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

Well good morning, everyone. And on behalf of the company, I'd like to welcome you today to the Magellan Financial Group's full year results presentation for the year ended 30 June 2020. I'm Sarah Thorne, and I manage the Investor Relations function here at Magellan. Today, we welcome you via Zoom, and we hope everyone joining the call is keeping safe and well. Today, the company's results will be presented by Brett Cairns, Magellan's CEO; and Kirsten Morton, Magellan's CFO. Hamish Douglass, Magellan's Chairman and Chief Investment Officer, will be joining the presentation at the end for a Q&A session. There are multiple ways to ask a question as part of the Q&A session at the end of the presentation. [Operator Instructions] Please note that today's presentation is being recorded, and a replay will be available on Magellan's website. We may also have media in attendance today. Thank you. And I would now like to hand to Brett to take you through the presentation. Thanks, Brett.

Well thanks, Sarah, and big virtual welcome to all on the call. And in particular, those down in Melbourne, we obviously feel for you in lockup. Hopefully, there's some light now starting to appear at the end of that tunnel. And if I could have the next slide, please. What I'd like to do is just quickly touch on some of the year's highlights before handing over to Kirsten to talk through the financial results in a bit of detail. I'll then come back and talk about the business in a bit more of an overview around some of the things that we've been doing. Importantly, our adjusted net profit for the year grew by 20% to $438.3 million, and that strong growth in adjusted net profit was really driven by a 26% increase in our average funds management across the year to $95.5 billion. Our funds management fees and services revenue grew 25% to, as it says there, the $591.6 million. That includes performance fees as well as underlying management fees. If you take out the performance fees, as we've said, which are lumpy and do move around from year-to-year, the profit before tax excluding those performance fees grew 27%, which is slightly ahead of the average funds management growth, reflecting the scale in our business. The dividend for the 6-month period is $1.22 per share, reflecting the final dividend of $0.916 per share and also our performance fee dividend of $0.304 per share, and that is 75% franked. That took the total dividends for 2020 to just under $2.15 per share, up 16%. A very important highlight of this year has been the strong investment performance, which I'll touch on further in my talk. With that, let me hand over to Kirsten, who can run through the financial results. And I'll pick up the business review once she's finished. Over to you, Kirsten.

Thank you, Brett. Overall, Magellan has had a strong financial year, underpinned by strong investment performance delivered by Hamish and the investment team. The group's adjusted revenue for the year was up 20% to $692.9 million, and that was mainly driven by an increase in management fees and services fees, which is in turn driven by a 26% increase in funds under management. Our crystallized performance fees before tax were $81 million with $41.7 million in the first half and $39.2 million earned in the second half. I do wish to remind everyone that performance fees are lumpy, and they may fluctuate significantly period to period. Other revenue was down 4% to $20.3 million. These revenues mainly comprise distributions we earn on investments in our funds and any realized gains or losses in our principal investments during the year. [ Ange ], I might get you to move to Page 4, if that's okay. As you can see, there is a 20% increase in our adjusted revenues, and that's fallen straight through to the bottom line. And the group's adjusted net profit after tax for the year is $438.3 million, which is a 20% increase compared to 2019. Adjusted net profit is the group's statutory net profit excluding certain items, and those items are shown on this slide on Page 4. And in 2020, they comprised 3 items: noncash items of $4.7 million, which related to amortization expense on intangibles in businesses that were acquired in prior years; $0.7 million related to unrealized net gains on our principal investments portfolio; and $38.1 million related to one-off transaction costs, which this year related to the Magellan High Conviction Trust IPO and the 6-monthly funding costs for the DRP discount, both our Magellan High Conviction Trust and our Magellan Global Trust. We provide adjusted net profit as we feel that provides meaningful performance information of our business as well as comparability year-on-year. Our statutory net profit after tax was up 5% to $396.2 million. And finally, diluted earnings per share increased slightly to $0.2183 per share compared to 2019. Adjusted diluted earnings per share was $0.2415 per share, which reflects a 17% increase on 2019. Now let's move on to the financial results of our core operating business, our Funds Management business, which is on Page 5 of the slide. Our Funds Management revenues for the year ended June -- 30 June 2020 increased 20% to $674.8 million. And overall, the increase was driven by a 20% -- 26%, sorry, or $119 million increase in management fees. The Funds Management expenses, not the group expenses, is what our market guidance is based on, and Funds Management expenses for the year ended June 2020 increased 15% to $116.8 million. That was in line with our 2020 expense guidance of $115 million to $120 million. At our interim results in February, we did guide that our expenses would be at the top end of that range. However, the impacts of COVID did result in lower travel-related expenses as well as lower employee expenses due to a prudent business decision to reduce bonus payments in 2020. This was offset by a decision to bring forward previously awarded but deferred bonuses into the current year. And despite the unprecedented environment that we are all working in, our business continues to operate efficiently with a cost-to-income ratio excluding performance fees of 19.7%, which is an improvement from 21.3% in the prior year. After adjusting for performance fees, the profit after tax of our Funds Management business increased 27% to $477 million. On Page 6 of the slides, there are just a couple of other comments I'd like to make about expenses. As we've previously discussed, we view the costs associated with strategic initiatives, such as the partnership benefits in our closed-ended funds, as investments and not day-to-day operating expenses. We, therefore, exclude expenses relating to our strategic initiatives from the Funds Management segment results when calculating dividends to shareholders. Our main operating expense, of course, excluding tax, is employee expenses, and that accounts for approximately 60% of our expenses. And we do expect some moderate growth in organic head count, reflecting the scalability of our business. And for the coming 2021 financial year, we expect our Funds Management expenses to be in the range of $110 million to $115 million. This is a decrease on the current year expense and primarily reflects the expected lower travel expenses and also the result of our remuneration decisions taken this year, as I mentioned earlier, due to COVID, those being bringing forward unpaid deferred bonus payments into the 2020 financial year and for 2020 bonus payments to be paid in full in the current year and, therefore, with no partial deferral period in future years, as they typically are. Turning to tax and dividends on Page 7 of the slides. The group's effective tax rate for the year ended 30 June 2020 is 23.1%. This is lower than the corporate tax rate of 30% as it reflects the benefits of our offshore banking unit license. As has been the case in prior years, in simple terms, the group's effective tax rate ultimately depends on the mix of overseas and domestic income and expenses, and this does fluctuate year-to-year. As Brett mentioned earlier, the dividend for the 6 months to 30 June 2020 is $1.22 per share, and that comprises a final dividend of $0.916 and a performance fee dividend of $0.304 per share. This will bring total dividends for the year ended 30 June 2020 to $2.149 per share, up 16% year-on-year. The dividend announced today reflects Magellan's dividend policy, which is to pay out 90% to 95% of net profit after tax on the Funds Management business, excluding crystallized performance fees; and with respect to the performance fee dividend, 90% to 95% of net crystallized performance fees after tax. The dividend will be franked at 75%. And as we've previously flagged, given our payout ratio and the interplay with our status as an offshore banking unit, dividends are likely to be partially franked. Our policy is to pay dividends promptly, and the dividend announced today will be paid to shareholders in 2 weeks, on the 26th of August. Now turning to capital management. The group maintains a strong balance sheet with net tangible assets of $925.4 million at 30 June 2020. The principal investments portfolio is a subset of the group's balance sheet, and it's an important aspect of the group's liquidity. Page 8 of the slides shows a summary of the principal investments portfolio, which totals $373.7 million, net of tax, at 30 June 2020. The portfolio includes investments in both Magellan's listed and unlisted funds. Turning to Page 9. Consistent with prior years, our aim is to earn satisfactory returns for our shareholders, and the Board has set a pretax return hurdle of 10% per annum over the business cycle for the principal investments portfolio. To date, the return has been achieved. And over the last 1, 3 and 5 years, the pretax returns are 6.5%, 13.6% and 11.4% per annum, respectively. Since inception from 1 July 2007 and excluding the group's investment in MFF Capital Investments, the portfolio has returned a pretax return of 10.9% per annum. And with that, I will hand back to Brett.

