Individuals Outsmart the Pros, Live From Chicago With Ben and Callie, Morningstar CEO Kunal Kapoor

Key takeaways

The resilience of U.S. households amid economic fluctuations indicates a potential shift in investment behavior, especially among younger generations.
AI is set to transform the financial advisory landscape by automating processes and improving access to investment information for both investors and advisors.
The rise of active ETFs shows a changing investment landscape where strategies are evaluated based on cost effectiveness and value addition rather than investment style.
Investors need better tools and educational resources to confidently navigate the complexities of private markets, which are becoming increasingly significant.

Summary

Market Surprises of 2025

In the opening segment, the hosts and guests discussed the biggest surprises in the economy and markets for the year 2025. They noted the unusual resilience of U.S. households in spending and investing despite various economic shocks. Ben Carlson suggested that there seems to be a generational shift toward embracing risk among younger investors, possibly leading to significant market implications. The productive discussion highlighted differing perspectives on how generational experiences shape investment behaviors, particularly among millennials and Gen Z.

The Role of AI in Finance

As the discussion progressed, the focus shifted to how artificial intelligence (AI) is influencing finance. Kunal Kapoor, CEO of Morningstar, emphasized the rapid adoption of AI within investment management and how it could improve efficiency for both investors and advisors. The panel engaged in a thought-provoking conversation about the future relationship between humans and AI in investing. While some remain skeptical about the full potential of AI, the general sentiment seemed optimistic that it would improve access to financial information and streamline processes.

Active ETFs and Market Dynamics

The podcast later explored the growth and evolution of active ETFs in the investment landscape. The guests discussed the implications of this shift, noting that while passive investing has gained traction, there’s been a resurgence of interest in active strategies, particularly among new products that leverage advanced technologies. There's a recognition that the active versus passive debate is evolving into discussions around cost and value rather than simply investment style.

Navigating the Private Markets

Lastly, the discussion touched on access to private markets and the increasing interest in private equity and credit funds. Kapoor highlighted Morningstar's efforts to provide better transparency and common valuation metrics in this space. The panel acknowledged that while private markets offer enticing opportunities, they also pose challenges for investors seeking to understand their risks. The consensus was that more educational resources are needed to empower retail investors navigating this complex landscape.

Show notes

On episode 195 of The Compound and Friends, ⁠⁠⁠Michael Batnick⁠⁠⁠ and ⁠⁠⁠Downtown Josh Brown⁠⁠⁠ are joined by Ben Carlson and Callie Cox in front of a live audience to discuss: the biggest market surprises of 2025 so far, government spending, the risk of recession, cash on the sidelines, and much more. Then at 36:48, Morningstar CEO Kunal Kapoor joins Josh and Michael on stage to discuss: how AI is changing finance, the growth of active ETFs, access to private markets, and more! Recorded live on 6/3 at The Chop Shop Chicago.

This episode is sponsored by F/m Investments. Check out RBIL today – for potential yield and as a hedge for inflation fears by visiting: https://www.ustreasuryetf.com/etf/rbil/

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