F&C Investment Trust PLC (0XW.F) Earnings Call Transcript & Summary

Welcome to this, the second of our fireside chats, and it's part of our engagement with shareholders. And we're particularly keen to reach those who, for one reason or another, may not be able to attend our AGM here in London. And indeed, looking at the numbers from last year, we can see that if you take the participants who listened to this event last year online or following it on the download, it was many, many more then we were able to attend the AGM. So we think it's a useful exercise. And with me today is Bea Holland, our distinguished Chairman, who will set the scene, and then she will hand over to Paul Niven. Paul Niven, the Portfolio Manager of the Trust from Columbia Threadneedle Investments, one of the city's most senior and highly respected investors, and he will take you through the annual report. I will then be putting your questions to Bea and Paul. And Mark has already explained how you can submit the questions. I've already got some coming in on my laptop. I can see. And I'll take those questions, and we'll answer as many as possible at the end of their presentation. So over to you, Bea.

Welcome, everybody. Thank you very much. This is just -- the Paul will run through the detail of the performance in a minute, but I just wanted to give you a quick introduction. Obviously, this was the second very strong year of performance for your Investment Trust and obviously, for markets as well. Our objective remains both growth in capital and income, and that is still the focus of Paul and his team. Our 10-year shareholder return has been 212%, which is more than 12% per annum. This year, the return was 21% on the NAV versus 19.3% for the benchmark, although the shareholder return itself was a little bit low at 16.9% because that was impacted by the slight widening of the discount to 9.2% from 5.9%. Paul will give you the detailed performance, but we, as a Board, are very happy with it and hopefully, you all are too. We also are proposing another rise in the dividend, subject to the approval at the Annual General Meeting on the 30th of April. We want to -- we're proposing a final dividend of 4.8% -- of 4.8p, which gives a total of 15.6p for the year, which is an increase of 6.1%. This means that compares with 2.5% for CPI. And that means that dividends have grown over 1, 3, 5 and 10 years and exceeded inflation in each of those periods. And it's also our 54th consecutive rise in dividend and our 157th annual dividend. We're an independent Board and one of our roles is to ensure that costs are competitive. And the Ongoing Charges fell to 45 basis points this year from 49 the year before. And we've negotiated further reduction. So we expect this to come down again next year as well. The Board has had a couple of changes or is undergoing a couple of changes. One, Tom Joy, who left last year, and he has been replaced by Richard Robinson, he's a very strong investor in his own right and runs the portfolio for a large foundation. We are also losing Edward Knapp later this year. He will have served his 9 years, and we're very grateful to him for all his enthusiasm and attention that he has given to this Trust. With the search is underway, and we will let you know more once we have chosen his successor. I've just got one final thought. There are lots of reasons to be cautious near term. But in the 25 years since the millennium, we have gone through, first of all, the tech crash in the early 2000s, the great financial crisis, Brexit and COVID and obviously, now more recently, extreme geopolitical uncertainty. But there are also developments which should bode well, particularly in AI and other tech. Paul will obviously discuss all this much more in detail, but where we think that there may well be a positive impact for the world, but we're still evaluating exactly what that is. I'm now going to hand over to Paul to tell you the details of how he achieved the performance last year.

