Magellan Financial Group Limited (MFG) Earnings Call Transcript & Summary

Well, welcome, everyone. I'd like to thank you for joining us this afternoon at Magellan's live audio broadcast on our global equity strategies. We do appreciate how busy you are, especially given we're all trying to make sense of this whole COVID-19 thing. We also hope that you and your loved ones are staying safe and healthy. These are obviously unprecedented times. It's certainly the first time I've done a broadcast from my home. Having said that, for the last 3 weeks, all Magellan's staff have been working from home, but I'm pleased to say that the BCP is working seamlessly, and hopefully, reassuring you that it's very much business as usual for the whole, entire Magellan team. In today's broadcast, we'll be providing current observations on the impact of COVID-19 before addressing some of your most commonly submitted questions. Hamish, welcome, and thanks for joining us.

Perhaps you could talk us through your current views of the impact of COVID-19 on global markets?

Well, thank you very much, Frank, and reiterate all Frank's comments. I hope everybody's staying safe in this incredibly uncertain and somewhat troubling environment. In terms of our assessment of the economic and investment implications, it really depends upon 3 fundamental issues. The first issue is something I'll frame the duration of the output gap. The second issue is the policy responses to mitigate the output gap. And the third issue we're looking about is whether or not this crisis will result in a fundamental and lasting change in consumer behavior. I'm going to start with issue one, and that's the duration of the output gap. The output gap is the lost economic output a country will experience during a period in which the economy is effectively shut down. The longer the output gap, the deeper the economic damage. The duration of the output gap will largely depend upon the effectiveness of the health response taken by governments. In our assessment, there are 2 health responses that are currently being pursued. The first is a hard suppression strategy where you implement a total shutdown of the economy for, say, 6 to 8 weeks. This is likely to be the most effective strategy to minimize the duration of the output gap. Following a total shutdown period, the growth in new cases should be near 0. You then should be able to reopen the economy, provided you have very strong testing, contact tracing and monitoring to stop the spread of any new cases. For many countries, this may be proved to be hard to do comprehensively and effectively. External borders would have to remain close to stop any new imported cases. In our view, China appears to be on this path. The second strategy is a mitigation strategy where you implement a controlled social distancing strategy and key parts of the economy open as long as you can. This is likely to lengthen the duration of the output gap compared with the hard suppression strategy. Many countries are pursuing courses in between these 2 bookends. Our best guess that the duration of the output gap ranges from 8 weeks to 6 months, depending on the effectiveness of the various health responses. Based on the current measures being pursued by various countries, we would put China at the low end, U.S. and Australia in the middle and many emerging markets at the other end of the spectrum. The one area that could shorten the output gap is an effective therapeutic being found that could be used to reduce mortality in the most severe cases. This would enable countries to reopen with less fear. We'd be surprised if an effective therapeutic could be found and scaled globally within 6 months. There is, however, enormous work being undertaken on testing therapeutics, with trials being undertaken with very little red tape. We also note that Johnson & Johnson has announced it will commence trialing of vaccine in September. At best, it would only be available for small-scale deployment in early 2021. A vaccine is unlikely to truncate the duration of the output gap. I now want to turn to the policy responses being pursued. There are 2 policy responses. Firstly, the responses from central banks. Central banks appear to be taking 2 courses: reducing interest rates as far as practicable, i.e., making money effectively free; and they're ensuring the financial system has sufficient liquidity so it doesn't freeze. We're seeing massive injections of liquidity by central banks by scaling up of quantitative easing, providing liquidity support facilities to business, liquidity support to other central banks via currency swaps and liquidity to critical areas of the economy, like the repo markets and money market funds. We have been impressed with the actions taken by the major central banks to date. They're acting nimbly and with scale and speed. They appear to be heading off a liquidity crisis. They will continue to tailor their responses as issues emerge. There are some difficult areas which haven't been addressed, and they're likely to put further strains on the financial system. These include support for sub-investment grade corporations that have borrowed in the high-yield and leveraged loan markets and also the implication for loan values as many corporations are likely to have their credit ratings downgraded from investment-grade to sub-investment grade due to the economic fallout. Addressing these issues are difficult and will require a coordinated response from governments and central banks. The second policy response is a fiscal response by governments. We see that there are 4 possible packages