Private market investing is on the rise. Here's why.

Investors are increasingly looking for ways to diversify their portfolios. One area that is seeing a surge in investments is private markets. Morningstar (MORN) CEO Kunal Kapoor spoke to Yahoo Finance about the growing trend, saying "The appetite to invest in a swath of companies that previously might have been public, but are not for multiple reasons today, has increased." He notes that it's not just the companies that investors are looking to buy into but the private credit market too. "So much of the debt that is being sourced today is coming from what I'll call nontraditional lenders, at least in the sense that they're not coming from traditional commercial banks. And as that number grows, you know, you have private credit expanding pretty meaningfully as well," he adds. Kapoor warns that there are risks to private market investing, such as less liquidity and more complicated taxes. However, he believes that many of these problems are being solved and that more investment vehicles are arriving to make it easier for retail investors and money managers to put money to work.

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