Capital Gearing Trust p.l.c (CGT) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Katie Forbes, and I'm Head of Investor Relations for Capital Gearing Trust. Thank you for joining us today for the full-year results for the year-ended 31st of March 2025. I'm delighted to be joined here by Chris Clothier, Co-Chief Investment Officer; and Emma Moriarty, Portfolio Manager. Before we move on, I'd like to ask you to go to Page 2 of the slide and just so we can go over the disclaimer. So, just a reminder that the value of investments can go up and down, and nothing we say here should be taken as investment advice. Before we turn to the investment highlights, I just want to bring your attention to Slide 4, where we highlight the different funds managed by CG Asset Management. For your awareness, we do have an open-ended UCITS fund for Capital Gearing Trust called CG Absolute Return, as well as 3 specialist bond funds. If you'd like to discuss these in any more detail, please do not hesitate to contact us after this call. Now, moving on to the full-year results and on the key highlights. The Trust delivered a net asset value total return of 4.1%. This compares to the Consumer Price Index return of 2.6%. The share price total return was 3.1%, and most of the areas of portfolio contributed positively, with one exception being our infrastructure funds. Our discount and premium control policy continues to work well over the period. In a market where many investment trusts are still trading at stubbornly wide discounts, we have managed to continue trading close to NAV. We also saw a meaningful rise in income, supported by shift in portfolio allocation and a rise in higher interest rates. To manage the company's tax position effectively, the Board has resolved to pay at least part of this year's dividend as an interest distribution. The recommended final dividend is 102p, which brings the total distribution for the entire year to 102p. This is a 30.8% increase from 78p paid last year. Finally, a governance point. Jean Matterson will be stepping down as Chairman of the upcoming AGM. On behalf of the Board and CG Asset Management, we would like to thank Jean for her leadership, dedication to The Trust and guidance throughout her 10-year tenure. She'll be succeeded by Karl Sternberg. That concludes key highlights from me. And I'll now hand you over to Chris and Emma.

