The Bankers Investment Trust PLC (BNKR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Sorry about that, but it's telling the guy at the back, the microphones that we put on. So if there's a [indiscernible] that explains ourselves. I'm Simon Miller, you're Chairman. I'd like to welcome you to the 136th Annual General Meeting of this Trust. It's a pleasure to see shareholders both in the room with us and online. And I'd like to thank you all very much indeed for attending. As we explained in our AGM notice, the webinar format does not allow formal monitoring of live votes. So we've asked all shareholders to send the votes by proxy, and we will show you all the votes received when the poll is being conducted. Please note that the meeting is being recorded. At least two shareholders are here, which means that we have a quorum, and I therefore declare the meeting open. Please, can I ask you to check your mobiles are off for the duration of the meeting. And secondly, in the event of the fire or other evacuation, Janus Henderson staff will lead you to the exit. With me at the top table are Julian Chillingworth, who retires after this AGM, and I'll say a few words about him later on. Ankush Nandra who joined in September Chairman of our Audit Committee; Richard West [ far end ]; Hannah Philip, who's Chairman of the new Marketing Committee and Charlotte Valeur and Wendy King, who represents the Corporate Secretary. This year, we're doing things a little differently. We're holding a less formal presentation in the form of the question -- for question-and-answer session with Alex moderated by Jane Shoemake, who's a client portfolio manager here at Janus Henderson it will last around 30 minutes, including, I think, a short video on Doris and [ Craig ] Wendy, who's taken over the Asia Pacific portfolio and Mike Kerley, who's retired. I would now like to hand over to Alex Jane.

Well, thank you, everyone, for coming and attending. It's my pleasure to be presenting here today. And great that I've got Alex in the spotlight because I normally work alongside him, so I can grow with him [indiscernible]. If we take a step back, Alex, and think about what happened last year, we had still very high inflation, rising interest rates. But global equity markets performed really quite well against what would have been more, I think, a bit of a challenging backdrop. What do you think were the key factors that were driving the returns we saw last year?

Yes, you said it's a very unusual environment. We're sort of used to interest rate cycles. We've seen many of them over the decades and normally rates go up and that depresses demand. You see a sort of economic activity fall and use your stock market responds to that and has a difficult period. But we -- as you say, we've seen markets actually have a very strong period. So I think three factors behind that. One is, I think the key one is the U.S. didn't get a recession. And we've all been looking at the U.S. as world's largest economy. The stock market is 70% of global markets. That's the big dominant player. And the U.S. had a pretty good year, actually. It produced 3% real GDP growth. And to me, the key factor in there was what we call deficit spending. So government spending stepped into the sort of void of private sector spending, which did ease off and it's difficult. And basically, the government there is borrowing a lot of money $3 trillion in the last sort of 8 months, so massive numbers. And they spending it in the economy on various projects and plans, spending it on wages, spending it on government -- the percentage of government employees just keeps accelerating. So I think the U.S. has deferred maybe things by actually spending, but we've been doing it. Our government spending borrowing and spending European governments as well. So I think that, that sort of capital has been pushed into the market and reflected in share prices. Other factors which are not as important, but important wage growth is now above inflation. So I think, again, people spending patterns have been sustained rather than finding the interest rates rising as cut that back. But then finally, it's just the AI, artificial intelligence investment story thesis, it just really has put a little touch paper under a lot of very large stocks that have gotten much, much bigger. And again, that top cohort of very large stocks in my global benchmark, I suppose, has really kept the stock market as a whole bubbling away nicely.

And so given that we saw that such strong performance in markets, how did bankers do in that environment?