of fiscal responses. The first is a response to compensate all businesses for 100% of the revenue loss or, in other words, 100% of the output gap an economy is facing. This would keep business balance sheets intact and enable businesses to pay all employees and key suppliers, like rent and mortgages. They could then prolong workers and restart when the economy reopens. In this instance, there would be a limited rise in unemployment despite a GDP hit, and activity would resume when the economy reopens. The output gap would be transferred to governments and to central bank's balance sheets via quantitative easing. This would be the V-shaped economic recovery scenario. No Western government is following this strategy. In our view, Singapore and Denmark are closest to the countries following this strategy. The second fiscal response would be to compensate businesses for part of the revenue loss and allow them to pay permitted expenses such as wages, interest on mortgages, rent, utilities, et cetera. Employees would be prolonged. The U.S. has a program to lend up to $10 million for companies employing less than $500 million and then pay permitted expenses such as I've outlined. Under this strategy, a large part of the output gap would be transferred to governments and central bank's balance sheets, and the remainder would be shared by society. This would save many businesses and enable them to restart. The combined -- this, combined with an effective mitigation strategy, would be the best chance of a U-shaped economic recovery. Germany appears to be following this strategy. The third fiscal response is to compensate workers for, say, 70% to 100% of wages may be capped at the medium wage. This strategy preserves personal balance sheets but not businesses who have to manage their fixed costs. The issue here is outside of wages, the remainder of the output gap would fall on businesses, landlords, utilities and banks. This is also likely to hit property prices. Even if many businesses survive, they would emerge with additional debt or balance sheets that are materially impacted. This would impact their ability to invest and employ as many would cut cost to survives even when the economy restarts. This strategy would head off the most dire economic outcomes but is unlikely to head off a deep and prolonged recession with materially elevated unemployment. This is a strategy many Western governments are currently pursuing. These governments may well provide additional fiscal support to preserve business balance sheets down the track, which would support a stronger economic recovery. The fourth fiscal response is effectively 0 compensation. Under this scenario, a country could lose 17% to 50% of annual output depending on the duration of the output gap. Many businesses will not survive, particularly small businesses. Property would crash and banks would face severe losses. This is the depression scenario. Fortunately, almost no developed world country is following this strategy. We fear many emerging markets will not have effective mitigation strategies and are not able to step in to fill a meaningful part of their output gaps. We are particularly concerned about Africa, Latin and South America, Southeast Asia and emerging countries and India. The third issue that we're looking at is changing consumer behavior. In thinking about the economic and investment implications, you also need to assess the likely impact this crisis will have on consumer behavior. This will impact the speed of any economic recovery and create relative winners and losers. We know that very significant events like a World War and the depression had very lasting effects on consumer and business behavior. There are areas where it is likely this is going to have a very lasting impact on consumer behavior. The cruise line industry would be an obvious example. It is possible the travel industry is going to undergo fundamental and lasting demand changes as retirees will probably not want to travel overseas for an extended period and businesses may determine that much business travel is inefficient and discretionary and meetings can be undertaken via video conference. In trying to think about changes in consumer patterns, we're asking ourselves numerous questions. Will people dine out less in restaurants? Will there be less conspicuous consumption? Are people going to change their hygiene habits? Will this lead to increasing demand for cleaning and hygiene products? Is there going to be a fundamental change in how people work? Will this lead to an increased demand for productivity software, like video conferencing? What is going to happen to the personal savings rate? Are people going to delay renovations on their houses? The extended change in consumer behavior will depend upon the duration of the output gap, the effectiveness of government and central bank policy responses and the speed and shape of any economic recovery. The situation remains fluid, and it's difficult to predict how the next 2 to 12 months will play out. We believe there's a range of outcomes for the economic recovery from a V-shape recovery, a U-shape recovery, a prolonged and deep recession, and at the pessimistic end, a depression. We believe that for many major economies of V-shape recovery and a depression appear the least likely scenarios. Outside a few countries, a recession, U-shape recovery to a deep and prolonged recession appear the most likely outcomes at this point in time. The good news is that governments and central banks are continuing to calibrate their responses to attempt to mitigate the economic fallout.