Thank you very much, Katie. Good afternoon, everybody. Thank you so much as ever for taking time to join us. We really appreciate it. I'm going to talk a little bit about performance and positioning, and Emma is going to talk about outlook. So, let's get straight on with it. So as Katie highlighted, the return over the year was 4.1%, which was a perfectly acceptable return, but it's not something that we're going to crow about. However, it was ahead of inflation and bearing in mind, the fact that we continue to be in a bond bear market, perfect creditable result. Let me show on the left-hand side of the chart, the asset allocation at the end of March. I thought it might be of interest to update you as to where our asset allocation sits today. So, our dry powder is at 35%. There's been a meaningful increase in our allocation to credit. So, that stands at just under 12.5% today. And that reflects 2 things really that the yield curve in the U.K. has been steepening and so we are, therefore, more attracted to taking on a little bit of duration within our dry powder. The second is that we've come across some really interesting opportunities in index-linked corporate credit. And so we have added to positions there. Our government bond holdings within the dry powder make up 18.5%. And those are chiefly in hedged Japanese short-dated government bonds for reasons that I will elaborate on. The index-linked bonds holdings has reduced somewhat to 36%, and we have been gradually trimming our exposure to U.S. TIPS In recent weeks. This is reflective of -- we have had concerns for the outlook for the U.S. dollar. Those concerns have been somewhat realized, and we continue to have concerns that the U.S. dollar may not provide the same safe haven attributes that it has provided in the past. At the same time, the other thing that's really exciting from our perspective is that yields on U.K. index-linked bonds have been rising and are now substantially competitive with the yields available on U.S. TIPS. And so we've been allocating there. So the duration on our U.K. index-linked holdings is a little over 8 years. The weighting there is a little over 12.5%. On our U.S. TIPS, the allocation is at 22%, of which about 5% is hedged back to sterling. So the naked currency exposure to U.S. TIPS is about 17% and the duration there is 6 years. I think it is worth highlighting that as a result of a relatively elevated allocation to dry powder, the overall portfolio duration has probably been reducing somewhat, even though in pockets such as U.K. index-linked gilts, our duration has been rising. So the portfolio duration stands at 4 years today. And that reflects, I guess, some of our concerns over the long end of the yield curve both in the U.K. and in the U.S. And perhaps Emma will talk to you about that. We have been trimming risk assets over the course of the year. We trimmed ahead of Liberation Day, and we have continued to trim since then, as we think that there is an extraordinary level of macro uncertainty in the world and that whereas equity valuations, particularly in the U.S. remain, in our view, very stretched. And taken together, that is a risky proposition. And so we are happy to bring our portfolio risk close to shore and reduce risk where we can. So to that end, our exposure to conventional equities is about 14% today, which is probably as low as it is likely to go. Our exposure to property is about 3.5%, and our exposure to infrastructure is a little over 7%. I know that -- sometimes when you look at our asset allocation, you might feel that it doesn't radically change and looks somewhat static. And perhaps the analogy of the swan is relevant, while it all looks hopefully serene and stable from the surface, and we're paddling furiously underneath trying to do smart things with your money. So, a couple of examples of that. Earlier in the year, in January, U.K. index-linked bonds went on a fantastic tear and actually moved to negative real yields. So, we took the opportunity to sell out of all of our short-dated U.K. index-linked bonds, and we reinvested the proceeds into U.S. TIPS but on a hedge basis, which was the right thing to do. And that's delivered a relative outperformance of 2.9% that decision. Similarly, our U.S. TIPS holdings due to our concerns over the long end of the curve, combined with the changing shape of the yield curve, we took off our quite aggressive barbell positioning and more than took it off and have overallocated to the belly of the curve. I dare say Emma might talk to you a bit more about that. And then finally, we made quite a large move within our dry powder into hedged Japanese 2-year government bonds. Now that's -- the first thing to say is that because we have done so on a hedge basis, we are not exposed to Japanese interest rate risk, which is obviously very topical at present. But our reason for doing that is that there is a very large cross-currency basis swap at the moment. So that means effectively that we -- by hedging from yen back to sterling, we earn an additional return. And that additional return amounts to around 25 basis points above and beyond the return on the U.K. 2-year. In addition, at the start of this year, we were very constructive on the U.K. 2-year. We didn't have a view on the path of 1-year interest rates that differed significantly from the market. However, embedded in the 2-year, particularly back in January, was a belief that interest rates would rise on a 12- to 24-month basis, and that was something that we were happy to take the other side of and lock in attractive yields. So the combination of those 2 factors meant that we were able to buy a 2-year paper yielding between about 4.8% and 4.9%, and that's proven to have been very good value with the passage of time. I will move on from there. We thought this chart would be interesting to share with you. And as you know, the objective of The Trust is to preserve and then grow shareholders' real wealth over time. And that inevitably means that we take a relatively defensive posture and have relatively modest exposure to risk assets because we are trying to avoid losing money over a 12-month period. But at the same time, within that asset allocation, we're trying to deliver good