The Takeaway
The traditional classifications anchored in the industrial economy and applied to public companies do not accurately recognize the companies that are leading the current and future growth in the economy, which are largely influenced by private venture capital firms.
The new knowledge-driven and networked innovation economy requires a different mindset and toolkit to demarcate the corporate landscape and classify investments.
The Morningstar PitchBook Unicorn Industry Vertical Indexes provide a new and nuanced framework for tracking companies that form the core of the innovation economy, enabling a better understanding of emerging investment trends and their drivers.
Traditional industry groups that are used to classify securities still largely reflect the foundations of the industrial economy. The Morningstar Global Equity Classification System is an example of a commonly used framework to group public companies. This framework is a robust representation of the global economy and continues to be one of the primary lenses for mapping the markets and driving investment opportunities. However, with the growth of the digital age, the business landscape is evolving, witnessing a tilt toward technology-driven industries.
The changing structure of the economy means that traditional industry classifications may lag reality, under-representing newer industries and over-representing ones that are declining in importance. The new economy is characterized by the advancement of technology, intellectual property, and a focus on knowledge-based industries. Areas such as financial technology, healthcare technology, and clean technology are emerging as new avenues for investments.
In this paper, we present the Morningstar PitchBook Global Unicorn Industry Vertical Indexes. These indexes, based on a new industry classification system stemming from PitchBook’s emerging technology research, offer insights into the trends that are propelling today’s innovation economy.
©2023 Morningstar. All Rights Reserved. The information, data, analyses and opinions contained herein (1) include the proprietary information of Morningstar, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete or accurate. Morningstar has not given its consent to be deemed an "expert" under the federal Securities Act of 1933. Except as otherwise required by law, Morningstar is not responsible for any trading decisions, damages or other losses resulting from, or related to, this information, data, analyses or opinions or their use. References to specific securities or other investment options should not be considered an offer (as defined by the Securities and Exchange Act) to purchase or sell that specific investment. Past performance does not guarantee future results. Before making any investment decision, consider if the investment is suitable for you by referencing your own financial position, investment objectives, and risk profile. Always consult with your financial advisor before investing.
Indexes are unmanaged and not available for direct investment.
Morningstar indexes are created and maintained by Morningstar, Inc. Morningstar® is a registered trademark of Morningstar, Inc.