And so Hamish, given that backdrop, what are you actually doing in the global equity strategy and portfolio? And what changes have you implemented of late?

Well, Frank, this is obviously very important here, how we're mitigating our view of this fluid situation. We've taken action in the recent weeks to increase the defensiveness of the global equity portfolio and increase the cash and the strategy from approximately 6% to approximately 15%. We have been surgical in selling down positions that we feel are most exposed in this environment. All cash in the unhedged portfolios is held in U.S. dollars. To date, our portfolio has proven resilient to markets. We believe the portfolio has numerous advantages to weather this situation. We have approximately 60% of our portfolio in 12 companies and cash. Combined, this is likely to prove resilient through the shutdown and during a subsequent economic downturn. As I mentioned, cash is at around 15%, and in unhedged portfolios, it's all held in U.S. dollars. We have meaningful investments in defensive businesses that represent 26% of the portfolio that are likely to prove resilient in this environment, including 3 utilities: Eversource, Xcel and WEC. We have a position in the U.S.-based telecom infrastructure, our company, Crown Castle. We have investments in 3 consumer staples: Nestlé, RB and PepsiCo. And we have an investment in the Swiss-based pharmaceutical company, Novartis. In addition, we have investments in 2 enterprise software companies: Microsoft and SAP; and investments in 2 Chinese technology platform companies: Alibaba and Tencent. And we believe that these companies are also likely to be resilient in this environment. These investments represent 19% of the portfolio. So these investments in total and the cash represent approximately 60% of our portfolio. We then have 11% of the portfolio in 3 quick service restaurant companies: McDonald's, Starbucks and Yum! brands. These businesses face a challenging situation during the next 2 to 6 months due to the extreme social distancing measures being implemented around the world. We note that drive-throughs and delivery remain open in many markets. Post the shutdown, these businesses should recover strongly and should prove resilience to an economic downturn. We have 11% of the portfolio in 2 technology investments with more cyclical exposure: Alphabet and Facebook. Whilst demand for advertising will be impacted by the economic downturn, we believe this downturn is likely to be an accelerant to their business models, and they're very well positioned to weather the downturn due to their extreme financial strength. We then have 7% of the portfolio in 2 leading payment platforms: Visa and MasterCard. Whilst demand will be impacted by the economic downturn, we believe they have strong long-term prospects and are very well positioned to weather a downturn due to their financial strength. We have 6% of the portfolio in 2 luxury companies: LVMH and Estee Lauder. The demand for their products is inherently more discretionary in nature, and this will impact their businesses. The impact will depend upon the depth of the economic downturn. We note they own some of the world's strongest brands, have very strong balance sheets and benefit from sourcing around 1/3 of their sales from Chinese consumers. We think China is one of the best placed economies to recover from this situation. The remainder of the portfolio of approximately 5% is in a range of businesses, including brewing and hospitals. None of these holdings are significant and are unlikely to materially impact the performance of the portfolio. We're closely monitoring the balance sheet strength of each company in our portfolio, in particular, their ability to withstand an extended shutdown scenario. There are 3 businesses in the portfolio with meaningful financial leverage. These, in aggregate, represent 6% of the portfolio, and as I said, we are monitoring them and engaged with the companies very closely. Importantly, our portfolio holds few or no investments across industries that are the most vulnerable to this crisis. The portfolio does not hold any banks, energy companies, airlines, travel-related companies or property trusts. The portfolio has no direct exposure to emerging markets other than China. We estimate our indirect exposure to emerging markets, excluding China, represents 12% of the revenue of the portfolio. This is a complex, fast-moving and unprecedented situation, and we will continue to manage the portfolio to protect capital for our investors. As Warren Buffett has said to finish first, you must first finish.