Thanks, Kirsten. Could we have the next slide please, [ Ange ]? But what I'd like to do is to start with a quick update on COVID. We transitioned to work from home, I think, very well in March. We're slightly ahead of things, not a long way, but slightly ahead, which gave us a bit of a head start in terms of getting people to work from home efficiently. We had a few teething problems at the beginning. But by and large, the business settled into working from home. One of the issues, and Kirsten touched upon this, is that we've maintained for some time now that there is a great benefit in having a very strong balance sheet for our clients and, therefore, for shareholders. And that really did shine through, I think, in March, when a lot of that volatility did hit. Hamish and I were able to focus on both the business, and Hamish was certainly focused on the investment portfolios and investment team, rather than sort of looking towards what actions we may have to take with regard to our own capitalization. And that allowed us to be very clear with our staff right at the outset that we weren't going to reduce anyone's hours, and we were not going to make anyone redundant as a result of the pandemic. And that really, in terms of when times are uncertain, in our view, it was very important to be clear the best that we could to reduce anxiety and make sure that the business itself was focused -- and the people in the business, I should say, are focused on the business and indeed clients. And I think the results from that period have shown that, that's to be the case. And I'd really like to thank all those that work at Magellan for their contributions and indeed their client focus. As part of this, and again, Kirsten did touch on this, and I tried to say this in the annual report, it's clear that the outcomes of this pandemic are very difficult to handicap. And we believe, and as a Board, it was very important that we did act prudently in terms of managing these risks going forward, both from an investment point of view, which Hamish and the team have done very, very well at, but also from the business. And we have elected to freeze salaries for this year. And then we also did pull back on some -- on bonuses. Hamish and I have waived our bonus in full, and as did a lot of others within the business and a few of the senior staff did experience meaningful bonus reductions in that. As part of this, however, we did -- we are very mindful, of course, that many households amongst the Magellan Group perhaps did lose an income earner in that, and we were very mindful of the cash flow of those households. So one of the reasons -- and that is one of the main reasons that we did decide not to defer bonuses this year and indeed bring forward those previously deferred bonuses to help out in those cash flows. So there were no bonus deferrals for this year. Overall, as I said, I'd just like to reiterate, I'd like to thank our -- all those at Magellan for their focus during this period of time. It was very clearly unsettling to have to upstart some moves to working from home. But overall, the business has performed extremely well and I'm very, very proud of the way that the team has pulled together. If I could move to the next slide, please, [ Ange ]. And very quickly, our funds under management, there's a bit of information on here. But a few key things is that the mix of our retail and our institutional as -- in a percentage terms have stayed roughly the same with around 28% in retail, and that's 72% in institutional. If you look at the management fee on average there, it's been stable at 62 basis points. It moved down from 65 to 62 as a result of a change in our mix, notably Airlie, at that point rather than a reduction in any fees. And our percentage of funds under management that are eligible for performance fees has stayed stable at about 33% or 1/3. Next slide, please, [ Ange ]. Very importantly, the investment performance, and Hamish and the entire investment team need to be congratulated, I believe. They've produced some wonderful results during this quite difficult period. The focus on investors and investor capital protection has been very important. You can see the results here across both the global fund, the infrastructure fund and indeed Airlie as well. And as I've said, I think John Sevior, Matt Williams, Emma, the entire team, the experience there has really shone through with the significant outperformance. And that bodes well in my mind, as that track record begins to build over the next few years. If I could move to the next slide, [ Ange ]. One of the things that's not apparent in those numbers, of course, and we've spoken about this in detail, so I thought it would be interesting to put a couple of slides in, is the downside protection that's built into the processes that we employ here at Magellan. This is for the Global Equities strategy. And you can see on the chart on the left that the downside protection is very significant in that regard. So for -- what this chart is saying is that for a, if you like, a move down in the markets, the Global Equities fund only moves down on average half that move down, and yet it manages to capture the upside in up markets. And that is very fundamental to both the design of the Global Equities strategy and its protections for capital for the investors over time, but it also feeds through to the opportunities to outperform markets over time, which I think Hamish has -- and the team have deployed extremely well. The next slide, please, [ Ange ]. In infrastructure, it's slightly -- presented slightly differently. If you look at the far column, the infrastructure index versus the broader MSCI World Index, unsurprisingly, has its own downside protection, infrastructure moves slightly differently to the broader market at 0.7. And the upside is about 0.6. But if you look in the colored slide there, the infrastructure fund has exhibited very good downside protection at 0.3. And these are very meaningful parts of our investment process, which do feed through to those results but more -- and very importantly, investor protections. I would note in passing, although not on these slides, that the correlation between our global infrastructure and Global Equities historically has been remarkably low. And these downside protections, coupled with that low volatility, is a very, very good underpinning if you're starting to think about designing a retirement income product. And I'll leave that there. Next slide, please, [ Ange ]. This shows our flows, both from an institutional and retail perspective. I would note that we've had a very good flows in our retail business this year. The chart also includes the IPO of MHH within that. But excluding that, we've had very solid flows into our retail business during the 12 months. Next chart, please, [ Angela ]. This tries to break out the impact of the performance and net flows essentially across Global Equities, infrastructure and Australian equities. I would say that given the scale of our business now, that the changes in our funds under management are more likely to be driven by net investment performance. This time, this year around, it's roughly balanced net investment performance with net inflows. But over time, we would expect that the investment performance and the valuation of markets would dominate those changes in flows. Next slide, [ Ange ]. As I said, the business, we believe, is well balanced. About 72% of our funds under management are in institutional -- from institutional clients, leaving 28% from retail. But if you then look at that from a management fee perspective, given the difference in the fee structures, about 55% of our fees are from retail, with the remainder coming from institutional. The institutional client base itself, we believe, is well diversified. There are over 140 institutions. There's clearly a tale to those institutions, as it's shown here. The top handful of clients represent around 20% or only 20% of our overall management and services fees. This chart has not changed too much over the years. We continue to add new institutional clients and build that diversity. And I would note, of course, that our largest client in that regard is St. James's Place. That relationship is deep and has been very, very productive for both, and we continue to see flows from St. James's Place, particularly as their business continues to do very well. Next slide, please, [ Ange ]. I thought it'd be interesting here to just update from a retail perspective to look at what has been the growth in unitholders in the listed side of what we've done. And of course, prior to the active ETFs, we had no listed unitholders, and that's now grown to just around 100,000 over 5 years. You can see the growth through both the active ETFs, the open-ended product, if you like, and also the 2 closed-ended IPOs that were done, MGG, the global trust, and also the High Conviction Trust that was like last year. For those that might have seen this chart before over the years, around the time that we did MGG, there was a little bit of switching, if you can see there, very minor in the scheme of it now. There was some small unitholder decreases coming out of MGE at that point to move into MGG. If I could move to the next slide, [ Ange ]. What I thought would be interesting, given we've now got 5 years' worth of data, to look at the daily change in our unitholders in these active ETFs, these open-ended funds. There's a lot of noise in this. But if you look at the daily change on a 20-day average, rolling average, across time, you can see here how that's moved over time. And indeed, that dip is what I was explaining around the IPO of MGG. But importantly, over the last year, on average, every day, we welcomed 55 new unitholders into our active ETFs. And I would note there around March, where the market did receive a lot of volatility, but we did not see redemptions in our active ETFs. We did not lose unitholders in that. And indeed, it stayed in -- when you look at that chart, relatively stable. Next chart, please, [ Ange ]. Just to recap on the High Conviction Trust, which we did the IPO back in October last year, which seems like a couple of lifetimes ago now. That raised $862 million. We -- as we did with the global trust, we provided investors loyalty units under a priority offer and both units under an IPO foundation units, which Magellan funded. The cost of those pretax was $53.4 million. We consider that to be a very, very solid investment, both in a return on a financial sense, but also in building resilience into the business. As Kirsten has pointed out, we exclude those costs from our Funds Management business and, therefore, from dividend payout from our dividends calculations. One of the other areas that we've undertaken is to try and continue to simplify and add some efficiencies into the way people can come into our funds. And one of the subtle and small steps, but I do think it does have some meaningful impact, is what we did with Airlie during the year. Back in June, a couple of months ago, the existing fund, Airlie, which was an unlisted fund, we made that fund also available on the ASX. Importantly, that was not a new fund. It wasn't a separate fund, and it wasn't a separate class of units. It was the same unit essentially. And what that really meant was we're bringing the unlisted and listed funds really together in 1 fund, in a sense. And that allows some great efficiencies from the investors' point of view in that if they wish to move from a, I would say, a platform with an unlisted holding into -- and to sell their units on exchange, they can now do that essentially by moving from one subregistry to another as opposed to actually selling a unit out of 1 fund and buying a unit into another, which clearly would create a tax event. So we believe that brings great efficiencies both to the investor and also to the way our business operates because, of course, now we only need 1 fund as opposed to 2. Next slide, please, [ Ange ]. So really, this -- we just thought it would be useful to sort of touch upon the journey that we've sort of been upon. And I think thinking back when we first sort of started to work on the active ETF, I'm not sure we had this journey in our mind, frankly. But we did think about allowing investors to have more choice and effectively made -- allow efficiencies that investors could actually access our strategies. And that really started, as it says here, with the active ETF that was done in March 2015. Although we had nothing to do with AMIT, one thing I would like to point out, that the introduction of what is called the Attributed Managed Investment Trust