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10k Words Equitable Investors January 2026 (2-minute read) We kick off calendar 2026 by trying our hand at our own sentiment indicators - combining valuation and implied volatility for the US equity and bond markets, the Aus equity market and ASX small caps. Are investors paying a premium price for market calmness? Then we check in on Morningstar's bottom-up valuations. There is a chasm between small and large cap valuations based on revenue multiples but not so much on earnings. Tech has done the heavy lifting in large cap valuation AND earnings in the US over the past decade and the trend is expected to continue - but can US smalls deliver on lofty targets and drive a catch-up? In US dollars, the US market has underperformed most major markets in the Americas. Then we look at how short-term (daily) volatility itself is becoming more volatile over time. Turning to the economy, we look at personal loan delinquencies and savings rates, with signs of deterioration in consumer behaviour. A custom US equity market sentiment score - based on CAPE adjusted equity risk premium and the VIX relative to their historical average and volatility 
Source: Equitable Investors A custom ASX equity market sentiment score - based on the dividend yield spread on bonds and the ASX VIX relative to their historical average and volatility 
Source: Equitable Investors A custom ASX small cap sentiment score - based on the dividend yield spread on bonds and realised volatilty relative to their historical average and volatility 
Source: Equitable Investors A custom US debt market sentiment score - based on 10 year bond yield and MOVE Index of implied volatility relative to their historical average and volatility 
Source: Equitable Investors Market price relative to US market bottom-up valuations from Morningstar 
Source: Morningstar Market price relative to ASX market bottom-up valuations from Morningstar 
Source: Morningstar Earnings: US Tech vs the Rest 
Source: Topdown Charts Actual reported and bottom-up consensus EPS growth estimates 
Source: Goldman Sachs Global Investment Research Enterprise Value / consensus sales - S&P 500 (IVV ETF) v US microcaps (IWM ETF) 
Source: Koyfin Enterprise Value / consenus EBITDA - S&P 500 (IVV ETF) v US microcaps (IWM ETF) 
Source: Koyfin Price / consenus EPS - S&P 500 (IVV ETF) v US microcaps (IWM ETF) 
Source: Koyfin Country ETF performance over past 12 months (in USD) 
Source: Koyfin No. of daily 10% swings per calendar year in the VIX (CBOE Market Volatility) 
Source: Iress, Equitable Investors No. of daily 10% swings per calendar year in the S&P/ASX VIX 
Source: Iress, Equitable Investors Personal Loans - 90+ Delinquency (#) 
Source: Equifax Australian savings ratio 
Source: RBA USA personal saving 
Source: St Louis Fed 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. |
