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10k Words Equitable Investors Aug 2025 Apparently, Confucius did not say "One Picture is Worth Ten Thousand Words" after all. It was an advertisement in a 1920s trade journal for the use of images in ads on the sides of streetcars... There's a healthy spread between the volatility investors are pricing in for small caps relative to large caps but high yield ("junk") spreads are near historical lows. Sticking with the small-big spread, the price/book chart is smiling back at you. Valuations for high growth companies have shot away from the pack, giving the US market an edge over Australian multiples - but with both above fair value according to Morningstar. ASX large caps have seen more upgrades than downgrades in the week leading into reporting season. We divert to look at the split of assets between generations and the affordability of housing; stablecoins becoming relevant players in the US treasuries market; China's declining population of workers; and finally volatility for "Dr Copper". Spread between VIX (S&P 500 implied volatility) and Russell 2000 VIX (small cap implied volatility) 
Source: Equitable Investors ICE BofA US High Yield Index Option-Adjusted Spread 
Source: FRED (Federal Reserve of St Louis) Premium in US large caps' price/boom multiples is the widest in 25 years 
Source: Bloomberg Recent multiple expansion in "high growth" (>25% YoY growth) companies 
Source: Altimeter via Clinton Capital Forward P/E - US v Australia 
Source: Ord Minnett Australian market trading above Morningstar's bottom-up fair value estimate 
Source: Morningstar US market has also return to a premium v bottom-up fair value 
Source: Morningstar More consensus upgrades than downgrades for ASX large caps over week leading into August reporting season 
Source: Equitable Investors Share of US household assets owned by those aged 55 and above 
Source: Apollo Global Management Distribution of Australian household net worth by age group 
Source: Saul Eslake House price to income ratios 
Source: Endeavour Equities Stablecoins the 18th largest external holder of US Treasuries 
Source: The Kobeissi Letter China's working-age population expected to decline dramatically 
Source: Apollo via Forager Dr Copper has turned volatile - daily price changes 
Source: BoAML August 2025 Edition Funds operated by this manager: Equitable Investors Dragonfly Fund Disclaimer Past performance is not a reliable indicator of future performance. Fund returns are quoted net of all fees, expenses and accrued performance fees. Delivery of this report to a recipient should not be relied on as a representation that there has been no change since the preparation date in the affairs or financial condition of the Fund or the Trustee; or that the information contained in this report remains accurate or complete at any time after the preparation date. Equitable Investors Pty Ltd (EI) does not guarantee or make any representation or warranty as to the accuracy or completeness of the information in this report. To the extent permitted by law, EI disclaims all liability that may otherwise arise due to any information in this report being inaccurate or information being omitted. This report does not take into account the particular investment objectives, financial situation and needs of potential investors. Before making a decision to invest in the Fund the recipient should obtain professional advice. This report does not purport to contain all the information that the recipient may require to evaluate a possible investment in the Fund. The recipient should conduct their own independent analysis of the Fund and refer to the current Information Memorandum, which is available from EI. |
