growing alts investment market, aiming to provide investors and advisers with greater transparency around products that blend private and public assets.
“Private investments are making their way into retail portfolios, but navigating this complex and evolving market comes with a significant information gap for many investors,” said Laura Lutton, Morningstar’s global head of manager research. She added that the new ratings will help investors determine “whether these products truly belong in a diversified portfolio.”
Morningstar’s inaugural ratings cover just six semiliquid funds, offering a cross-section of strategies and managers. The results were mixed – most received a “neutral” rating, one fund received a “negative” rating, and two Pimco offerings stood out with “silver” and “bronze” distinctions. Notably, none of the funds earned a coveted “gold” rating.
The Capital Group KKR Core Plus+ and Capital Group KKR Multi-Sector+ interval funds — both launched earlier this year and among the most closely watched debuts — each earned overall Neutral ratings. Morningstar cited solid parent backing but only average assessments of people and process, noting that the funds are still early in their track record.
In contrast, Pimco’s Flexible Credit Income Fund secured a “silver” rating, supported by a high conviction in the investment team and above-average assessments across all criteria. Pimco’s Flexible Municipal Income Fund earned “bronze,” while TCW’s Private Asset Income Fund was rated “neutral.” The only fund to receive a “negative” was First Trust Alternative Opportunities, where Morningstar flagged structural concerns.
The ratings are meant to help financial advisers and investors evaluate the performance potential of semiliquid strategies compared to their relevant peers and traditional mutual funds and exchange-traded funds, or ETFs. These include interval funds, tender-offer funds, nontraded real estate investment trusts, and non-traded business development companies in the United States, as well as several investment options overseas.
Morningstar said it selected this initial group of interval funds to give investors a cross-section of different types of strategies and approaches from previously rated asset managers. In its next round of ratings, most will come from firms that primarily manage private assets, rather than invest in public securities. The company said it is initiating coverage of several firms, requiring additional due diligence and a longer lead time.
According to Morningstar, the need for this analysis has become increasingly urgent as the semiliquid fund market, which includes popular vehicles like interval funds, has grown by over 60% since 2022. These funds aim to make private assets more accessible to retail investors but are difficult to assess due to their unique fee structures and limited liquidity.
The ratings use Morningstar’s familiar five-tier scale (gold, silver, bronze, neutral, and negative) to express the firm’s conviction in a fund’s ability to outperform its peers over the long term. This initial batch of rated funds represents a cross-section of different strategies and approaches from previously rated asset managers. Lutton noted that higher ratings were given to funds with strong management teams and a proven track record, while a low rating was influenced by “structural concerns that warrant further evaluation.”
The new rating methodology is a specialized version of the framework Morningstar uses for traditional mutual funds and ETFs. It evaluates a fund’s investment process, management team, and parent firm, with specific adjustments to account for the unique characteristics of these funds, such as liquidity constraints and exposure to private assets. Morningstar plans to expand its coverage of this fund universe based on factors like investment merit and investor demand.
Morningstar is a global provider of independent investment insights offering an extensive line of products and services for individual investors, financial advisers, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $352 billion in assets under management and administration as of June 30, 2025.
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