returns and get each part of the portfolio working as hard as we can. So, I thought I'd share some examples of that with you. So on the left-hand side, you can see the performance of our major asset classes. I've just highlighted credit within our dry powder because clearly, our treasury bills do not tend to materially outperform or underperform the underlying the very vanilla investment. And as you can see, over a 5-year period, our credit has delivered a return of 21%. That plays 1% for a sterling investment-grade broad aggregate of credit. And really, that reflects the fact that we were very concerned coming out of COVID that spreads were tight and also that there was significant risk of the yield curve steepening. Both of those things came to pass. But also that we were then able to opportunistically deploy meaningful amounts of money into credit after The Trust crisis when spreads blew out and the yield curve had steepened. And we've then trimmed back since then as those values have normalized somewhat. Our index-linked government bond holdings, that's -- as you can see, those have also outperformed a global benchmark there by about 4% per annum. And really, the reason for that was that we were managing our duration carefully, particularly in the U.K. where yields went to fantastic negative levels and we were concerned. On the risk asset side, we've compared ourselves to the investment trust index here, and you can see that we have outperformed that. Why the investment trust index? Well, that is the principal area that we fish in, as I'm sure you know. So looking to the right, I'm going to come back to equities, which is the one area of underperformance. The benchmarks that we use here, equities is the MSCI World, Property is MSCI, EPRA Europe, infrastructure, the AIC Infrastructure sub-index and so on and so forth. And you can see that the property, the infrastructure and our sort of high-yield credit, all materially outperformed their underlying benchmarks. So that was fine, too. Clearly, our equities was one area where we did underperform. And the rationale for that is partly that conventional investment trust equities underperformed the MSCI World for reasons that I'll come on to. But partly, as you know, we've had a long-standing view that American equities were very expensive. They have gone from being very expensive in our view to being extremely expensive in our view, and we've been underweight them over that period, and that explains the underperformance there. But hopefully, in aggregate, you'd agree that the performance of the subcomponents of the portfolio has been pretty satisfactory. And so now, I show things in a slightly different way. Here's the return of our bonds, which comprises our dry powder, our credit and our index-linked bonds on the left-hand side of the chart. And you can see that they have quite meaningfully outperformed cash. And more importantly, a diversified portfolio of sterling-denominated bonds, Sterling AG, we've outperformed those by about 40% in total. So, we're pretty pleased with that performance. And on the right-hand side, you can see our risk assets versus the investment trust index. And indeed, those have also outperformed. So as I said, we are trying to -- I thought I'd dive in and just give a couple of examples of the ways in which we're trying to get the sub-asset classes within our portfolio to just deliver those little bits of extra return. So in the top left, you can see here are our hedged JGBs. As I said, at the top, we invested in January. We were able to invest at yields of 4.8%, 4.9%. Those yields have reduced quite markedly, and so we've enjoyed some capital gains there. But more importantly, the pickup from hedging JGBs versus owning the U.K. 2-year -- apologies, I think I misspoke later. I think I said 25 basis points. As you can see, it's 35 basis points as things stand today. Now, that number fluctuates around a little bit. Top right, here is a credit holding that we added to in recent months. And it is a Tesco index-linked bond of 2036, that's slightly longer duration than most of what we hold in our dry powder. But when we see things that are really good value, we are prepared to lock that value in for a long time and happy to own slightly longer duration assets. That spread of 255 basis points compares with just under 140 basis points for a similar duration vanilla nominal Tesco bond and offers, in our view, fantastic value. What that means in practice is that we are getting a 4% real return from that piece of paper, which is fantastic, both in absolute terms and on a risk-adjusted basis. I talked earlier about the outperformance of our index-linked bonds versus a global portfolio of index-linked bonds. I think it's also worth really highlighting that index-linked bonds themselves have dramatically outperformed nominal bonds over the long term. And so here in the bottom left, I show the return of U.S. TIPS versus U.S. treasuries since the year 2000. And they have compounded 4.7% versus 3.6%, 118 basis points per annum higher return. And that over time really, really adds up. And really importantly, there are 2 reasons to believe that this will, if anything, this excess return will persist and if anything, could increase in the future. And that is that the breakevens today are very modest. And second is that we believe that inflation is likely to be higher in the future than it has been in the past 25 years for reasons that I think we talked about before. Why is it that inflation-linked bonds have shown this outperformance? Well, the reason is -- the single biggest factor is that markets routinely underestimate short-run inflation. So, that's to say that if you take the 2-year breakeven at any point in time and compare that to what realized inflation turned out to be 2 years later, on average, realized inflation has exceeded that breakeven by about 1% per annum since the year 2000. And that is a fantastic additional source of return. And on top of which, as I'm sure we've explained in the past, we actually think that index-linked bonds are more likely to be negatively correlated with a portfolio of risk assets due to the fact that they protect you against inflation, which tends to be something that causes all assets