Thank you very much, Bea. Thanks very much for your attendance. So what I'll spend the next 15 or 20 minutes doing is running through the highlights from the results from 2024. Before I get on to that, I'll just spend a few minutes just building on some of the points that Bea made already, but to give you a sense of our heritage history and where we are today, what we look to deliver going forward. We are the world's oldest investment trust established in 1868. And as Bea as, we have paid a dividend every single year since 1868. And subject to shareholder approval, this year will see us deliver our 54th consecutive year of rising dividends. So we are an AIC dividend hero. We've displayed consistency in terms of management and approach. I've managed the Trust since mid-2014, and I am the third manager since 1969 following 10 mangers managers before me. So [indiscernible] long-standing tenure and consistency, as I said, in terms of managers and approach. We're an equity product. We started investing in equities in the 1920s. We were overwhelmingly invested in the equities by the 1960s, but also have significant experience in private markets where we made our first investment into unlisted equity in 1942. We've got very material scale. Our market capitalization at the end of January was GBP 5.7 billion, total assets of GBP 6.5 billion. And we are a FTSE 100 constituent. We reentered the FTSE in September 2022 and at the present time, are in the mid- to high 60s in terms of rank within that index. In terms of our objectives, again, building on what Bea said, our overriding aim is to deliver long-term growth in both capital and income. The way that we seek to achieve that is by delivering exposure to both listed and unlisted global growth assets. In other words, listed equity and private equity. And we blend a range of in and of themselves, focused active strategies to achieve superior returns with lower risk. So delivering the benefits of diversification. And we do have a commitment to net-zero carbon portfolio by 2050 or earlier. The outcome we look to deliver on top of our aim is consistency in terms of performance delivery and a value for money proposition for shareholders. So the highlights from our results in 2024 are on this slide. Shareholder total return was 16.9%. It was a really strong year for equities in general, the second consecutive year that the S&P 500 in the U.S. delivered a return in excess of 20%. And the last time we saw that was in the late 1990s. So it was a really strong year for global equity markets. However, underlying NAV, net asset value total return was 21%, and that was ahead of the benchmark return with FTSE All-World net index of 19.3% for the year. I'm going to explain a bit about the drivers of the return in a moment. We did -- the reason that there was a gap between the shareholder return and the NAV total return was a function of a widening of our discounts to NAV. We started the year at 5.9% discount, ended the year at a 9.2% discount that's why there's a widening in discount. Subsequent to year-end, we have seen some narrowing and we're back towards a mid -- broadly mid-single digits discount. In response to the widening discount, we bought back 27.3 million shares. Now the sector more widely, did see widening discounts, general uplift in buybacks. So we were not alone, but it was quite a material uplift. And that is accretive to NAV. So that is beneficial to shareholders by lifting the NAV, buying in shares when we're trading at discount. I'll demonstrate the impact of that in the moment. So it was a good year, I think, in absolute terms, a good year in relative terms. And if one considers longer-term returns, we have delivered both NAV and shareholder returns ahead of our median peer over 1, 3, 5, and 10 and indeed 20 years, and NAV returns were ahead over all those periods as well. So a strong 2024 but consistency in terms of those long-term returns. Really helpful to see our net revenue return per share, up by 7.5%. So our income was just over 17p, another new high, and that enabled us to not only have a covered dividend for 2024. But as again, Bea suggested, proposed a 6.1% rise on 2024 over 2023. So subject to final approval, the 2024 dividend will be 15.6p. And again, to repeat the point, 54th consecutive annual rise in our dividends. Now private equity has been something of a drag on the portfolio in recent years. We've had positive long-term experience from investment in private markets, but the last couple of years have been somewhat lackluster. It was a positive year for private equity in absolute terms. But given the significant strength we saw in listed markets, we did see, once again, private equity lag listed equity markets, and that did detract from NAV returns in relative terms. In addition to that, another significant point I would make is, we did have exposure to the Magnificent Seven cohort of stocks, which includes NVIDIA, Amazon, Microsoft and others, but we have less exposure in the benchmark. And that group of stocks delivered a return of around 67% in dollar terms on the year. So having a slight light exposure there, in Apple and Tesla was a slight detractor from our relative returns because the market was narrow. As I said, those 7 stocks, 67% return, materially outperforming the U.S., which in turn outperformed the rest of the world. And costs are down. So our Ongoing Charges figure 45 basis points that was down from 49 in 2023, a revised management fee arrangement with Columbia Threadneedle Investments delivers the benefit of lower costs through increased scale. So in more detail and decomposing that 16.9% shareholder return. You can see here the portfolio delivered a return -- or a portfolio of assets that we invested into delivered a return of 19.1%. Management fees and interest and other expenses detracted 0.3% and 0.5%, respectively. Buybacks, as I said, were accretive, buying in shares at a discount to NAV added 0.5%. There was a change in the value of our debt with a rise in market interest rates that reduced the value of our outstanding debt in terms of fair value, and that was positive. And then the impact of having borrowings gearing into a rising market, again, that was accretive to returns. So the NAV total return was 21% from -- for the year. The change in share price discount detracted 4.1%, and that led to the share price total return of 16.9%. In terms of underlying performance, I'll just draw out a few points from the slides, there's quite a lot of information here. What this shows, and I'll give a bit more granular detail in a moment is how much we have allocated to different areas geographically as well as how much we have in private equity. So for example, we have 41.7% of our underlying portfolio invested in strategies which are -- have exposure to North America, specifically. But our underlying allocation is actually higher, 64.5%. That's a function of those global strategies of 30.1%, having a global exposure by definition, and a large chunk of that component also being in the U.S. So if you look at the underlying allocation, you can see that 64.5% of the portfolio in North America, 20% in Europe and so on. Portfolio performance and index performance is in the last 2 columns. So you can see the highlights and relative low lights in terms of performance for 2024. In North America, we had very, very strong performance, 27.7% for the year in aggregate, that compared to the index of 26.3%. Within that, we've got exposure to growth stocks and value stocks, both our primary growth manager, and our primary value manager outperformed their respective indices significantly. Europe, while the index return was relatively lackluster in the global context, we had significant outperformance, delivered 11.3% against the index of 4.2%. In Japan, again, good outperformance, 