regime was a very important step in tidying up, in my view, a lot of the inconsistencies under the old regime, particularly asymmetries around tax and the way that these managed investment schemes can operate. And that's allowed us to undertake the most recent restructure that we've announced, which I'll talk about in a moment. The time line also shows obviously that we've spent some time thinking about the best way for people to enter into closed-ended funds and the partnership benefits that we've included in those. Notably, we've paid for the establishment costs of these funds in cash so that investors on day 1 would have their dollar invested in the underlying strategy from day 1. Building upon those partnership benefits in terms of offering discounted DRPs, in which we would then pay into the fund to avoid any dilution of that discount, is building what we believe to be significant partnership benefits, particularly for those who have long-term interests and perhaps are in the accumulation phase that can use those trusts and those characteristics that are part of the close-ended structure to investors' benefits. As I said, that's flowed through into the way that we've been -- brought the unlisted and listed open-ended structures together, as I explained with Airlie. And that's led now to really bringing this all together into 1 trust, which is the restructure that we announced a couple of weeks ago. And [ Ange ], I'll talk about that now. If you can move to the next slide, thank you. Really, what's happening here is that we're bringing our 3 Global Equities, separate funds, if you like, at the moment, into 1 trust. We're bringing -- the global equity fund is the unit, that open-ended unit. We're bringing MGE, the listed open-ended fund, into that trust, and we also are bringing MGG, the closed-end unit, into that trust. And that trust then will have 2 classes of units, one being an open class of unit and one being a closed class of unit. That open class of unit will operate, as I've just explained with Airlie, under the Airlie structure that we should be able to exit and enter, if you like, on and off market. And the closed class of unit will trade on the Australian Stock Exchange, as MGG does now under the listing rules. We believe over time, as this restructure works through, people will understand that this simplifies the investment proposition that we're offering here. It means now under the 1 trust, there's more, we believe, benefits in terms of the secondary trading of the closed-ended units because those units now and the open-ended units, there's less basis risk, as it's called, or less difference between the underlying portfolios. And that will help put upward pressure, if you like, or demand into those closed-ended units through various mechanisms, which would hopefully help in periods where those units could trade at a discount. As it says, we've made the extensions, and we think it's the very next logical step following all those other innovations I've just spoken about. [ Ange ], if I could move on. What this really boils down to is that the global fund, the existing unlisted global fund, those open-ended units, those in the global fund effectively retain those units, and they are the same units. There's nothing to do there if you're a global fund unitholder in a sense. But what will happen is that you will also have the ability, if you wish, to transact those units on market. MGE will come inside, in that they'll effectively swap their units, if you like, or exchange their units for a global fund units, and they will form part of the -- they will form the open class of units. MGG, the listed the closed-ended structure at the moment, people come inside the trust and we issue closed-ended units as part of that. That will result in the overall trust being about $15.5 billion, $15.6 billion, I should say, with about $13.3 billion in the open class of units and about $2.3 billion in the closed class of units. Next slide, please, [ Ange ]. As part of the restructuring, after that restructure, if that restructure goes through, we intend to offer all unitholders in the trust, both open and closed unitholders, a partnership benefit that they can apply for $1 worth of units for every $4 of units that they hold to buy more or to buy closed-ended units. We will, as we have previously, have a 7.5% partnership benefit, if you like, attached to that. And we're also looking to attach an option to those issue units that have been purchased. And that option will have terms that will be for 3 years, and it will be able -- that option will allow a holder of that option to buy more units, more closed-ended units, if they wish, at a 7.5% discount of the net asset value at the time that they exercise that option. Our plan is to make that option listed such that if someone would -- does not wish to take up, that they could sell that option to someone else on the exchange. Separate from that, all the unitholders that come into the restructure in the closed-ended units will also receive 1 option for every 2 closed-ended units that they hold. Those options are exactly the same terms as I've just described, and we believe over the time that these partnership benefits will meaningfully add to investors. And as in previous, Magellan will pay for the entire restructuring costs, the partnership benefits of the 7.5% additional units, as part of the capital raising and, indeed, the discount that's associated with the exercise of those options. When we will -- and we will fund those from existing financial resources and a corporate debt facility. I'll just briefly turn to the business itself and its -- what we've done over time to build in resilience and indeed some -- and diversity across the business. We've been progressively pursuing a strategy to diversify really our revenue streams over the years. I would note that our infrastructure business has continued to grow. It's now $15.9 billion worth of funds under management. Our direct retail strategy, as I've just talked about with the unitholders and the active ETFs now, this totals over 42,000 individual unitholders in there for $2.6 billion. The acquisition of Airlie back in 2018 netted $7 billion of funds under management -- in Australian funds under management. And as we've discussed, we've also developed closed-ended LITs as part of that broad strategy totaling $3.2 billion. The continuation of the restructuring of these retail funds, as I've just discussed, adds into this resilience. The launch of the Sustainable strategies that we've discussed previously, and I'll touch on that in a moment; and also the recent launch that we've announced today of the Core Series feeds into what we believe is building resilience and also diversity across our revenue streams. And lastly, we intend, as we've talked about before, to launch a retirement income product into the Australian market. What we thought we'd do is try and sort of quantify this a little bit on where we've been and where we've got to now on this sort of path. If we look back in 5 years ago, about 80% of our business was away from the Global Equities. It was largely infrastructure at that point. And the Global Equities part of that business was really set around the institutional business and also the advised retail business. And whilst we've diversified through that, as I said, we've got a large number of institutional clients, we've got a very large advised retail business as well they do exhibit characteristics and traits of more aggregated decision-making. Obviously, at the institutional side, large amounts of money are made -- the decisions around that are made by individuals, if you like, at each individual institution. And then as you work your way through into the advised channel, whilst it's obviously much more diversified, there are still aggregated decision points through modern portfolios and through dealer groups, et cetera, which, whilst very valuable, still exhibits those aggregation points. If you walk through to today and think about where we've got to with regard to infrastructure, away from global equities and, indeed, where our global equities have got to from nonplatform, i.e., more direct, if we add Airlie into those and also our closed-ended funds, we -- 28% of our business now is away from those institutional and more aggregated decision-making points. And we believe over time, and this has been something that we've been working on now, this adds broader resilience to Magellan's business and does help diversify across those range of businesses. And we continue to look and explore other opportunities in this regard. And of course, it helps diversify things such as key main risks as well. If I can move on. Part of that is what we've sort of announced today, which is the MFG Core Series. What the MFG Core Series seeks to do is really to leverage our existing research and our investment philosophy to really build portfolios of high-quality companies and undertake the management of those in a more proprietary, somewhat systematic approach in that. And what -- and I'll talk about this in a moment. What I think is not well understood is that we've been doing this now in infrastructure for well over 10 years and had a very good track record in the way that, that's been applied. And we've learned a lot over that time as well. And so it's really taking that learnings of what we've done with infrastructure and extending that into some other areas. Because of the way that is approached, it's not a fully active, concentrated portfolio, similar to what Hamish runs or indeed the general runs in the infrastructure business, it -- we believe we can offer this at 50 basis points management fee, which I'll talk about in a moment. And that, therefore, has a broader audience for those that are a bit more fee-conscious. Very importantly, what this does is it leverages the core DNA of our research process into what we believe is a very good offering for those that will -- do have fee-conscious constraints, if I could put it that way. But move on. So what we're looking to do here is to launch 3 currently in this series. One will be focused around international equities. One will be around ESG. And as I said, the Core Infrastructure Fund, which has been in existence as an institutional fund for the last -- for over 10 years. We intend that to make that available also to retail. These portfolios, as it says, are actively constructed and then are subsequently rebalanced in a proprietary, systematic process. We intend, as I said, to price these at a 50 basis point management fee that really, for those that are not seeking our fully active management services but would like, nonetheless, to be exposed to Magellan's research. We intend to launch these as open-ended, if you like, active ETFs, also on Chi-X. And hopefully, we should be able and in a position to do that, COVID -- subject to COVID and various things but hopefully by the end of the year. We do believe these are highly scalable and over time will help build further resilience into our business. The core infrastructure strategy that, as I said, has been going for over 10 years, which is an institutional strategy that we now are looking to make available through these core series, here is the performance of that. It's been a very, very well-thought through and very well-orchestrated strategy that's produced, we think, very, very solid results for our investors. And we look forward to making that available to people through this core series. The funds under management that has garnered in an institutional sense is growing very significantly over time, and it's now $8.2 billion. And lastly, I'll just quickly touch on 2 other initiatives as part of this. The sustainable funds, we've been -- we've had many inquiries, frankly, from retail in Australia asking whether or not that we could make that available. We intend to do that by the end of the year. That will be made available as an open-ended fund, again, available on exchange or off-market. And our retirement income product, whilst we were hopeful to try and get that launched prior to 30 June, COVID, of course, got in the way of that. We did, however, continue to make progress with the various regulatory requirements. Notably, we did receive a private binding ruling from ATO, which is important, to make sure that the tax outcomes within that structure are correct. And we're continuing discussion with the remaining regulators. And once we have that, we'll be in a position to launch the product soon thereafter. So with that, I might hand back to Sarah. There's been a lot discussed there, and perhaps we could pick up the rest in Q&A. Thanks, Sarah.

