Morningstar warns Robinhood's new venture fund a potential 'disaster' for investors
- 17 hours ago
- 2 min read
Updated: 3 hours ago
Kelly, B. (2025, September 16). Morningstar warns Robinhood's new venture fund a potential 'disaster' for investors. InvestmentNews.
Robinhood Markets recently registered Robinhood Ventures Fund I, a closed-end fund designed to provide retail investors access to private, pre-IPO companies.
Morningstar analyst Bryan Armour issued a stark warning, labeling the fund's potential launch as a "disaster" and "reckless" for average investors.
Critics point out that Robinhood lacks a significant track record in money management and has no prior experience managing private market access in the U.S.
The fund's management subsidiary was only formed in August 2025, leading to concerns that the firm is operating outside its "circle of competence."
While Robinhood CEO Vlad Tenev frames the fund as a way to democratize elite investment opportunities, analysts suggest better-managed alternatives already exist.
Established firms like Fidelity, T. Rowe Price, and Baron Capital already offer retail exposure to private firms like SpaceX through existing mutual funds.
The rise of "semiliquid" funds has provided a $400 billion market for private access while incorporating more robust risk management than the proposed RVI structure.
Knote: This reads to me as Morningstar being defensive for some reason. It is not clear to me that managing a pre-IPO fund requires decades of experience and it is hard to say that the established funds are better managed when this fund has not even launched yet. The bottom line is that Robinhood is looking to be the new Charles Schwab in 15-20 years and so far it looks like they are on track. That probably does put a lot of players on the defensive, but I think Morningstar does not have anything to fear here.