14.9% against 9.7%, whereas there was some modest underperformance from our emerging market exposure, quite a small allocation. You can see, 4.9%, but also some underperformance from global strategies. And in that global strategy context, we've got, again, some growth exposure and some more value-oriented exposure. There, growth exposure did very well, 25.4% from our global focus strategy, whereas our more income-oriented and value-oriented strategies actually underperformed the benchmark, not out of line with expectations given the fact that growth stocks were in the ascendance once again, meaningfully outperform value, but nonetheless, slightly disappointed to see global strategies in aggregate underperform. Now if one took the portfolio, excluding private equity, we outperformed listed comparators. And when one adds in that return from the private equity component, which was just under 11% of our total assets, 9.7% return from private equity, that was quite a way behind listed markets, which globally did 19.3% last year. So that detracted from relative returns, as I said. So that gives a snapshot of the performance, what worked, what didn't work. As I said, strength in North America in relative terms and absolute terms, Europe in relative terms, Japan in relative terms, and some underperformance in emerging markets and global strategies, albeit some pockets of really strong returns within those areas. And private equity, actually a really good year, but lagging listed markets. In terms of our allocated exposure, again, lots of information on this chart. You'll be able to perhaps look at this in more detail on the playback if you have interest. But this shows you a few aspects. One, the fact that we are diversified in terms of our underlying strategies. The reason we are diversified is that by blending across a range of differentiated investment strategies that each invest in a slightly different way, and one can add returns while reducing risk. So there's more than one way in our view to win within global equities. You can buy cheap stocks, value tends to outperform in the long run. You can buy growth stocks and high momentum stocks that also tends to work in the long run. And you can buy high-quality companies, they also tends to work in the long run. So by blending across those different components with growth, quality and value attributes, and with strategies that have concentrated exposure, a very specific mandate in terms of delivery, we can add returns and smoother performance outcome for shareholders. So this gives you a sense of our exposure regionally and globally, and also within the private equity space. So again, just adding a little bit more details to that. We've got a few areas within the U.S. market that we have exposure. Some of that is managed by Columbia Threadneedle Investments. We also have JPMorgan Asset Management, who run our growth portfolio for us. As I said, very strong performance last year, meaningfully outperforming the Russell 1000 Growth. Barrow Hanley outperforming last year, they're a Dallas-based value manager. Elsewhere, a range of different strategies in global and also in private equity, where, again, we blend internal expertise to source and select funds and co-investments. But we also use third parties and specifically in the case of Pantheon, who run a bespoke program for us, and in terms of venture capital and growth exposure. And they provide us with access to preeminent managers in that space. So what did we do last year in terms of activity. There was a lot going on, we started the year with some real concerns about recession. There was very aggressive expectations in terms of interest rate cuts from the U.S. Federal Reserve, the Bank of England and elsewhere. AI, Artificial Intelligence remained a dominant theme. And the U.S. performance very, very strongly, outperforming global markets and growth, as I said, outperformed value. And I shouldn't forget to say that, obviously, towards the end of the year, we had a rather significant event in the U.S. in terms of the presidential election. And initially, that led to quite a boost to risk asset, equities and U.S. equities specifically. But obviously, since year-end, the picture there has turned somewhat. I'm sure we will have some questions on that. So we ended 2024 with more exposure in the U.S. than we started. You can see growth and value exposure there was higher at the year-end than at the start. We had less in Europe and emerging markets. And actually, in the early part of the year, we sold some European exposure. We also sold some emerging markets. We added to a global focus. As I said, very strong performer last year, 25.4% return. We also added to our global enhanced strategy as well. And private equity reduced slightly as a proportion of the overall portfolio. Private equity, we had net distributions. So we had more out of the portfolio than we paid in, in terms of that Columbia Threadneedle Investments component. But really, the reason that, that allocation went down slightly proportionately was really because listed equities performed so strongly relative to unlisted. In terms of our revenue and dividends in a little bit more detail, and repeating some of the points I made previously, final dividend is proposed at 15.6p. That will be an increase of 6.1% on the year ahead of inflation, not just last year, but 1, 3, 5 and 10 years and indeed, longer term. We had a very helpful increase in net revenue return per share of 7.5% last year to a new high. Our revenue reserves are extremely healthy. At the end of 2024, we held GBP 116.2 million in reserve before the payment of third and final dividends, and that equates to about 24.2p per share. So covered dividend, substantial revenue reserves, and that puts us in a very strong position to not only pay dividends in future years, but to pay rising dividends in the future years. And the Boards are clearly committed to raising dividends for shareholders over the long term as we have historically. Look-through exposure at the end of the year, including liquidity, including private equity in the left-hand side there, again, quite a lot of information on this chart, but it shows you that we do have over 60% of the portfolio invested in North America. We've got a small amount of liquidity, right-hand side there, listed equity exposure, technology and consumer discretionary are the two largest single components of our listed equity portfolio. Gearing. Gearing fell slightly on the year. We didn't borrow anymore during the year. We hold about GBP 580 million worth of debt. That was held relatively constant throughout the year. So the fact that our asset value rose and gearing in nominal terms was held constant means that debt at par fell and debt at fair value also fell. So gearing fell from just under 10% to around about 9% last year with debt at par and fell closer to 5% with debt at fair value. So we're modestly geared when one considers debt at fair value, I'd say, around about the 5% level. And I just want to reiterate, and those who have heard me speak, will know that every opportunity I do -- every opportunity that I have, I will remind shareholders that we have fantastically well-priced, long-dated debt. This shows about GBP 580 million worth of borrowing split over different maturity buckets, so we've got around about GBP 170 million of debt that is due in the next 10 years, around about GBP 150 million in the next 10 years, 10 to 20 and so on. And this shows the fixed rates that we pay for each segment to blend all that together and our blended cost of debt in fixed terms is about 2.4%. And we did borrow as low as 1.87% for 2061 borrowing. So we've taken that debt and we've invested into assets, equities and private equity. And if we make a return over the long term, which exceeds the cost of