Well, we've definitely had some good bits. We had -- Japan, I think, is really a very nice highlight for me. So in terms of where we've been positioned, Europe actually responded very well. It had a difficult 2022, but '23 was really quite good for European recovery, particularly in the first half. But Japan, I think, was a standout one for us. It's a pretty big allocation. And there we've seen lots of positivity. We might discuss it later, but around improving corporate governance to improve returns. But the economy has just sort of made a nice swing through deflation and into inflation. And that, again, for equities is positive when inflation generally is rising. It's a good market for equities. And we've seen very strong earnings growth. So almost 14%, 15% earnings growth from that market, actually better than the U.S. I think it's in Japanese earnings growth. So that's responded well. There's also been good stock picking in many of the sleeves. So [ Jane ] is here. He has had a very great year in Europe -- stocks like UniCredit. We've had a big holding in Novo Nordisk. I'm sure you're all aware, is very much in the forefront of the obesity drugs -- market their Munich Re and other good performer. U.K., we did very well, 3i, RELX, [ Sage ], again, key holdings and Japan, SMBC, Sumitomo Bank, bank as rates have been expecting to rise again, the banking system is working quite well there. So system good stock picking I think, in the key areas as well.

It's encouraging, isn't it because you see all these headlines and it's all doom and gloom, but in actual reality, as you said, a number of companies have navigated that incredibly well. But maybe there were challenges. In particular, the Chinese market has really struggled to recover post-COVID and the market has been quite depressed. Just some thoughts on what the challenges were in '23?

Yes, two twin challenges, I think, for me. One is U.S. growth investing and U.S. growth stocks and then China is the other one. We well do U.S. first. I've just got a slide here. I hope it's big enough to see that from the back there. But it's just showing the Orange line is U.S. growth stocks and the black line right at the bottom is U.S. value. And the scale is huge here. So over the last 12 months, calendar months at the end of the year, sort of nearly 40% outperformance U.S. growth against U.S. value. Oddly, that's been very different everywhere else. Certainly, bankers style, [ classic style ] we're like in a dividend. We like giving you dividends, so a bit of dividend growth, but trying to find growth opportunities. In the U.S.. And that's worked pretty well in Japan. It's worked well in Europe. It's worked well in the U.K. and in Asia. All those markets actually value-add performed in this period. As it normally does, when rates are being pushed up, value actually performed a bit better. But in the U.S., we've just seen a totally different story here, a huge outperformance. And really, a lot of it is just coming out of these 7 in the accounts with the magnificent 7, we call them, but these are the 7 sort of largest holdings is actually in the U.S. market, but have -- all seem to have a sort of bubbling AI story behind them, and the market's just very aggressively rerated a lot of these. They have turned out with wonderful earnings. Some of them will have to say, margins have improved and earnings have come through. And we've got some of them, but not enough. And I think that's been a great challenge for us. And we've historically tried not to chase things too much. With hindsight, definitely would have liked a bit more of that. China is the other area where we've seen -- actually, when we look at what the companies are doing, that we own. It's not been too bad. We've got earnings growth. It's the next highest earnings growth just about behind Japan, so maybe 10% earnings growth from the Chinese market. But what we've seen is very savage derating of the valuation of Chinese stocks twofold. One is that COVID recovery didn't follow the model that we followed, i.e., everybody getting out of that and doing things. The consumer in China hasn't been spending has actually been increasing savings and not getting really spending again. And then the government has been a lot of policies, which are not so economically friendly should we say. So corruption drives means that management and a lot of companies are very less keen to do things to be shown to be against whatever the state is wanting. So it's been challenging. I just got another chart maybe to put that in context of the longer term of our investments in China. And to say, we've definitely been cutting back China in the last 12 months and reducing exposure, both in the Pacific sleeve that you'll see in a minute, but also in the dedicated China Asia. So these are onshore Chinese companies listed in Shanghai and Shenzhen. And really, the line in the middle zero, a dotted line is the rolling one year relative to the benchmark. And you can see in the early period 16, 17, we were 30%, 40% ahead of benchmark. We're really only investing in the almost 1/3 of the market looking at consumption consumer positive stories. And you can see it pretty much worked all the way through until this period sort of mid-'21, which again is when COVID was really if we get, if you remember, actually, they put a much more restrictive COVID policy than anywhere else in the world, and we've just not seen any recovery. Over this period, though, I think we're up 120% above benchmark. We're up 270% in absolute terms. So it's been a great investment. But at this tail end on the right, really struggling to get performance out of our portfolio. They're trying things this month has been pretty positive. But again, whether that carries through into the rest of the year, we will have to see. I think, it's probably a good point to segue into a quick video. Last year, if you came, you may remember, we had a video from Jeremiah Buckley. So a lot of our managers work overseas. Jeremiah was in Denver, but Sat Duhra taken over from Mike Kirley. He sits in Singapore, lives in Singapore. So we'll just have a quick 5-minute video about what he's been doing for Bankers. [Presentation]