Great. Thank you both, Brett and Kirsten. We'll now move to the Q&A session of the presentation. We have Hamish, Brett and Kirsten all available. [Operator Instructions] And whilst we wait for people to raise their hand, I'll just go to a question from the Q&A from Nick McGarrigle at Ord Minnett. "Can you just walk through the structure of the global funds after the consolidation, Brett, namely how the liquidity works for the closed versus open-ended funds in the listed and unlisted form? And then just following on then from that, do we anticipate any cannibalization of retail fund in the take-up of the entitlement and options?"

Yes. Look, thanks, Nick. The -- as I said during that presentation, ultimately, once the restructure goes through, we're left with 1 single trust with 2 classes of units, one of being the open class of units and the other, closed class of units. What AMIT allows us to do is to effectively quarantine, if you like, the effects of the open class of units through redemptions and inflows into that class of units. And the closed class of units itself, it will act as though it's a closed class of units in terms of the impact of flows and those sorts of things. And so really, the liquidity on the closed class of units, because they are closed and there's no right of redemption back to the fund, hinges on the listing on the ASX, as it does currently with MGG. In the open class of units, of course, you can redeem those units directly back with the fund. But now because it's combined with the active ETF, you can also sell those on exchange as well like MGE at the moment. And that's got the internal market-making side of that -- part of that equation. And really, what we're saying is that by bringing those 2 classes of units together under the same trust, the interaction of those 2, because now, as I said, there's very little difference, if you like, or basis risk between those 2, that should help drive demand or help support demand over time in the closed-ended units and make the liquidity -- hopefully introduce more liquidity into those closed-ended units and, indeed, get it to trade closer to its net asset value, all things considered. I think the other question was, do we expect any cannibalization from the entitlement offer? We may see some of that. As I've discussed, we did see a little bit of that when we did MGG at the time. We'll see. We don't anticipate that to be material, but it is possible that some people could switch from some of our funds to take up that offer. Hamish, I'm not sure, would you want to add anything more or another?

