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10k Words Equitable Investors February 2025 The AI theme is taking up greater share of S&P 500 market cap than previous growth "bubbles" while fund managers' cash holdings are at 15-year lows. US valuations have left Europe in the dust but sustainable high growth is scarce; and there is healthy debate over whether US valuations stack up (and on Morningstar's numbers Australian stocks are more overvalued than US peers). It is reporting season in Australia and the final week of February will be big. Be careful what you take away from it though - it seems CEO sentiment is not a reliable indicator. Meanwhile, US consumers are showing some distress in the form of credit cards 90+ days in arrears. There has been an uptick in non-performing personal loans and home mortgages as a % of bank assets in Australia too. With coffee bean prices surging, meanwhile, it is good to know the bean is only ~11.5% of the price of a cup of coffee. Market cap as % of S&P 500 for "market leadership" themes 
Source: Bank of America Global Research Fund Manager Survey cash level (% of Assets Under Management) 
Source: Bank of America Global Research European market PE multiple at record discount to US 
Source: Bloomberg via @BobEUnlimited Growth in market cap of the Nasdaq Composite - historical & forecast 
Source: UBS Three-year compound annual sales growth rates for US companies, 1962-2024 
Source: Morgan Stanley Morningstar's bottom-up fair value estimate of the US market 
Source: Morningstar Morningstar's bottom-up fair value estimate of the Australian market 
Source: Morningstar No. of ASX-listed companies reporting each week of February reporting season 
Source: Coppo Report S&P/ASX Small Ordinaries weighting (% of index) reporting each week of February 
Source: Coppo Report CEOs bad at market timing 
Source: Goldman Saches, @BrianFeroldi US consumer credit: percent of balance 90+ days delinquent by loan type 
Source: New York Fed Australian banks' non-performing assets - as % of assets by type 
Source: RBA Historical price of Coffee (Arabica) 
Source: Financial Times Cost composition of a cup of coffee 
Source: Pablo & Rusty's February 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. |