to perform poorly. And so they come with twin benefits. And then finally, as you know, we are focused on investing in investment trusts and exploiting discount opportunities in the investment trust market. And so outside of North Atlantic, which is a long-standing deep value position that we hold, our single largest position over the course of the last year was Polar Cap Financials. And you can see the returns from holding that position over the period. And this is a perfect example of the kind of situations that we like. Polar Cap Financials owns a broad portfolio of global mega caps. So, I think Visa, Mastercard, Berkshire Hathaway, JPMorgan, Chubb, et cetera, et cetera. And it's well managed by the team at Polar, and we hold them in high regard. But in addition, it has a feature, which is that it is a fixed life vehicle, which comes up to the end of its life in June this year. And so last spring, we were able to buy it on discounts ranging from 8% to 10% in the knowledge that, that discount would mechanically close over the course of the following 15 months or so. And that meant that we had every reason to believe that our holding would materially outperform the underlying benchmark, which is the MSCI global financial index. And sure enough, that's exactly what came to pass. Now, as it happens, we also got lucky in this instance because in December, financials came very much into fashion and an investor or a number of investors wanted to build a position in this trust and took us out at an extremely narrow discount to NAV. And so effectively, that pull to par, which we were hoping for, got pulled forward and happened more quickly than we would have expected. So, that's particularly pleasing. And it's worth saying that as well as investing in these sorts of situations where we believe that we will be able to deliver excess returns as it were passively without intervention on our part, we remain incredibly active engaging with Boards collaboratively, ideally and more confrontationally if that proves to be necessary. And one public example of the latter case would be PRS REIT where we, along with our fellow shareholders, requisitioned the Board to change our members of the Board and change the strategy of the company. And I believe that the returns over the last 12 months have been of the order of 50% arising from that activism. And there are lots of situations in the portfolio where we hold assets that trade at material discounts to their NAV. And we think that those discounts will close through a combination of our actions, but in most instances, as a result of Boards doing the right things for their shareholders. Given the underperformance of our conventional equities versus MSCI World in recent years, I thought it was worthwhile just touching upon the performance of the investment trust index over the long term for that is our benchmark and that is the pool, as I said, that we're principally fishing. And of course, you can see that the MSCI World has put some clear blue water between it and the investment trust index in recent years. However, if you look on the right in log terms, you can see that, that deviation doesn't look particularly material in the historical context. What you can also see is that the 2 indices tend to track one another reasonably closely and the converge -- appear to converge with one another with reasonable regularity. So, why is it that the MSCI World has outperformed the investment trust index recently? Well, really 2 things. One is that the investment trust index structurally underweight U.S. equities. And we know they've been on a fantastic tear, and also discounts have risen in recent years. However, given the starting valuations of U.S. equities at present, combined with the relatively high discounts that we see in the investment trust sector, we have every reason to believe that those 2 lines will converge in years to come and are very happy with our investment in the investment trust sector. And so finally -- so it's fair to say that the 5-year performance of Capital Gearing Trust has been somewhat muted. So on a 5-year view, we've compounded at 4.9% per annum, 27% NAV total return. And crucially, that has been behind inflation over that period. And that reflects, in part, the fact that the performance hasn't been fantastic, which I think, again, is a function of the fact that we have been in this really very prolonged bear market in bonds, and we are a defensive fund and therefore, tend to hold the majority of our assets in bonds. And also, of course, reflects the fact that inflation has been very high in this period. But if you look on a 10-year view, you can see that we have quite comfortably outperformed inflation by around 2% per annum. We've also outperformed the PIMFA Conservative Index by a little over 15% cumulatively. The PIMFA Conservative Index, I think, is relevant because it has a similar risk appetite, a similar mandate, which is to deliver returns with relatively low drawdowns, relatively low risk. And you can see that we've outperformed that quite materially and we have done so while taking less risk. So, we generally had lower equity exposure over the period, and you can see that our volatility in drawdowns have been rather smaller. So in that sense, things have been working reasonably well. I think it's also worth talking about the performance this year and in particular, our performance during the turbulence that we saw during April. And so our NAV from the beginning of April to its trough, which I think was on about the [ 30th ] of April, fell by about 2.2%. Over the same time, the MSCI World sterling-denominated fell 9.4%. So, we had participated in less than 25% of the drawdowns over that period. Now, of course, as it's turned out, equities have done more or less a full retracement and are, frankly, in our view, irrationally priced given the risks that we are seeing in the market. But I think that has maybe, if you've owned equities over this period, you've been in for a very bumpy ride. We have delivered something hopefully rather smoother. I think that's a good place to stop because it allows Emma to talk about some of the things that we are thinking about in terms of outlook. Thank you very much, indeed. Emma?