Hello, my name is Sat Duhra. I'm the Fund Manager for the Asia Pacific sleeve of Bank Investment Trust. My outlook for Asia for 2024 is quite positive. There are a number of macro factors which are going for us. So inflation is low. Central banks are on [ polls ] already, and we think the next movement were like a rate cut, which will provide more stimulus and also good earnings rebound as well, especially in Korea, for example. And then we have strong dividend growth coming through alongside that. So we think that the [Technical Difficulty] value in versus other markets that is a very compelling combination. The concerns for us would be around elections, but we have gone through the Taiwanese election without any kind of issue. Indian and Indonesians elections will be the ones to watch out for, so any change in economic policy there would be of some certain interest to us. I think China, of course, is a big [ unknown ]. And we've seen some attempts by the government to [ brighten ] the economy haven't quite yet worked yet. But the fundamental issue, which is around local government indebtedness, the collapse of property volumes, neutral unemployment, misallocation of capital. We think those kind of issues are yet to be addressed. And if they were addressed fundamentally rather than trying to restock market directly, then there could be a good solution and a reason to invest back into China. But at this point, we have taken down our China weight and reallocated towards growth markets. We see better value and income like is. So we have adding exposure to India. We think that the macro picture there is much stronger than it's ever been. And the last 18 months have been particularly impressive in terms of tax collection, in terms of fundamental growth. We've also seen prior CapEx where we got nicely. We're seeing infrastructure spend from the government move up very sharply. And so those kind of things make us more positive on the Indian story. It does mean that finally, the more [indiscernible] because the structure, utilities, which is an area we added to, are finally working because they are attracted to evaluation and they have held so we start to see an allocation towards those areas and broadening out of the Indian market. So we took a step back and we decided that there were a number of structural themes that we're not really participating in. So we think that areas such as the infrastructure build-out in Asia, and that's to do with new [ impose energy, ] -- it's also due in the materials that are required for that transition. And such as financial inclusion, where hundreds of millions of banks have been opened in India and Indonesia. We're seeing a change of deevaluation across selling products growth generally in that area -- and also technology. So of course, we don't have the big U.S. majors listed in our markets. But we do have the courage to fight in the conductors, the hardware and so on for those names. So they are very essential for that whole global tech story. So that's how we reposition the portfolio to take advantage of those structural themes without giving up anything in terms of yield and maintaining better earnings growth and higher earnings quality as well. We haven't used China, of course, but there are still some areas that are interesting. So the three areas we like infrastructure, which is still as for commitment from the government is growing. We like the domestic and super names -- so we have the largest domestic sportswear brand. And we also own Lenovo Group, which is the world's largest PC brand, but they are also talking about new AI models. And we think that there will be a new replacement cycle led by artificial intelligence, and that's a very strong area for China as well. But the more macro-sensitive name, we have reduced, and that's where we've seen the largest change in the portfolio.

There's obviously a lot of interesting things going on in the portfolio. If we just take a little bit of a step out, you take down the debt bench into the financial year. Just wanted to point a little bit about your views on the hearing and how you see that going forward?