Yes. Brett, the only thing I would add, and thank you, Nick, for the question, I think there's 2 reasons. So -- there's 2 reasons for the liquidity on the closed-end units. The open-ended units have unlimited liquidity, both on the application and the redemption side. It's an open-ended fund. We make a market -- or it's off-market redeemed, so the liquidity is unlimited in those units in both directions. But in the closed-ended units, it's subject to the markets, but it's also subject to the fundamental demand. And what we're doing here is we think we're creating a new element of demand in a core large fund from advisers who are interested in clients who want to be in the accumulation phase. So what we've done is we've lifted the DRP discount on our closed-end units from 5% to 7.5%. And so anybody who's interested in accumulation here, you're younger and you don't want to take the dividends, they can reinvest, and this yield is going to -- this trust will have a yield of 4% per annum paid semiannually. You can reinvest those distributions at a 7.5% discount by getting additional units. We think that is going to create, even in more portfolios, an allocation towards our closed-end units. So that will create more liquidity through natural demand. And the second thing then, by putting this all together in 1 trust, as Brett was mentioning, we were actually creating an environment in which the market participants create demand for closed-end units. And I don't want to get too complicated here. But really, what we're doing is, if you look at market participants who want to trade in 2 identical securities, the securities are identical in terms of their underlying investments are the same. And that happens often in markets that you can get pricing disparities in securities that are virtually identical. And it's something the markets, which is known as risk parity trade, it happens in a dirty sense in the DLCs, in BHP and Rio Tinto, where there can be discounts between them. And there is an industry that actually looks at that and hedges that risk. So to hedge that risk, people would -- if the PLC shares are trading at a discount to the limited shares, people would typically short sell the limited shares. And when you short sell, you get given the cash and you actually take the cash and you invest it in the PLC shares. And effectively, you have no real money at work other than you're trading at a discount. And when you're not exposed to what the BHP or the Rio Tinto share price does, you're only interested in the discount between those 2 securities. And by putting these all in 1 trust, we are setting up a basis risk-free trade for people, if they're interested, to play the discount within this vehicle, where they could effectively short sell the open-ended units because they're listed. They'll be a listed security. And obviously, they have to get access to borrow, and Magellan may be able to help that out. And if the closed-end units are trading at a discount, they could take the proceeds from that short sale and invest them in closed-ended units. And we would expect that to occur. And it's only by bringing all these trusts together and making the underlying investments identical that we create that market environment. Plus, I think it's very important that what we're doing on the DRP side of things, to create a fundamental demand -- additional demand, and if they're trading at a discount, so I think there will just be a market, if you're going to buy the same unit and you see one is trading at a discount to the other one, that will attract the interest just from normal people, not even people who are market participants, who may look at that more sophisticated but very, very well-understood trade where you've almost got 2 identical securities. So we think there's going to be more liquidity and more demand for the closed-ended units in this structure. And the proof will be in the pudding, but we're -- it's taken some time to get here with all the elements. But it's very simple. It's a trust with 2 units at the end of the day. And I think the units have some different use cases for the investors.

Yes. I would just add a little bit more to that. Some of the things we've already done in terms of -- and we know, for example, that scale is important in terms of liquidity. I don't think that's quite clear when you look at the ASX, that we've instigated a buyback within our closed-ended funds. We've made an iNAV available over our closed-ended funds. So there's a sort of -- it's updating every second now because the technology has got to that point. So there's a reference point in all that. I think all these things add up, including the structural changes that Hamish has just discussed that we're looking here. All these things add up to actually making the trading experience of those closed-ended units better in that way. And I agree, Hamish is right. I think that there are use cases for the closed-ended units, and we see that. Partially, we see people who would prefer closed-ended units because of their characteristics. Others would like the open-ended units. And particularly given that we can then introduce partnership benefits, as I said, we can't do that in the open-ended sense in the same way of offering a discounted DRP, we can do that in the closed-ended units. And that I agree with Hamish that it allows people to think about long term, whether or not that might be the right place to have a long-term accumulation strategy. So all those things add up in my mind. It's just not one. I think it's all those things that add up to, as I said, put a bit of -- add some more gravity, if you like, to bring that trading price back towards its net asset value.

