Tracking Unicorn Companies in U.S. Mutual Funds

Morningstar

Jack Shannon, Katie Reichart

Research

24 Pages

Morningstar explains how U.S. equity mutual funds have increasingly owned private company shares and why that can backfire. Ownership grew from a niche allocation into a meaningful pool of assets, yet liquidity limits and subjective valuations can turn paper gains into frustration when markets fall and exits get delayed.

Date published: September 21, 2022

Key Takeaways

Modest private stakes: Median private equity exposure was about 0.5%, though a few funds went much higher.
Exit timing risk: The 180 day IPO lockup often turns early wins into painful post listing drawdowns.
Valuation lag: Most funds anchor marks to funding rounds, so write downs can trail public markets.
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