funding, that will be additive to returns. And given the hurdle rates we have in terms of borrowing rates, we think that's highly likely. Ongoing Charges, we do, as I said, seek to deliver not only strong and consistent returns for shareholders, but do deliver these returns in a cost-effective manner. And the Board engaged with the management company and renegotiated fees. We felt we already had a competitive fee rate, but that has been reduced further. So our Ongoing Charges fall -- fell, I should say, from 0.49% down to 0.45% at present. And part of that reflects the benefit of scale, but also a revised management fee arrangement. So from the 1st of January '25, management fees, which Columbia Threadneedle Investments will earn from F&C, which is based upon the market capitalization of the company. So I should point out that the interest of the management company and the shareholders are aligned in terms of market value rather than net assets. So when the discount narrows, it's good for us as a management company, and when discount widens, then clearly, we -- the market capitalization, all else being equal, will fall and we will earn less. So our interests are fully aligned there. We've reduced the tiering in terms of that 0.3% rates from GBP 4 billion to GBP 3.5 billion, and above GBP 6 billion, there's a new rate, which has been introduced. So when market capitalization is above GBP 6 billion, the value above that will be charged at 0.2%. We're not at the GBP 6 billion level yet. We're hopeful clearly to reach that level in coming quarters and years. At that point, there will be a new tier, which is introduced 0.2% for value above that level. And then next year, again, as we alluded to, that 25-basis-point rate will be payable on assets from GBP 3 billion to GBP 6 billion or from market value, I should say, from GBP 3 billion to GBP 6 billion. So that should be beneficial again to a further reduction in our Ongoing Charges, which have come down meaningfully in recent years. Just a couple of words on the discount. So we had a long journey from 2014 really to 2019, 2020, just pre-COVID to reaching a premium, and we issued shares in both those years. We have seen the discount widen. And as I said, we did face some challenges. I think it's fair to say in the sector last year, we did buy in 27.3 million shares, and we ended at a wider discount last year when we started, we have been committed to using buybacks. It is accretive to NAV, as I've demonstrated, and we are encouraged that the discount has come in since year-end. Performance from a longer-term perspective, again, quite a lot of information on this slide, a couple of key points. This shows you the shareholder return, the NAV return against different comparators, the AIC, which is the Association of Investment Companies, our closed-ended peers over these time periods and where we sit from a quartile perspective. So last year, we delivered a second quartile we're in the top 50% of competitors in terms of our shareholder return, but we're in the top 25% in terms of any NAV return. And those were meaningfully ahead of open-ended fund equivalents, but also we were ahead of benchmark. So to repeat the point I made, in one of the early slides, we're ahead of benchmark, we're ahead of benchmark at the end of 2024 over 1, 3, 5, 10 and actually 20 years as well. So that's why we're very pleased with that outcome, and obviously, very strong absolute returns as well. So I'm sure we're going to get into Q&A. I'll make just a few comments before we do take questions just with respect to where we are and notwithstanding all of the obvious uncertainty, our view on the outlook. Firstly, I would say the fundamental backdrop for equities is predominantly in our view driven by the -- for corporate earnings, interest rates and inflation and the corresponding risk appetite of investors. We still think that, that fundamental backdrop is reasonably constructive. What do I mean by that, essentially, at the present time, while there are risks, we do not envisage a recession in the U.S., we think that we will get a reasonable growth outcome and good corporate earnings in the U.S. and in the Europe and in Japan, and in Asia and in emerging markets globally. We're also likely to see further declines in interest rates. And again, that tends to be constructive for equity markets. So provided that, that backdrop holds and there are clear and obvious questions with respect to that relatively benign view, the outlook for equity markets is reasonably constructive. Now the risks are numerous and frankly, relatively obvious in many instances. One, geopolitical and political risks. Tariffs, we have seen the early moves from the U.S. administration, which have not always been either communicated or indeed to this point, implemented in a consistent manner, that tariffs are at the margin likely to reduce growth, raise inflation and clearly, a trade war will be damaging for growth. The U.S. will not be immune, the U.S. is a relatively closed economy, but it will impact on growth there if tariffs are imposed as indeed seems likely to be the case and is the case. In addition to that, the approach to trade policy that we've had thus far creates tremendous uncertainty, and that damages clearly business and consumer confidence. Businesses will have less confidence in terms of capital expenditure decisions, consumers, whether they work in the public sector in the U.S. or not, will have a lower confidence with respect to the outlook that the impacts their particular role and job in the wider economic environment. So there is a clear risk here that if the trade war escalates that, that will be detrimental to growth. But we hope that, that will not be the case, but it is the risk. We do remain vigilant. More positively, we have seen a real sea change in terms of the backdrop for the Eurozone in general, Germany specifically, growth prospects from that region look much brighter over the longer term. There's been an announcement of a plan to meaningfully increase expenditure -- fiscal expenditure on defense and infrastructure. That will boost headline growth. It will be concentrated in certain segments of the economy. It has led to a rise in the euro and in terms of market interest rates, which at the margin does tighten monetary policy in that area, but it is good news. And it does bode more positively for the outlook for Europe. And that does, I think, lend weight to the view that we have that the market is going to be broader in terms of performance, the equity market will be broader over the medium term than it has been in recent years. So last year, to repeat the point, Magnificent Seven, very, very strong performance, meaningful outperformance against the S&P of around 40% in arithmetic terms. I don't think that, that is going to be repeated in short order. We do expect better performance from areas outside of the U.S., some element of catch-up, but those areas, specifically Europe have run very hard, very fast in short order, but medium term, I definitely think the market will be broadening. For private equity, exists will depend to some extent on the risk appetite of investors and listed markets, clearly, we do expect that deal volumes and exits will increase. I should say, we did see some very good exits last year in our private equity portfolio from the co-investment side. One notable exit that we had was from pet supply retailer, Jollyes. We made a 3.7x return on that investment and over GBP 29 million return back to the Trust. So we're seeing some good exits coming through. It was a good year actually for private equity in absolute terms, and we're hopeful that, that will continue. I'm mindful of time, I'm going to pause there. I suspect that Steven has a list of questions he is armed with. So I'll pass over to you, Steven.