Thanks, Brett and Hamish. I'll just move on to another question from Nick that's been commonly asked. "Can you comment on the target market retail for the core series? How do we anticipate the core series will sit against the active funds? Do we expect the same sort of advisers or investors? And do we expect any cannibalization from our existing active funds?" Brett, I'll hand it to you.

Yes. Look, actually, I might have to -- give that one to Hamish because I know he's got a view on this. Hamish?

Thank you. It sounds like a hospital pass, Brett. Well on the core series, I -- one, we're not worried about the cannibalization at all. And I think that's the classic incumbent's problem that they would get worried about cannibalization. The only cannibalization, if it comes, is from investors who are genuinely interested in lowering their management costs. And if we don't have a solution, that money is most likely going to leave us in any event and go somewhere else. So there could well be some switching from our -- for the active funds into our -- into the MFG Core Series funds. But that doesn't worry us at all. The more important issue is we are dramatically increasing our addressable market. There is a very large part of the market that isn't fully passive and what is known as smart beta. We can debate how smart some of the smart beta actually is. I call it revision beta, much of it. But there is a massive and growing market in that space that we are not participating in. So even to the extent we cannibalized a little bit where people switch, we are going to be playing in a much larger pool. And I would say that this is going to be accretive to Magellan materially over time, even if there is a little bit of cannibalization. And typically, incumbents get so caught up in cannibalization, they completely miss these opportunities. What is their case? In the advice space, people construct both active models and low-cost models. So a financial planning or dealer group may offer their advisers 2 different choices, a low-cost model and a sort of standard model in there. We are, in most instances, not considered in the low-cost model. Normally, sort of passive funds and smart beta funds are sort of included in the low-cost models, and they've been growing in significance. We've got very, very high share in the standard models but very patchy share in the low-cost models, and we would expect that we're probably going to get some good traction in the low-cost models where we're really not participating at the moment. And we're deliberately putting this under a sub-brand. We are wanting to differentiate that this isn't a fully active product. It's a different product. It's a bit like BlackRock, having the BlackRock active products and having no shares. We're going to have Magellan, and Magellan stands for fully active products. Airlie stands for Australian equities. And MFG Core Series stands for these more diversified, more systematically constructed with all Magellan's research intellectual capital sitting underneath them. But if you're worried that this is going to lead to a poorer economic outcome to Magellan, that's not going to happen. And I've also seen some people going, "Is it going to lead to margin decrease in the businesses?" I have to say, these people just don't understand our business if they think it's going to lead to a margin decrease. All I can tell you, this is a higher-margin product. Don't worry about the 50 basis points. That's not our margin. Our margin is our revenue less our costs, and all -- these products will have less than a 20% cost-to-income ratio on them. So this business will be accretive to our operating margin. The basis points we earn on FUM is, if this is a large amount of fund, the profit margin on the revenue is very, very attractive in this business for us over time. So it's accretive to our actually economic margin. The basis points we earn on a product, I think, is a misnomer. And we've never seen any fee decreases on the individual products that we have. The only reason that moves around is just mix, but the mix isn't -- hasn't led to an increase in our expense ratio. If anything, our expense ratio keeps going down because of the operating leverage we have in the business. And this will add to the operating leverage in the business in time. So overall, we'll see what happens about the traction. But we want to participate in this space. And as I say, it's materially increasing our addressable market.

Yes. I would agree with that. And I did say you had a view, and you do. I think that's right. And we've always maintained and we've always known that there's a, as you say, an addressable part of the market that we're not considered for because of -- people do focus on those fees. And I think that, that more than outweighs if there is any cannibalization within that. And I couldn't agree with you more, the scalability of this is very significant.

Thank you. We now move to some questions on the line. I'm going to read out the last couple of numbers on the line, and I'll ask you to speak. So for the number ending 1684, if you could just introduce yourself and ask your question.

Can you hear me okay? It's Andrei Stadnik here from Morgan Stanley.

Yes. We can hear you. Go ahead, Andrei.

Well I mean, I wanted to ask 2 follow-up questions on the core funds. And actually, I've got kind of another question maybe on the listed funds. So look, are there going to be any performance fees on those core funds?

The answer is no.

Got you. And then just thinking more broadly in terms of differentiating the core funds versus the count for the active funds because, for example, with the infra products, it seems that the core funds actually outperformed the regular active product over the last 5 years. So in terms of differentiating, I mean, what can you do here? Like, for example, with the partnership benefits, will those participating in the fully active funds enjoy future partnership benefits, whereas the ones in the core funds would not? Or will there be other differences in terms of the marketing, the PM access, the -- and different support structures? Because -- and I appreciate that you definitely protect -- the addressable market is a lot wider. But in terms of having that real differentiation in service, how are you thinking about that?

Yes. I think Hamish touched on that we have branded this separately. In terms of partnership benefits, they -- in our minds, they really are trapped around, as we talked about, closed-ended structures. These are open-ended funds in that regard. So the ability to offer DRPs and those sorts of things at discounts that we would fund is really not available in that sense. In terms of portfolio manager, this does not involve Hamish. It involves members of our research team that have put this together and who will be managing this. They will have access to that. Our distribution team will work, as it does with our current offerings, to offer these out. So it is a different proposition in the sense that it's not a concentrated, actively managed portfolio that are -- that Hamish or, indeed, Gerald and the other guys are focused on in that regard in an actively managed, fully actively managed sense. But it does have a PM. It does have an oversight. Importantly, I think, most importantly, if you like, it is fishing in the same pond, if you like, from a research point of view, that the characteristics and the research that we've done as a firm to build an underlying research base of companies, these portfolios are constructed from that. And that's very important, linking back to what Magellan does. But from a process point of view and from a portfolio construction point of view, these are going to have something like 70 or 80-odd stocks versus the 30 or so that are in the actively managed portfolio. So they are differentiated, Andrei, in our mind, very much in that regard. Hamish, I don't know, do you want to add anything more to it?

Yes. I would say that we have thought about this a lot about how this interacts with our investment team. The international equity strategy has a completely different PM on that strategy to myself, myself and Stefan and Chris and Arvid, the global equities person. Vihari Ross, who runs research and before that ran franchises, who runs a whole lot of this, but she is the portfolio manager on the international strategy. And Vihari will be fronting that with our BDM team. So our BDM team will be talking to advisers and others. And people who are interested in this product, they're interested in this product, and Vihari and international equities, or just representing the whole product, will be fronting that. A portfolio manager and the infrastructure team will front this, which won't be Gerald. And there will be a portfolio manager who isn't Dom Giuliano, who is running our active strategy, a different portfolio manager, who's been working with Vihari, will front the ESG strategy here. So there is going to be different portfolio managers who are funding each of these products who are different from the people who front the Magellan fully active products and who are actually running these products. So there won't be confusion at all there. And I would say -- and people know exactly where their time is. The only area where we may be overlapping is the analyst on Microsoft may do -- be available on a road show to talk about that with Vihari, and that same analyst would do a road show or do some stuff on the active side because they're the expert on Microsoft, for instance. But likewise, we could use a video with Microsoft talking about Microsoft for both audiences here. And we could brand it MFG Core Series, and we could brand it Magellan. So it is actually very, very synergistic with our business but clearly delineated in terms of who are the front people who are looking after these products.