So, one of the key features of our outlook at the moment is the global trade environment and at the center of the global trade environment is the U.S. economy. At the beginning of this year, and this plays out in our asset allocation, when we were judging the likely impact of tariffs at a high level, we said the impact of tariffs would be to lower the global rate of the economic growth and to increase the rate of inflation. And on inflation specifically, tariffs serve to increase it through 2 mechanisms in the short-term simply through the impact on the prices and over the medium to longer term through the impact on supply chains, reducing the elasticity of supply globally and forcing the movement away from established lowest cost supply chains. On the left-hand side, the chart assesses a range of likely possible impacts on U.S. GDP growth from different tariff scenarios. I think the important thing to note here is that this is just the direct impact of tariffs. Layered on to this, of course, will also be the impact of the uncertainty that's been created by the on-off stop-start nature of tariff implementation, which has caused delays to investment decisions and has caused delays to consumption. On the right-hand side, what we've seen is attempt by the Atlanta Fed to quantify the impact of these changes to the global trade outlook on U.S. GDP. Now the Atlanta Fed GDP Nowcast is not an official forecast, rather what it seeks to try and do is give an indication of the live impact on U.S. growth of data on the U.S. economy as it comes in. And what it shows here is simply the volatility of U.S. economic activity in light of the on-off nature of tariff implementation. There have been a few factors driving this. One is, obviously, sort of consumption and imports that have been brought forward ahead of the Liberation Day. And sort of more recently, what has been weighing on this indicator has been reduced investment as the changing environment causes corporates around the United States to put off investment decisions. Consistent with the minutes that were published last night by the FOMC, the U.S. Fed's rate setting committee, one of the things that they chose to highlight was the fact that on one hand, the nature of the tariff shock that came through on Liberation Day was something which was far greater than expected. But similarly, they expect to see some movement on tariffs, on fiscal policy and further finalization of immigration policy. And all of these are wait-and-see type situations. Similarly, the volatility in the data makes it hard to get an accurate picture of what GDP growth is going to look like. So, interest rate decisions are somewhat on hold as the GDP picture becomes clearer. Given all of the uncertainty and the lag in receiving hard GDP data, one set of surveys which have received greater importance are consumer sentiment surveys and the 2 big surveys, of course, being University of Michigan and The Conference Board. And while again, these 2 surveys also show volatility as the trade position changes, one thing that is clear at any point in time pre-U.S. election and post is that both the level of reported consumer sentiment has fallen and similarly, consumers' expectations of inflation have risen. Now, the chart on the right-hand side shows that for the next year, which is likely when the first impact of tariffs come through, but it's also true that consumers have reported increasing expectations of inflation over longer horizons as well. And this expectation of higher inflation, which is something that we share is one of the factors that underscores our allocation towards index-linked government bonds over nominal. With all of that in mind on the economic outlook, turning to the financial market asset prices, prospective returns and how these impact our asset allocation. The first thing to say on this is despite the weakened U.S. economic outlook, it's also true that U.S. equity market valuations remain stretched. Meanwhile, long TIPS yields have continued to rise. This has been against a backdrop of increasing concerns about the outlook for U.S. economic growth and increasing concerns about the U.S. fiscal situation. And this differential, at least for recent years is historically narrow. And that narrow differential is such even before accounting for the risk associated with each of these different markets. And given this combination of stretched equity valuations, a weakened economic outlook and elevated long-term real yields in the U.S., asset allocation at the moment favors index-linked bonds and is relatively constrained in its allocation to risk assets. Within index-linked, the other important development is the steepening of the U.K. index-linked yield curve. And this has been a function of domestic factors and the international environment. So domestically, some of the drivers of this have been a weakened economic outlook and concerns about the U.K. fiscal situation, which began with very limited headroom over the fiscal rules in March. And given the weaker economic outlook and the tariffs that have since been levied, concerns that this headroom has narrowed further or may even have been completely eroded. Internationally, obviously, index-linked gilts compete in the broader market of safe government assets, and concerns about increased supply across all of these jurisdictions and particularly in the United States have served to push yields further and U.K. yields have not been immune to this. From the perspective of our asset allocation, 20-year TIPS, for example, now stand at around 2.6%, whereas 20-year index-linked gilts stand at 2.3%. And after adjusting for the impact of the RPI, CPI wedge, that differential narrows by a further 15 basis points. Given this, we have been steadily increasing our allocation to index-linked gilts and away from TIPS, as Chris mentioned, in the earlier part of the presentation. The other aspect of this is our currency decision. And as Chris mentioned earlier, one of the sort of historical features of TIPS in our portfolio is that on an unhedged basis, they had a reliably negative correlation with sterling-denominated equities. This is what the right-hand side chart shows. However, over the year-to-date, that relationship has fallen away somewhat. And while the U.S. dollar remains underpinned by interest rate differentials and that expectations of short-term interest rates remain reasonably high and GDP growth, although most estimates have downgraded, still competitive with other developed market economies. It's also true that there is an increased risk sentiment around the U.S. dollar. And as such, we've been reducing our exposure to this currency and it now stands at around 20%. Despite the fact that we have reduced exposure to the U.S. dollar, we still believe that its status as global reserve currency remains underpinned. As you can see from the chart on the left-hand side, the U.S. dollar still has the largest share in global FX reserves. By far, the second highest is the euro and for various structural reasons associated with that currency, we judge it's unlikely to become the next global reserve currency. Obviously, the other major economy, which is sometimes considered in this respect is China. At present, the Chinese yuan is unlikely to be sufficiently internationalized to hold this role. It only represents 2% of global FX reserves. Despite this, we do continue to be concerned about the U.S. fiscal situation, although the latest projections of the U.S. fiscal deficit are reasonably unchanged from those that came out at the turn of the year. It's also the case that these rely heavily on assumptions around government downsizing over a 10-year horizon and around tariff revenues, which particularly after the overnight news, the trade court decision, there is some downside risk. Given all of this, we expect there to be further volatility, particularly in the long end of the U.S. yield curve. And as such, against this likelihood of volatility, weakened economic forecast and stretched equity market valuations, we have chosen to allocate more of our portfolio towards dry powder. This has 3 benefits. The first is to dampen the portfolio against this source of volatility. The second is that because we are seeing higher short-term interest rates, the section of the portfolio now delivers a positive real yield over inflation. And the third is it gives the portfolio the liquidity and the optionality to rotate into index-linked gilts and to risk asset as the appropriate moment arrives. That was all to say on outlook. We turn back to questions now.