I have a very long list of questions here, actually. And my job is to collate as many as possible to get through as many as possible. You can still submit more questions though. I'll scroll through them. And you've answered the first one. There's a big theme of a lot of the questions, You've partly answered this. And it's people asking about global political instability, White House chaos, and in particular, you've got a big exposure to the U.S., a big exposure to technology. Do you think now is the time to make a strategic shift away from that sector and away from that country?

Well, what we've done year-to-date is a modest reduction in U.S. and equity exposure. I do think, as I said, that medium- to longer term, we will see a broadening in the market, and that does argue for a widening in terms of exposure, maybe some reduction in terms of U.S. going forward. I don't think the time is quite right to be making that shift right now. But I think the U.S. market, despite relatively extended valuations still has a lot of room for it. It is expected to deliver superior earnings growth against other developed markets this year and on a go-forward basis. Margins on many of the market leaders remain very, very high. And while there may be some modest reduction, again, are expected to be superior return on equity as well compared to other areas. So I think there's definitely a case that the market will broaden. I am not -- and again, events may change and things are -- both political and geopolitical backdrop is moving very quickly. But I am not of a view that we're currently in a bubble in the U.S. I'm not of a view that the valuations are so extended, that we are going to get a meaningful setback on that basis alone. And therefore, we will maintain, I think, a relatively heavy exposure in absolute terms to the U.S. while looking for opportunities externally. I should say our underlying managers clearly are looking to take advantage of current market volatility and to, again, within Europe, maybe pick up some of those -- have already picked up some of those defense stocks that have performed very, very strongly in short order.