Yes. I wanted to ask a second question, just around the restructure of the global fund -- I mean, not the restructure. I mean, what you're doing is obviously very innovative. You're moving the whole back book to listed -- to a listed structure, facilitating much easier access for everyone. Is it -- I mean, in terms of kind of longer-term benefits, is your thinking here that you're investing in your brand and that you're also preparing for potential off-platform future, where the role of wealth platform diminishes and you see more and more investors wanting to transact more simply through the ASX itself?

Look, that's not a driver, Andrei. I think what we're really solving for here is the client experience within this. If there is a move from those platforms on to the ASX, one of the barriers, of course, to that is if you need to effectively sell 1 fund and buy another and crystallize a tax event. What really -- what we've done with Airlie is because it really does boil down to a registry issue in many respects, is to really solve that problem by effectively that 1 unit is just moving from one subregistry to another. It's not a tax event in that sense, and that becomes available on exchange. So to some degree, it does free up that movement from platform to exchange. But that's not the reason that we -- the underlying reason we did that. We're looking to provide efficiencies for investors generally. It could facilitate that move that you talk about, but platforms themselves obviously offer other services in terms of consolidated reporting and those sorts of things as well. So it could facilitate that, but it's not the driver of what we've done.

Thanks, Brett. We'll move on to a next question. Can the caller ending in 4321, please introduce yourself? And you can be free to ask the question. 4321? Okay. We'll move on to the next question from the caller ending in 549. Please go ahead and ask your questions. Okay. We'll move on to the next question ending in 6300. Please go ahead and ask your question, if you could introduce yourself.

Hello? Yes. It's Tony Mitchell from Ords. I just wanted to ask your view on the fact that the currency has now gone up to $0.71 against the U.S. dollar. What impact did -- will that have on your results for the coming year, if it stays like that?

Look, we're -- our funds under management are affected, obviously, by the currency. The average funds under management of the time are as a function of, obviously, the market -- the underlying market performance and also the FX in that regard. So if the currency does increase, that obviously pulls back our A dollar funds management in many respects. But it also depends on the performance of the underlying markets. So I wouldn't read too much into that at the moment in terms of what its impact is. Hamish, I don't know, do you want to say anything from an investment point of view?

Yes. Well I would just say in relation to that, we give our funds under management every month that marks to market for the investments plus the currency, and our current funds under management at sort of $0.72 is higher mark-to-market currently at the moment than our average funds under management were last year. If the currency kept rising and markets didn't rise at all, that would obviously be a negative to our business. We get a very small offset. We've got some U.S. dollar costs, which would be less in Australian dollars, but that's not material. One, we've got such low cost to revenue to start with, and then it's only a small proportion of our costs that are actually in U.S. dollars. So it's really a revenue story. But largely, the gains in markets have more than offset the currency in the last 6 months. But if the currency kept rising from these levels, then it would have an impact if markets didn't go up correspondingly. But typically, the Australian dollar is quite correlated with markets, and it doesn't compound markets comp. So over the long term, it doesn't have much of an effect. But in the short term, if the currency went up and the markets went down, that would be a negative. But often, if markets go down, the currency goes down, and it kind of offsets each other.

Thank you. Our next question comes from the caller ending in 1655.

This is Russell Gill with JPMorgan. Can you hear me?

Yes. Russell, please go ahead.

Great. Two questions just on the core series. When you first talked through the core series, you said the existing infrastructure strategy or the systematic strategy targets each of those. And then this new launch is very much targeting, I guess, retail model portfolios. You talked a little bit about the TAM. But is the broader aim of this, I guess -- longer term, you've got a very large offshore institutional business. Is this something that you could push, I guess, offshore in a larger addressable market even longer term for the product?

The short answer is yes on that. So yes, the attraction of this style is, I think, we've sort of demonstrated that through the infrastructure, as you rightly point out. We're launching these at the moment, as you say, into the retail market for the reasons that you've outlined. But of course, it does have applicability institutionally, notably offshore as well.

And then 2 quick questions. Just I might have missed it. I do apologize if you did say this earlier. Just on the large domestic fund restructure, are there, I guess, individual tax consequences for unitholders as the restructure occurs? And then just a second question, maybe to Hamish, on your retirement income product. When it was originally announced and launched a couple of years back when you did the cap raise, is that money still parked to the side, ready to be allocated if and when that does launch, given that this could be a big expense coming from this restructure? And then also on that retirement product, is the holdup in the retirement product just a timing issue around the regulatory approvals? Or is it more of an impact that there's obviously been a lot of dividends being deferred from high-yielding companies in the last 6 months, and it's a timing, I guess, on an asset allocation rather than a, I guess, procedure or regulatory issue?

I can -- I'll pick up on both of those. So on the first one, the restructure, and you'll see it when all the documents come out, but it's a unit-for-unit exchange essentially. So there's no sort of tax impact from the restructuring and consolidation in that sense, if that's what you're asking. On the retirement side, we've obviously got our cash flow projections around both what we're looking at on the restructuring, so planned uses of capital around retirement, et cetera. That's built into what we're doing. So that's catered for in what we've projected. In terms of the product itself, it's really working through the regulatory side of things. It's got really nothing to do with the underlying portfolio asset allocation or any of those sorts of things. We were hopeful, as I said in February, that we could hopefully get something launched by the end of June. Of course, COVID got in the way of that in terms of working our way through many of those regulatory requirements. We did, as I said, private binding from the tax office, which is quite important in all that. And we continue to work with the other regulators. So it's really working through those regulatory requirements. We've done a lot of work to prepare and be organized around what we need both from -- as you say, from a funding point of view requirement but also just generally setup and those sorts of things. So we'll see as we work through those requirements from the regulators, and we'll launch as soon as we practically can, having obtained those necessary regulatory approvals.

Thanks, Brett. We'll just move on to another question and from a caller ending in 822.

It's James Cordukes here from Crédit Suisse. Just a question. There's been a number of articles over the last few months suggesting Magellan has got some involvement with an investment banking start-up. Are you able to make a comment on that?

And I'm happy to go. If we've got anything to say, you'll be the first to hear it.

