What potential investment products could be created around this index and how might they impact market liquidity for private versus public equities?

Potential investment products

Because the Modern Market 100 is the first index that holds both listed and private‑company constituents, it can be licensed for a family of “dual‑exposure” vehicles:

Liquidity impact

• Public equities: Adding a private‑equity component to an ETF or fund will not materially affect the underlying public‑market turnover; the index’s public side remains already highly liquid, and the product’s daily creation/redemption mechanism (ETF) or intra‑day NAV updates (ETN) will keep it so.
  
• Private equities: The novelty is the “cash‑settled” exposure that prices the private side every day. By offering a transparent daily NAV, the index creates a price‑discovery mechanism for private‑market valuations that previously existed only in quarterly or annual fund valuations. This will encourage more frequent capital flows—e.g., quarterly fund managers may see a smoother redemption schedule because investors can offset private‑exposure through the liquid public side or via futures. Consequently, the overall private‑market liquidity could improve modestly, narrowing the gap between private‑equity transaction costs and public‑equity spreads.
  

Trading implications

1. Short‑/long‑bias opportunities – The index’s hybrid nature allows a trader to go long the public leg while shorting the private exposure via futures or swaps, essentially betting on a widening or compression of the public‑private return spread. Monitor the “private‑equity premium” (historically ~2‑5 % per year). A sudden compression (e.g., after a rate‑cut cycle) may signal a relative over‑valuation of public stocks versus private assets—good for a private‑leg long, public‑leg short trade.
   
2. Liquidity premium capture – Futures on the index will price the combined liquidity premium. A higher contango (futures > spot) suggests market participants value the private side more than current NAV, indicating a potential carry‑trade: sell the future, buy the index, and earn the spread as private‑market valuations catch up.
   
3. Risk‑management – Because the private portion is still subject to valuation lag and “lock‑up” risk, any derivative exposure should be hedged with a tighter‑spread public‑equity hedge (e.g., a high‑beta ETF) to avoid excess tail risk. Use the index’s historical volatility (≈10‑12 % annualized) as a basis for position sizing, and employ stop‑losses near the 1‑month rolling‑beta breakpoints (≈1.5 × average volatility) to protect against sudden private‑market shock events (e.g., fund‑closure news).
   

In short, the Modern Market 100 unlocks a new class of “public‑private blended” products—ETFs, mutual funds, SMAs and cash‑settled derivatives—that will bring daily pricing and hedging tools to private‑equity exposure, modestly improving private‑market liquidity while leaving public‑equity liquidity essentially unchanged. Traders can exploit the emerging public‑private spread, capture the liquidity premium via futures or swaps, and hedge the residual illiquidity risk with high‑beta public instruments.