Good. And on the theme of geopolitics, a very specific question here. Are you exposed to Russia, Russian markets in the Trust?

We do have two holdings, actually two Russian holdings, they are valued at 0, at the present time. And in the event that there is a change in terms of Russia's access to global capital markets, then there is scope for an uplift in those valuations. But as I said, we do have two holdings, currently held at 0 in the portfolio.

Okay. A question here Bea, there's been a lot of discussion of shareholder voting. Do you know what proportion of your shareholders actually turn up and vote?

We have a voting ratio of about 50% to 55%, which is actually relatively good for the sector. Our main peers are around sort of 26%, 27%.

Okay. Okay. Another question. The Trust has a net-zero commitment by 2050. President Trump has signed an executive order where the U.S. is definitely moving in the opposite direction. Are you reviewing that objective?

We absolutely did review that objective as a Board and discussed it to see whether or not we thought that it was still realistic. I think that at the moment, we believe that there is long enough until 2050 to still get there. The world does need to decarbonize, I mean that is very obvious. And so that's not going away whatever the legislation happens to be in the United States for the next few years. And you have seen that in our annual report, you will see in our annual report that our weighted average carbon intensity has actually gone up over the last couple of years. So we have always said to Paul, we want to be responsible investors, but we want our shareholders investment returns to be the first and foremost focus. And so at the moment, we believe that, that is still a possible balance to have. It may well change as we get closer to the 2050, but at the moment, we are comfortable.

Good. Thank you. So there are several questions on a similar theme here. One is, how are you taking defensive approaches to your exposure in the U.S. and U.S. tech? Do you hedge the currency? And the third question, I'm going to link with this is in listing your different exposures, there was no mention of U.K. value. Do you have any views on that?