Thanks, Hamish. And maybe we'll take some questions now that have been sent through. The first one, Hamish, when was it apparent to the Magellan team that COVID-19 was a serious global health and economic problem? And when did the team act on this?

Well, the first thing I'd say, Frank, is almost no one had a good reference point for how COVID-19 would play out, and particularly, in the early days. Initially, we thought this looked like a localized epidemic centered around Wuhan in China. And the spread appeared to be imported cases from Wuhan, in other places in China and very selectively around the world. We were analyzing -- I think many people were analyzing the SARS and MERS examples of the likely impact. And the assessment at that stage is the impact would pass, there would be short-term market volatility but markets would quickly bounce back. In the early days, we were trying to assess mortality figures. The best information we had was evaluating the Diamond Princess boat off the coast of Japan, and that was at the end of February. And the assessment from that, because it was a closed sort of vessel, it looked like the mortality would be sort of 6x the standard flu. Over the weekend, I think it was 22nd or 23rd of February, that weekend, the facts really then started to change as we started to see outbreaks in Italy, Iran and Korea, and we thought this would be a more serious event but still mortality appeared outside Wuhan to be very low. Then in the week commencing the 9th of March, we really started to crystallize our view that many major economies would have to start taking hard mitigation strategies to stop the spread. We effectively assessed that many nations would have to shut down, and this was at a stage where nearly no nations were shutting down, and we're assessing that this was going to become very likely. Our evaluation of the implications of shutting down economies was pretty pessimistic. At the end of that week, we decided to take further action to derisk the portfolio. This was a few weeks ago. At the end of the day, we evaluate the facts and the data as we have it. We tend not to speculate. We want to make data-based decision. Whilst we're wrong in our initial assessment that this wasn't likely to be a major event, we quickly changed our view when the data started to change. And we're comfortable with the swift portfolio changes that we've made to the portfolio and probably will continue to make to the portfolio as the facts and the data evolve.

Thanks, Hamish. Another question was what has genuinely surprised you in the current market volatility, if anything?

Yes. So it's a very interesting question. The extreme market volatility in terms of share prices hasn't surprised us. And it's really very correlated to the news headlines and the uncertainty that's created. By that, we're inherently wired to expect volatility in these circumstances. So even though when we thought this thing would pass, we were expecting a lot of volatility in markets. And we don't react to volatility. We react to how we think things are going to play out in the data. Largely, the different style of stocks had performed as you would expect them to perform in this market. The nondiscretionary retailers such as the supermarket chains have performed well, consumer staples have performed well. Our productivity software has performed well. Telecom has performed well. At the other end of the things, travel- and leisure-related stocks have been poor. Oil and gas has been terrible. Banks have performed poorly. Discretionary retailers and property trusts have performed poorly. So all that has sort of been in line. But one of the things that have surprised us, Saudi Arabia's position and their dispute with Russia took us by surprise. I think it took a lot of people to surprise, and particularly, the time in which the world is trying to cope with this to add the demand gap for oil but now we've now got a supply war going on as well. So that kind of added a dimension and added a lot of volatility to market. Also, the bond market surprised us as did some short-term trading around some stocks in our portfolio like the utilities. We would have expected that treasuries and long -- and government bonds would have performed very well. With a lot of demand, utilities would perform well. But actually, there were pockets where those prices were pretty weak, and that was because there was just this massive demand for cash. And assets that were cash-like were being sold to be turned into cash, and that was somewhat counterintuitive during a flight to safety. So in terms of this, we haven't been concerned by the volatility. We haven't been overly been surprised. But there have been a few pockets that have come up, which are things that you just weren't expecting to see.

Another question, what has been the best risk management tool in your kit bag through the whole COVID-19 pandemic crisis to date?