I guess -- and yes, slightly related, slightly unrelated, I mean, more broadly, managing unlisted assets is, I guess, an attractive segment of the market. There's long lockups. There's potentially less competition from passive. Is that a segment of the market that Magellan would be interested in?

Well I'll answer that. Look, we'll never say never. But it needs to fit in with what we've been looking at. And one of the issues that we have in -- when exploring a number of these is the distraction that would bring to our current business. We don't want to distract from, obviously, what we're doing. We want to do what we're doing very, very well. The complexity that would bring to our business in terms of various risks and regulatory requirements, so whilst it's not an impossibility, it's not something that we've found that we could accommodate. We've certainly looked at those sorts of things. But to date, we've not found the right mix of that. Hamish, I don't know, do you want to add something on to that?

Yes. Yes. We've thought about this a lot over many, many years. And the thing about unlisted assets, it's actually quite a different skill set. It's much more operational. It's probably a lot more financial. It kind of sits where private equity sits, where investment banking sort of skills sit. It kind of attracts different styles of people as opposed to pure listed equities side, and it tends to be much more people-intensive because you're involved in the operations. You're on boards of companies, et cetera, in monitoring the investments in a prudent CapEx and all sorts of things that you're doing in those assets and the acquisitions side of those assets, dispositions of those assets, the capital raisings associated with doing debt issues and things with those assets. So you need quite a broad skill set to do that, and it seems to be a lot more capital- and people-intensive for the business. And we wanted something that's simple and scalable in our business model. And frankly, private equity investment banking is kind of different to the culture that we have in Magellan as well. So you have to be careful how you mix cultures and whether that actually, the story is part of the magic that we have at Magellan. But there are certain asset classes. Infrastructure, we understand well. There's a lot of assets in unlisted infrastructure, and there's been businesses for sale in unlisted infrastructure that we could have bought. But for various reasons, we've decided, "Let's stay focused and stick to our knitting here." And if we're ever going to do something here, it would probably be in partnership with somebody else or something where we could add something. But within Magellan, it's difficult and it's not very scalable either in that world. I think you just have to be really focused on what you're good at and what your skill set is and not just calling something infrastructure and thinking just because it's called infrastructure, it's the same thing. It's not the same. It's not the same thing. And what Macquarie does really, really well there in unlisted infrastructure, I'd argue we probably do better than they do in listed infrastructure, even though they've got some capability there.

Okay. Thank you. We might just go through one more question on the phone. I think we'll try again with the caller ending in 549.

It's Brendan Carrig from Macquarie. Sorry for the issue the first time around. Just a quick question on the retirement income product. So since sort of the last update, obviously, the markets have had a material sell-off, and we've moved into a much lower interest rate environment. So I'd just be interested to get any comments you might be able to provide as to how that product would have performed during the market sell-off. So was it sort of in line with expectations in managing that sequencing risk that you've talked about in the past? And then as we've moved into this low rate environment, has the product increased its relative attractiveness to the likes of annuities and bank term deposits that it would be competing against, given obviously the relative returns on those products has come down? So I'd just be interested in any comments you can provide on that.

The answer is yes on the first part. We do and we have been running a portfolio, if you like, tracking this. And it has performed as we expected through this last period. And it has helped, albeit it's a relatively short period, on that, as you'd rather point out, the sequencing risk part of that. It is a longer-term product in that sense. So the relatively short time in that context gives us some information, but it's clearly not determinative across that. But we do believe that there is a real benefit in the way that we're thinking about this. In terms of the general sort of competitive landscape on this, I think you're right. I think it does mean that this approach that we're doing has probably become a little bit more valuable in the sense that the opportunity costs of cash and these other investments is quite large now. So I do think that you're right. The environment is somewhat conducive for this type of approach. And to date, from what we've seen and what we've tested and what we've obviously modeled and what we're actually seeing live, we do believe it's adding significant value.

And Brett, I would say is, if we could pick out a time in the last 30 years to launch this product, it would probably be today, if we could. And I'm anxious to get out there but very mindful that we have to go through the final regulatory hoops. Whenever you do an innovation that no one else has ever done before, and the product will look simple at the end, but some of the innovations underneath to make it work, that takes time. The simple -- single unit structure probably took 18 months, Brett. And even when we thought we were through it with one of the regulators on that very simple structure, at the last moment, the personalities changed, and we had to go back through to get approval. And we've done a number of things with active ETFs. So that took some real time, and it's exactly the same thing. But we are very advanced, and we've had discussions with all the relevant regulators on all the issues for an extended period of time. I think COVID probably slowed us down slightly in terms of just how we -- how people could work and how they could interact during the period. But I think the time to do this with interest rates being at 0 and more and more people now moving into the retirement phase because of baby boomers, you couldn't think of a higher use case. And as far as we're concerned in what -- exactly what we're doing and what we're trying to bring to the table and the style of what we're doing, there's kind of no competitors anywhere in the world who are doing exactly because it's new.

Yes. Yes. And that -- therein lies part of what working through regulators because a lot of the rules, if you like, and the approach and the structures have been developed around existing type products. And then when you look to -- I mean, this happened when we did the ETF, when you look to try and do things in a slightly different way, it doesn't quite fit with the structure that's already in place. And we found that with the tax, frankly, we have to readjust some things to make sure that the tax worked within the framework. So these things are -- just take time, and you need to work through it. I would say, I certainly agree with Hamish on the demand side. We've also had some independent research look at this product, and they also believe that it's -- it does add value to people or utility and value to people over time. So look, we're very comfortable where we've got to on the product. It's tested obviously well through this period. As I said, we believe we understand how it does add something to the equation. And that -- and Hamish is just right. It does approach it in a different way, and therein lies part of the challenge in making sure we can get that to fit in the existing regulatory environment.

Great. Thank you. And we'll just wrap up with one final question coming in from the Q&A. Brett, this is probably for you. "Does the restructure mean you will restructure your hedged and infrastructure funds?"

Look, we've not made any sort of announcements clearly on that. But I would think that over time, and that's a question for the Board obviously as we work through this, but it would make some sense over time for us to look at those products. It does make no sense in my mind to have 2 of those listed and unlisted that they can be brought together as 1 fund. And obviously, that's -- it adds some efficiencies from our side of it. But more importantly, as we've discussed, it adds, I think, some great efficiencies with our investors. So over time, I suspect that we will get to that. But that's not on the agenda right at the moment.

Great. Well thank you to Brett, Hamish and Kirsten for presenting today's results. Thank you for all for joining for Q&A, and we hope you will keep safe and well. And we look forward to seeing you in October for the AGM. Thank you very much.