Okay. Great. Thank you very much. So, we have received some questions already by e-mail. But please continue to send them in as we go. So the first question we have received is -- stop to share, sorry. Do you have any limit to your dry powder allocation?

That is a very good and germane question. Our dry powder today, as I said, stands at about 35%. And I think we're probably at the upper limit, more or less of the amount that we would allocate there. And I would say that while in theory, all of that dry powder is available to be deployed into alternative assets, we are a cautious bunch and like to hold something in reserves. So, I think probably you should imagine that maybe it might fall down as low as about 10%, and 10% to 35% would be a reasonable range. As Emma said, the thing that's wonderful about it at the moment is that it is delivering really attractive positive real returns. And it provides a wonderful benchmark against which all other investment opportunities can be set and a hurdle that they need to get over in order to bring -- introduce risk to the portfolio.

Thank you very much. The next question we have, compare against some of our wealth preservation fund competitors, how do we differentiate from them? And what do we expect in terms of our long-term performance?

Emma, do you want me to take that?

Sure.

So, I mean, I think probably when people think about us, they probably think about us in relation to Ruffer Investment Company and Personal Assets Trust, managed respectively by Ruffer and Troy. We know them very well. We hold them in incredibly high regard. And I would say that intellectually, we all tend to view the world in a fairly similar fashion. The way we go about constructing our portfolios is somewhat different. That's not to say that anybody's approach is better. So, I would say that we tend to be, as a house, somewhat more value-oriented and somewhat more bond focused. Troy tends to be focused on quality growth equities and tends to have a larger allocation to gold. Ruffer, as you know, use a more diverse array of derivatives to provide portfolio protection. And over the long term, I think we've all delivered fairly attractive returns. And I wouldn't expect -- I don't believe that an investor should have different return expectations for each of us, if that makes sense.

That's great. Thank you very much. The next question we have is in the stake of CGT's directors and employees fallen from 2.5% to 1.8% over the last year. Have you got any easy explanation for this reduction? And what happened to Peter Spiller's 10% stake of The Trust?