Yes. Well, the most important risk management that we have in our portfolio is our portfolio construction. And we've said this for many, many years that we design a portfolio to deal with the unexpected, to deal with the black swan event. This is probably as close as you can imagine to a black swan. And we often cited a pandemic as something that is unpredictable, a major terrorism, a bioterrorism event would be another event that we cite, and we've said is we design a portfolio to inherently run a lot more risk. But if you're fully invested, and we were fairly fully invested at the time when we went into this, that our portfolio should be resilient. And we have something called a combined risk ratio that's a measure of drawdown risk and volatility risk, and we capped our portfolio at [ 0.8% ]. We're extreme into quality and the portfolio has performed largely as expected. And it has, to date, proven to be pretty resilient versus what's happened in the market. And then as we have evaluated the situation, we have taken our risk ratio and our -- down further really due to the extreme economic uncertainty that lies ahead. And we're pretty -- we're comfortable -- very comfortable with the position we have. There are some things surgically in the portfolio that, of course, we're looking at under different scenarios. But the portfolio has -- and the portfolio construction has come through here. And that's very, very important. You can't just react after the event to events like this. So it's about having the right risk management in front of these events. And touch wood, we've been pretty pleased with how the portfolio has performed to date in probably the most extreme event that we've seen in the last 13 years, and I've put this beyond the event we saw in the financial crisis. This is far broader than the financial crisis was.

Hamish, the portfolio has brands and products that are of a discretionary spend nature, for example, Louis Vuitton, Estee Lauder. And consumers are now being reminded or forced to consider what are essential purchases, what do I really need, which may have an impact on consumer spending behavior for some time. Do you believe that consumer behavior will revert back to the other side of this fairly seamlessly? Or will it take a number of years to return? Will you retain a large position in these companies?

That's a broad question. Are we expecting consumer behavior to change? Yes, we are expecting consumer behavior to change. How deeply it changes is too early to call. It's going to depend upon the depth and the length of this crisis and also how the economies recover after this crisis. In relation to the names you say, which aren't really the pointy end of discretionary consumer brands, I would say that LVMH and Estee Lauder, I said it before, it's 6% of our portfolio. So it's very modest. As I said, we've been quite surgical here. We have sold down part of those holdings as part of our repositioning of the portfolio here because we do understand that they're more discretionary. Many of LVMH's products, in particular, appear to be in the aspirational category and really fit discretionary purchases, how many people really need a Louis Vuitton handbag or consume French champagne and cognac and things in this environment? The good thing about both of these companies is that they have about 1/3 of their sales to Chinese consumers. And we're pretty positive on the outlook of China coming out of this, but that's still 2/3 of their sales are exposed in other areas of the world. We're managing that discretionary risk. We may well sell them down further depending on the pricing and how we're evaluating the situation. But on the other side of these, these are absolutely outstanding companies and outstanding brands, and at the right price, we'd be happy to scale up these investments. They're going to come back over time at the prices, at the rise price that factors in the likely economic downturn in the discretionary nature. We would own these businesses for the long term at the price, so don't be surprised to see us hold less at the moment. And we could, at some point, in the future, maybe not in the near -- distant future depending on what happens to prices, scale up those investments again.

Yes. And so what are the long-term implications of these unprecedented levels of monetary easing and fiscal spending currently underway? What is the risk, a substantial inflation or other pressures emerging once the initial impact of the virus passes?

