Podcast Summary – The Long View

Episode: Leyla Kunimoto: Why Investors in Private Markets Need a Louder Voice

Date: January 27, 2026
Hosts: Amy Arnott & Jeff Patak (Morningstar)
Guest: Leyla Kunimoto, Founder and Editor at Accredited Investor Insights

Episode Overview

The hosts sit down with Leyla Kunimoto, an individual investor, newsletter founder, and experienced voice in private markets. The episode navigates the challenges and opportunities for individual, accredited investors in private markets (private equity, private credit, and real estate), emphasizing the need for more independent voices and greater transparency. Discussion topics include the realities of private credit risk, how to evaluate private equity returns, systemic issues of opacity and liquidity, the growth of secondary markets, current disclosure concerns, and practical advice and resources for investors.

Key Discussion Points & Insights

Leyla Kunimoto’s Background & Entry Into Private Markets

• Early Investment in Real Estate (01:56):

  • Inspired by "Rich Dad, Poor Dad," Leyla and her husband began investing in single-family homes in Seattle in 2006.
  • Real estate attracted her because, “it's a little bit less of an efficient market…there was an opportunity to take advantage of those imbalances. There was very clear value and I sort of jumped on it.”

• Expansion Beyond Real Estate (02:48):

  • Moved from direct property to syndicated real estate investments post-2020, then quickly expanded to other alternative asset classes (private credit, private equity, venture capital).

The Lack of Independent Voices in Private Markets

• Motivation for Accredited Investor Insights (04:57):
  • Most commentary comes from sell-side (general partners or intermediaries), not true LP perspectives.
  • Leyla founded the newsletter as “there was a need for that voice for investors,” seeking to “level out the playing field.”
  • Quote: “There is not a lot of voices who are saying, well, wait a second, let's...peel the onion back a little bit and let's see what's inside, what's under the hood.” (05:44)

Private Credit: Risks, Systemic Questions & What To Watch

• Recent Distress Signals (07:03):

  • High-profile bankruptcies may be "a canary" in the coal mine. While she does not see the space as a “house of cards,” Leyla thinks there is a risk from weakened underwriting with so much capital chasing deals.

• Systemic Risks vs. 2008 (08:38):

  • Cautions against direct comparisons to the Global Financial Crisis: “What we're seeing today is a lot of private capital that is not tied to the banking system…It's private money. It's well dispersed.”
  • However, aggressive growth and marketing are causes for pause.

• Indicators of Market Stress (11:23):

  • Opaqueness is a fundamental feature/bug of private credit markets.
  • Key sign: Payment-in-kind (PIK) rates are primary clues to distress: “PIK is about the only measurable thing in those financial statements...That's probably a signal that the borrower base is becoming distressed. Is it a clear signal? No, but it's the best I got.” (15:52)
  • Tracking PIK: Required in quarterly filings; more challenging for non-public funds but possible; rising PIK percentages are a red flag.

• Leverage Considerations (18:31):

  • Important for investors to scrutinize maturity schedules and types of leverage (fixed vs. floating, CLOs, etc.), and assess refinancing risks for the fund’s own borrowings.

• Retail Access & Vehicles (21:12):

  • Most retail allocations go into BDCs, both public and non-traded, with non-traded BDCs being the hottest area.

Private Equity: Performance Metrics and Liquidity Issues

• Limitations of PME & IRR (23:01, 27:53):

  • PME (Public Market Equivalent) unfairly advantages private equity due to the timing of capital commitments vs. actual deployment and distributions.
  • Quote: “The metric doesn't allow us to compare apples to apples." (26:35)
  • IRR can be gamed by general partners via early capital returns and over-raising: “It's a metric that is extraordinarily sensitive to when the capital gets returned...makes it very easy to manipulate.” (28:10)
  • Recommended to consider IRR, DPI (distributions paid on capital), and equity multiple together.

• Liquidity Bottleneck & The Rise of Secondaries (29:43):

  • Vastly fewer exits and slower return of capital in recent vintages.
  • Secondary funds are buying LP stakes from institutional investors needing liquidity.

• Retail Investor Challenges with Liquidity (31:27):

  • “If I'm an investor in one of those closed drawdown funds...there is really not a good way to exit that. So individual investors should be aware of that dynamic.”