Okay. I'll take that one as well. So, I'm thinking on the hoof here. My guess would be is that we obviously had Robin Archibald retire. And I dare say that, that changed because I should be very surprised if any of the directors have been selling their shares. So, my expectation is that it is Robin disappearing off the register as a director. I hope he's still a shareholder. Perhaps, Robin, if you're watching, you can tell me that. As it relates to Peter's stake, I think that the annual report only refers to the director stakes, not those of the managers. It's always dangerous to say some of it can be disproven. I think I would eat my hat if I discovered that Peter had sold any shares. And indeed, I know he has been buying shares over the last 12 months, which is -- if any of you know Peter, as I'm sure most of you do, you will not be surprised to hear that he's very enthusiastic about our portfolio. But it is also true that because of the fact that over the last 10 years, we've issued a lot of shares, Peter's stake as a percentage of the outstanding share capital has, of course, come down.

Thank you very much. We have a next question regarding one of our investment trusts. So, noting continuing price weakness in FCIT, has your faith in this trust diminished at all since highlighted at a recent presentation?

No.

There you go. Very simple, straightforward answer. And the further question we have is, are you looking to change your asset allocation over the next 12 months?

I think -- well, I suppose one thing that I would say is, as Chris set out in the opening section of the presentation, we do, at a very high level, tend to keep quite a stable asset allocation. That said, it's dynamic and it responds principally to the values on offer and the macroeconomic outlook sort of managed also to the sort of the mantra of where values are good, we will try to lock them in for as long as possible through longer duration. I suppose all of that said, the way our portfolio will change will likely depend on those 2 factors. In terms of what the likely things are that might impact that, one is obviously the outlook for global growth and global inflation and the extent to which we start to see some finalization around U.S. trade policy and the U.S. fiscal situation, which will likely determine, particularly values in bond markets and to an extent, values in equity markets. So it's difficult to say without knowing exactly how things are going to eventuate other than to say that we intend to respond to value on offer as it presents itself and to the evolving macroeconomic situation.

Thank you very much, Emma. I can move on to our final question now. So, considering that all of our portfolio outperformed except the infrastructure fund part of the portfolio, do we still have strong conviction in this area, and we will continue to hold the same amount?

That's an excellent and a very fair question. And I suppose -- and sorry, forgive me, I was slightly flippant in my answer as it relates to FCIT. And I was sort of worried that we would have lots of questions because I wasn't going to be able to give that one lots of time. And so the answer that I will give for the infrastructure is -- I would include FCIT within that for, of course, it is an infrastructure stock. And I guess the fundamental question that you ask yourself whenever the price of something goes down and generally speaking, our infrastructure holdings have been sort of flat to down is has anything in the fundamentals changed that means that they are less attractive? Because if the fundamentals have not changed, then lower prices mean higher prospective returns. And therefore, if anything, we should be doing the opposite, which is increasing our weightings to. And so -- when I look at our infrastructure holdings, the underlying performance of the assets has been as expected. There's a slight wrinkle there. We have -- within our infrastructure holdings, a relatively small part of it is allocated to renewable infrastructure, and there has been some relatively weak wind production over the winter. And so there have been some idiosyncratic features. But as a general statement, they've performed in line with expectations. The second thing to say is that where they have sold assets, they have largely sold them at or around NAV, in some cases, above, in some cases, slightly below, but generally at or above NAV. So, we have reason to believe that the NAVs are fairly hard. One thing clearly is that as interest rates have been rising around the world, and these are interest rate-sensitive assets, the NAVs have ticked down somewhat. But obviously, on unchanged share price, the prospective returns are unaffected by those changes. And so in summary, we are very happy with our infrastructure holdings, particularly within the core infrastructure space. We expect that the long-term returns from them are of the order of 8% to 10% nominal. And that is without assuming any re-rating of those stocks. And we do think that a re-rating can happen, particularly because the Boards are finally coming around to recognizing that they need to take action to address the discounts and allocate capital more effectively through -- diverting through sales of assets and using the proceeds to buy back stock, and we're starting to see evidence of that. So yes, we remain comfortable with our infrastructure holding.

That's great. Thank you very much. I think that will conclude the session here. If we haven't got around to your question, we'll follow up with you by e-mail or phone call. But thanks once again for attending, and thank you very much, Emma and Chris, for today's presentation.

Thanks very much, everyone.

Thank you.

Bye-bye.