Well, what a big question this one is. Firstly, I'd say that this isn't today's issue. This isn't what we're grappling with today. We're very likely to be in a very prolonged period of near 0 interest rates. We've actually -- in the last few days, we've debated this separately with both Janet Yellen and Kevin Warsh, who are consultants to Magellan. The initial assessment is that inflation is unlikely to be an issue for many developed world economies. And the reason for that is we're likely to come out of this with a substantial shock to demand and a lasting shock to demand, and therefore, we're likely to have substantial excess capacity in the world. And there's probably going to be a few inflationary pressures emerging for many, many years. The emerging markets could be a very different story around inflation. But on the other side of this equation, the debt burdens that many countries will be facing, and you could think of some countries in Europe that already have high debt burdens, this could put very substantial market pressures on long-term interest rates as market participants and investors worry about the solvency of countries. The only way to then overcome a sort of spike in longer-term interest rates is effectively to transfer the debt burdens to central banks via quantitative easing and maybe to specifically target longer-term interest rates with quantitative easing programs like Japan did. This issue could again place very substantial pressures on the EU and on the euro. So that is an area to watch very, very carefully coming out of this. So in the short term to the medium term, inflation in many of our economies probably isn't the issue, but the debt burdens and the solvency of countries will become an emerging issue. What does that mean for longer-term bond yields? At the end of the day, we would prefer to stay around sort of safe haven status at places like the U.S. and Switzerland, Denmark, U.K., Singapore and even possibly Australia. Here, I'd be very wary of emerging market currencies. And I think we do have caution around Europe in this situation. So it isn't the first issue on our agenda today, but as we think about portfolio positioning and where we want to be exposed, it is a relevant issue about which currencies you want to be in. As I've mentioned, we've got pretty limited exposure to emerging markets outside of China, and we may even take action to further reduce that risk through the -- through portfolio management.

Yes. And again, Hamish, not necessarily today's story, but what will be your trigger point for deploying some of this cash and moving out of defensive stocks?

I'm glad you find that is maybe not this week's, but then we've just increased the cash in the last 2 weeks, and we're not really thinking about deploying the cash just at the moment. We really have to better assess how this is likely to play out, and we know it's a fluid situation. We really have to assess how deep and long the recession will be and truly whether or not the central banks are ahead of all the financial stability issues. We don't have a good reference point, and I don't think anyone does. We haven't seen an event like this in any investors' living memories. So you can't just say this is going to bounce back quickly because that's what happened after 2008, and through 2009, you had a strong bounce back. We think that could be a misjudgment of this situation. We have to really assess that there are other emerging risks in the financial system, high-yield credit leveraged loans, rating migration pressures as investment-grade companies have downgraded. This has likely put further capital pressure on banks and insurance companies. So I think we're going to see some rolling issues emerge, and we really want to see how some of those issues emerge and how the regulators and governments and central banks deal with them. We're going to be assessing the preemptive and reactive policy measures as these events unfold. I think they're highly foreseeable that they are going to unfold, but it's not that foreseeable of exactly how they will be dealt with. When we think we have a handle on the likely shape of the downturn and the stability of the system, we will look to deploy cash. But we just do not want to catch falling swords in this environment. We're focused on downside protection. We do have -- when people go redeploying cash, we just have to remind people we've got 85% of the portfolio invested in equities. We're very substantially invested in equities. And our equity portfolio is going to do just fine if we get a sharper economic recovery than we're currently envisaging. And preservation of capital is critical. And as I said in my opening remarks, as Buffett has said is to finish first, you must first finish.

Yes. And so post-COVID-19, what long-term changes do you forecast for the world? Maybe comment on supply chains coming back to domestic countries, deglobalization, potentially noninflationary pressures, how will this influence your future portfolio construction?

Yes. Another very broad question and one in which we've heard a lot around, especially very early on around supply chains. On supply chains, we think the reaction for a mass deglobalization and onshoring of supply chains is a misplaced notion. Moving all supply chains onshore doesn't actually help mitigate the pandemic risk. By definition, a pandemic is a global event. And it may, in fact, turn out to be China is one of the best places to have manufacturing located when you have a pandemic, because I think they're probably going to be one of the first manufacturing zones that actually come back, but let's see. They may have further outbreaks and that proves to be wrong. I think what we're going to see is a lengthening of supply chains and onshoring of warehousing to have more stock in that supply chain, which will really challenge this sort of just-in-time supply chains that we have, the super, super efficient supply chains, which had no real latency in them for a shutdown of production. I do think we're going to have some onshoring of strategic industries. Medical supplies is obviously an obvious area, or if they're not going to onshore it, I think they're going to move to a world of having strategic reserves onshore of medical supply. From the portfolio point of view, we want to make sure we capture the additional cost of expanding supply chains in our cash flows and think about whether this cost could be recaptured in pricing. I think this can be hard for many companies. So if you have a very subdued demand environment and we move into a sort of extended recession environment, it's going to be hard to take pricing to offset this so this will impact the company's margins. Portfolio construction, we remain positive regarding China relative to many other places in the world as well.

