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Insights: Has the small-caps bull case run its course?
The pace at which ASX-listed shares have advanced in recent months suggests a growing void between large and small-cap stocks, and this has become even more evident since August, with trend lines suggesting the emergence of two-speed growth for equities. Admittedly, it’s no secret that small caps have been leaving their large cap counterparts in the dust for a while now. After all, the Small Ords Index is up 18.5% over one year while the ASX 200 is up 7.7% over the same time frame. However, the degree to which the two indices have been diverging has been widening in the last few months. The ASX 200 has struggled to move 4% higher since early August, while the Small Ords Index is up around 13% on the back of lower interest rates, better economic signals and earnings expectations that exceed those of large caps. This is a complete reversal of the 23% underperformance experienced by small caps in the three years after Covid, when interest rate rises, inflation and small cap earnings downgrades attracted investors to more liquid large cap stocks. While the recent recovery staged by small-cap stocks has been well supported by the market, there’s now growing concern that this part of the market is looking a little topp
Investing
Is it time to take safe bets on a US small cap revival?
While small cap stocks on the ASX account for 87% of all listed stocks, they do precious little to move the market on any given day; with the difference between the All Ordinaries Index and the ASX300 Index accounting for 336 points - that’s a measly 3.68% of total market movement (based on today’s numbers). While small cap stocks significantly outpaced the tech-fuelled S&P 500 Index during the post-pandemic bull market ending in December 2021, the sector has for a long time played second fiddle to the global onslaught of tech stocks and, more recently, artificial intelligence. Since then, it’s AI-tech darlings that have shanghaied the media narrative that has driven capital flows into these immensely popular stocks.Value and contrarian appealHowever, for investors willing to do their own homework, the small cap landscape offers a veritable treasure trove of value and contrarian appeal, that’s lurking behind the hype of large-cap stocks that command the market’s attention both locally and overseas. Sentiment towards ASX-listed small caps has been progressively turning since the sector slumped to a five-year low in late October 2023. A closer look at the ASX Small Ordinaries Chart, which represents the small-cap compone
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Entrepreneurs shift from startups to established firms
Australian entrepreneurs are increasingly buying established businesses, rather than opening new startups. Of the 15,000 business loan requests submitted through Money.com.au in 2024-2025, 2,300 were aimed at buying an existing business, a Money.com.au report found. “We’re seeing a rise in acquisition-focused entrepreneurs who are opting for businesses with existing revenue, systems and customer bases, rather than taking on the risk and uncertainty of a new venture or startup,” said Money.com.au business finance expert Phil Collard. “About 84% of those seeking to purchase an existing business required immediate funding, which tells us there’s a sense of urgency — these buyers are often ready to move quickly when the right deal arises and they don’t want delays in their financing.” The report found that 42% of those requesting loans to buy existing businesses saw average monthly turnovers above A$30,000, indicating these are small businesses generating at least $100,000 each year. Small businesses are contributing almost $590 billion in value to Australia’s GDP in 2022-2023, around one third of the country’s total. Agriculture and rental services boasted the most profitable small businesses in that period, by thei
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Blackstone tops estimates, CEO warns of tariff risks
Blackstone reported better-than-expected first-quarter earnings on Thursday (Friday AEST), driven by strong performances in its private equity and credit divisions. However, the company’s Chief Executive Officer warned that heightened market volatility could impede asset sales in the near future. Earnings per share stood at $1.09, surpassing estimates of $1.05, while revenues reached US$2.76 billion, slightly ahead of expectations of $2.75 billion. "Uncertainty around tariffs, and their potential impact on economic growth and inflation, has dramatically impacted investor sentiment," said CEO Stephen Schwarzman during the earnings call. Schwarzman, a long-time backer of former President Trump, added, "We believe a fast resolution is critical to mitigating risks and keeping the economy on a growth path." His concerns echo those of other business leaders and economists, many of whom have increased recession warnings following the unveiling of the full tariff scope on 2 April. During the quarter, Blackstone drew in $61.64 billion in inflows, lifting its assets under management by 10% to $1.17 trillion. About half of these inflows were channelled into the credit and insurance segment, which provides a wide range of de
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Netwealth boosts quarterly FUM by almost a third
While the pending rising tide on the ASX - following the 6.62% jump in the ASX/SPI200 overnight - will float all boats today, Netwealth Group (ASX: NWL) may outperform the market after an announced record-breaking performance for the March 2025 quarter. Despite ongoing market volatility and market conditions, the Melbourne-based investment platform says it’s on track for a record year of funds under advice (FUA) net flows. FUA were up 29% year on year to $104.1 billion, driven by net inflows of $3.5 billion and partly offset by $1 billion in negative market movements. Net inflows totalled $12 billion for the financial year to date, up 61% on the previous period, while net inflows reached $15.8 billion for the last 12 months, up 49% on the previous year. Overall, the total number of accounts increased by 4,301 for the quarter to 155,738 as at 31 March, up 13% from the preceding 12 months. Management attributes recent growth to high transition rates from existing financial intermediaries and strong new business conversions. What’s also protecting Netwealth from current market fluctuations is the company’s diversified revenue sources and portfolio across various asset classes. Looking forwardAdded to their strong ne

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ASX floats: What to consider before buying into an IPO
A company’s decision to float on the Australian Securities Exchange (ASX) is typically done together with an initial public offering (IPO) which allows them to raise the funds needed to expand the business. That’s great for those responsible for bringing a company to market, but not always great for you, the poor old punter. With that in mind, Azzet ran a rule over what you need to know before investing in ASX floats. An IPO can provide a ground-floor opportunity to acquire tomorrow’s ASX leaders before future growth is factored into the price. But the opposite is also true, and based on the ASX’s recent past, you’ve got a 50-50 chance of an IPO being valued at less than what you paid in the first 12 months. First the history lesson: The ASX is littered with examples of floats that didn’t make shareholders' money, either short-term or even over the long haul. So how can you ensure you back the next Guzman Y Gomez (ASX: GYG) - up from an issue price of $22 last June to $33.34 today - instead of future share market debris? Weeding out the duds The trick to isolating quality IPOs from the duds, claims Bruce Apted senior portfolio manager at State Street Global Advisors is avoiding overpriced and over-

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Investing

Insights: Has the small-caps bull case run its course?

Is it time to take safe bets on a US small cap revival?

Entrepreneurs shift from startups to established firms

Blackstone tops estimates, CEO warns of tariff risks

Netwealth boosts quarterly FUM by almost a third

ASX floats: What to consider before buying into an IPO

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