• Outlook on Market Access Platforms (34:38):

  • Leyla is optimistic: “Five to ten years from now that problem is going to get solved” as brokerage firms buy platforms and technology evolves.

Transparency, Disclosure, and Secondary Fund Concerns

• Marking to Market Issues (36:07):

  • Secondaries often buy at a discount (e.g., $15 on a $25 NAV), but accounting rules let them mark up to full NAV instantly, generating "phantom" gains that help raise more capital.
  • Quote: “This fund to immediately mark that $15 to $25 or whatever that NAV is...They simply bought something at a discount and marked it up immediately...” (37:09)
  • Leyla calls for rule changes: “With all my heart, I do. I do think that practice needs to change, the accounting standards need to change and more disclosure needs to be done about it.” (36:55)

• Cost Disclosure Practices (44:47):

  • Some funds obscure holding cost with illegible footnotes, deeply frustrating evaluators.
  • Quote: “If I could change that with a wave of a magic wand...I would love to see that.” (45:42)

Retail Portfolio Implications and Practical Advice

• Portfolio Sizing and Liquidity (46:37):

  • Admits sizing is specific, but warns: “I would strongly urge them to think about liquidity needs...these positions may not be liquid.”
  • Redemption gates in interval/tender-offer funds can catch investors off guard.

• AI Tools in Research (47:40):

  • Leyla’s go-to: NotebookLM. “It’s a fantastic screener tool...not a replacement for due diligence...but as a back of the napkin kind of first pass screen, it does a fantastic job aggregating data.”

• Book Recommendations (49:27):

  • The Intelligent Investor by Benjamin Graham: “...the allegory that that Graham uses with Mr. Market…is a fantastic framework to kind of have in your head as an investor.”
  • Howard Marks’ The Market Cycles (and memos): “Beautifully written, they're very clear to understand, and...touch on a lot of timely topics.” (50:03)

Notable Quotes and Memorable Moments

• "There is not a lot of voices who are saying...let's see what's inside, what's under the hood." – Leyla Kunimoto (05:44)
• "PIK is about the only measurable thing in those financial statements...That's probably a signal that the borrower base is becoming distressed." (15:52)
• “IRR is a time sensitive metric…makes it very easy to manipulate.” (28:10)
• “If I'm an investor in...drawdown funds…the problem becomes I don't have an exit button with my small stake.” (31:49)
• “Secondaries funds, funds show these gains...on paper those returns look beautiful...But then there comes a point where the fund becomes large and any marginal dollar...weighs a little bit less.” (39:01)
• Book pick: “The Intelligent Investor…a fantastic framework…[but] in private markets you don't have that option. You do not have a Mr. Market…” (49:37)

Timestamps for Key Segments

• 01:56 – Leyla’s start in real estate investing
• 02:48 – Expansion into private real estate and alts
• 04:57 – Why independent LP voices are so rare
• 07:03 – Private credit distress signals, defaults
• 08:38 – Systemic risk: is private credit the new 2008?
• 11:23 – How to identify stress in private credit markets
• 15:52 – PIK rates as a red flag
• 18:31 – Risks of leverage and debt structure in credit funds
• 21:12 – Vehicles for retail access to private credit
• 23:01 – Problems with PME in private equity assessment
• 27:53 – IRR: pros, cons, and manipulations
• 29:43 – Recent PE vintage trends: DPI, distributions, and exit bottleneck
• 31:27 – Liquidity concerns and secondaries
• 34:38 – Will Schwab/Morgan Stanley platforms help with liquidity?
• 36:07 – The “mark to NAV” issue in secondary funds
• 44:47 – Cost disclosure tactics and transparency
• 46:37 – Should retail investors allocate to private markets?
• 47:40 – Favorite AI tool for analysis: NotebookLM
• 49:27 – Book/resource recommendations
• 50:59 – Closing remarks

Tone and Language

• Candid, practical, and skeptical, with Leyla frequently stressing the importance of due diligence and independent thinking.
• Focus on nuance, challenges, and realities, not just upside narratives.
• Advocates for democratized access but with full appreciation of the risks, opacity, and illiquidity hurdles involved.