And again, a real challenge obviously for active management, I would have thought, Hamish.

It is a real challenge. Obviously, we're having to mitigate the risk and things, but you have to be very forward-looking about what plays out next and where you want to be positioned. Where you were positioned going into this may be very different where you want to be positioned coming out of this because the world could look fundamentally different.

Yes. Final question, Hamish, which industries do you think won't return to their pre-corona earnings after the crisis ends?

Well, overall, if we get a prolonged global recession, many companies are going to have materially lower earnings for an extended period, and particularly compared to what it would have been absent this. So I would be cautious about betting on a sharp bounce back and earnings will be back within 18 months to where they were before. I think that's an unlikely scenario. I'm talking in aggregate companies here. But of course, there are going to be winners and losers here. Winners are going to be either driven by super resilient business models. Supermarkets could be winners, people who are producing hygiene products here, but also consumer behavior that's going to lead to an accelerant in the demand for their services. Productivity software, we're all on video conferencing today. Much of Microsoft's business, I think, is very advantaged. Digital entertainment platforms. As I mentioned, hygiene products. So there are businesses that you can think about positioning that may well come out of this faster and stronger than before. So it's not all downside. We've got the very resilient company, supermarkets, consumer utilities and consumer staples where their demand should hold up pretty strongly. But interesting, we're going to be in a very low interest rate environment, and it may well be that their valuations increase coming out of this. So if your profitability stays up and you come out with lower interest rates, those businesses could be particularly valuable coming out of this. But there are also industries that appear to be in trouble. I've mentioned cruise lines before, travel companies, airlines, oil and gas companies, some mining companies, certain real estate investments. And I would also say balance sheet financial investments. Banks and insurance companies, all would be cautious on here for various reasons. But the important thing is there are winners here as well. We're going into a lower interest rate environment. The depression scenario looks very unlikely. The world's not going to end. We will, in 18 months, be past this virus. We would hope we'll mitigate this and the world can be operating well before that. But the threat of this virus ends, but the economic damage will be lasting. You have to be well positioned. And other things is markets can perform very well, well before the economies fully recover as well, which is an important message here. And I wouldn't get -- if I was people, I wouldn't get overly pessimistic and decide you need to sell everything, but I wouldn't get overly optimistic that your lessons in 2008 and 2009 are the same lessons you should have here. So I think just some realism is important here as well, but I'm confident with the portfolio and the changes we've made. We'll continue to make changes. I'm pleased that portfolio construction has led the portfolio to be very resilient relative to what markets have done. But we're still early days into this situation and expect volatility to continue.

Hamish, thanks so much for these insights.

My pleasure, Frank.

And thanks, everyone, for joining us on this live broadcast. We're going to be providing a recording of this later on our website. So feel free to share it with colleagues or clients. A reminder that many of you might have also received an invitation for an 11 a.m. webcast with Gerald Stack, our Head of Investments and Head of Infrastructure. He's going to discuss how global listed infrastructure stocks are faring in this market and what changes he's made to our infrastructure portfolios. If you haven't already registered, please do so on our website now. Additionally, we'll also be sending out the 2 broadcast recordings along with paper-based reporting by Hamish on the current crisis in a special quarter end update. We'll have that out probably on Thursday afternoon. Once again, thanks, everyone, for your time. Thanks for joining us, and we hope that you and your families are safe and well. Thanks.