Yes. Okay. I think that's 3 or 4 questions in one, Steven. So I'll try and remember as we go through this. So firstly, with respect to the U.S. and what we're doing to defend values. I think one of the best means of defense that one has in investments is to diversify. So we start from a diversified position. We do have exposure to U.S. growth stocks. We do have exposure to the Magnificent Seven, albeit as I said, we are slightly underweight the index of those areas. And we supplement and complement that with value exposure. And I think that starting point of not overly being overly relying on a specific segment of the market in the U.S. is signed and should place us in good stead in terms of potential volatility that is to come. As I said also in the presentation, we are balanced between growth and value. So we do not have a particularly large position relative on growth stocks right now. We have in recent years and it wasn't obvious from the presentation that I've given today, but I think it has been obvious in some of the prior presentations which shareholders may have seen, taken really quite an active approach to management of our growth and value exposure, having been meaningfully overweight our growth stocks and conversely meaningfully overweight value stocks in the U.S. As I said, we have chosen to balance up that exposure. I think growth stocks are likely to deliver superior underlying fundamental growth. But clearly, there's limited scope for disappointment in terms of valuations. So hopefully, that gives us a sense of a response to the first part of the question. Hedging currencies, we do not hedge currency exposure as a matter of course. However, we have historically taken the opportunity to hedge a portion of currency risk. At the present time, we do not have a position on in terms of a currency hedge. It is a very active and frequent discussion with the Board. And clearly, as a U.K.-based trust, that invest in global equities and a large portion of the assets in U.S. equities, we and shareholders would be exposed negatively to a sharp rise in sterling. That would be detrimental to NAV returns and actually would be detrimental to revenue. So it's a point of significant consideration. At the present time, I don't frankly see a compelling case that sterling is going to be a very strong currency against the dollar. And therefore, I don't think that's going to change in the short term, but it is something that we do pay very close attention to. U.K. equities, which I think was the third question. U.K. equities optically look cheap, which I think was the inference from the question. As to Europe, in fact, areas outside of the U.S., equity market in general trade. We can look at most areas, whether it's small cap or large cap stocks, U.K., Europe and Japan now, comparing them to the U.S. and reach a conclusion these areas offer value. I think there's a difference between the optics and reality. And while the U.K. and indeed Europe have performed better, and as I said, I would expect medium- to longer term some broadening out returns. I struggle to see a meaningful and sustained bull case for U.K. equities to outperform global on anything other than value. I don't see a superior growth outcome in terms of the corporate earnings backdrop. I do think we've got some domestic challenges here from a macro perspective. So where we're not meaningfully increasing U.K. equities, albeit I should caveat that with our European exposure is predominantly pan-Euro. So we delegate part of that decision actually to our pan-European manager who had a really, really strong year last year in terms of relative returns. Did I capture everything?

I think, you did. Well done, remembering all of them. So another question here is when you're switching between managers with different styles and the questioner mentioned value versus growth and internal and external. What factors drive that decision?

So in terms of the stylistic decision, so I think the way that I think about the way we construct the portfolio as a starting point is, as I said previously, it's more than 1 week winning global equities. You can value outperforms in the long run, growth and momentum outperforms and the quality outperforms. So the starting point of having positive exposure to value to growth momentum and quality is a good place to be. However, what factors drive a move in managers or a move in styles, so there's different aspects to that. One, from a manager perspective, essentially a loss in confidence in process or personnel and a lack of adherence to a stated philosophy and process. That doesn't happen very often because when you buy or have exposure to a manager, hopefully, and we do, do the diligence and the manager has a consistent and persistent approach that will, in the long run, drive some relative value but will fluctuate through time. So if you deviate from process or there's a fundamental change in personnel, then that will trigger a review. And obviously, flags for that can not only be people leaving, but obviously, performance outcomes being and different than expected. So last year, it's not surprising value stocks and our value managers underperformed the S&P, but they meaningfully underperformed comparator indices and there's some style drift, then that's a flag for us to reconsider. From a stylistic perspective, I think there's two aspects that we'd consider in terms of the value quality growth aspect. One is the macro environment, so what's happening in terms of inflation and interest rates and growth. And in simple terms and highly stylized terms, when interest rates are rising, inflation is rising, then that might be a better value for -- environment for volume stocks. And when growth is scarce, it might be a better environment for growth stocks. It doesn't always work out like that, but there is a cyclical element in terms of performance. And when you're heading into a recession, then quality might outperform or totally outperform. So there's a macro component, but there's also a valuation component, and that is a real live issue right now, whereby clearly in recent years, the value spread between growth stocks and value stocks has reached extended levels. And we're constantly, again, asking ourselves does that -- is that premium on growth stocks warranted? And that's come in quite a way actually in the last month or so, but that can be a trigger for a rotation between the different styles.

Well, thank you very much. I think our time is up. I'd like to extend my thanks, and thanks to everybody, to Bea Hollond and Paul Niven, and most of all, to you, our shareholders, for participating in this online event. Thank you.