It's radically different when I took over this trust. Back in the early 2000s, we had a 12% debenture, then huge annual cost to try and keep servicing. So we finally paid off the last 8% debenture. So we -- I've taken that opportunity in the last part of the last decade, I suppose in '21 such low valuations on long-term debt. And I'm really pleased we've locked a lot of that in. So the cost of our debt now is 2.7%, which is the same as the dividend yield on the portfolio. So over the next 20-plus years, 25 years, 30 years out to 2045 was the last of those loan stocks we really paid, all the income growth, all the capital growth of those that borrowed money will come to all of us as shareholders. So I think it was great. We really set it up nicely for the decades to come. We've also not got stuck as many others have done on short-term borrowings. So a lot of peers certainly have been borrowing from the bank overnight. And that's got really expensive. You're going to have to pay 7% of the margin in there over the 5% base rate. We don't need that. At the moment, we're not in that market. So I'm really pleased actually where the structural gearing is for the trust. It's about 9%. So 10% is where it is. So I think it's -- again, it's a nice level, not too high and should certainly pay back over the next decade.

You mentioned the dividend yield on the trust, but also it was encouraging to see dividend growth of around 10%. Do you want to just comment about the outlook for dividend growth going forward?

Yes. Again, the strategy is very much not to go after the highest yielding stocks, you often they're sort of value traps or limited growth, but really to focus on companies that grow fundamentally, the profitability, the cash that business generates. So that should and usually does lead to dividend growth down the road. So although we certainly in the U.S. market and Japan, it's sort of these markets yields sort of between 1% and 2%. But let's keep. We're keep trying to focus on the big dividend growers and try to get the opportunities there. So we put the dividend up 10% last year, the board approved a 10% dividend increases wonderful. We've got a long-term [indiscernible] to grow above inflation. It's been a bit difficult in this sort of spike in innovation we had in the U.K. sort of '21, '22, but we're above that now. And the 5% forecast for this year will probably reflect CPI inflation up to 2 or 3. So we're continually, hopefully, that growth into the future.

And I suppose that takes us quite nicely on to what the outlook is for market. We talked about the dominance of artificial intelligence and the obesity drugs, two companies, in particular, Novo Nordisk and Nvidia, so very sharp share price appreciation last year. Where are we now in Nvidia, one of these artificial intelligence companies reported yesterday. And it seems some of those stocks continue to drive higher. Just really interested in what the outlook is from here.

Yes. Let's start with sort of a graph here what I call the big resets, which is I still don't think the market has really got to grips with a long-term cost of capital. And this is, again, long -- long many of you remember maybe in direct U.K. for the 9, 10, 11 I think they hit [ 1.5% ] or something 15% at one point like [indiscernible] -- and we've had a decade, 2 decades, 3 decades of interest rates, cost of borrowing money and that drives investment decisions, just going lower and lower. And the U.K. never got negative, but certainly, European markets you have been paid to borrow money is ridiculous. And you can see on the bottom right, we've had a very sharp correction. These are global bond yields sort of 4-ish percent. And I think that has material issues around what businesses work and what businesses struggle. And it's not worked its way through the market yet. So I think this still is -- it's not going back to 0, it's not going down. As mentioned, governments need to borrow a lot of money. That seems to be the model to support growth. And therefore, they're going to have to keep raising cash and that comes at a cost. And so I still think we're talking in teams about how we can take advantages in here an easy [ one ] is around the insurance industry. I'm sure you experienced insurance premiums rising. And one reason they're going up is a lot of the hot money that was in an insurance market, just trying to write premiums is exiting. And so it's leaving the core players a decent return now and growing returns. So we're seeing that everywhere throughout. We've got some dominant themes within the portfolio if we think of what we're trying to focus on. I've tried to, in simple term, getting down to 3, but there's lots going on. Geopolitics is a big one. And this goes to your question really make sense about semiconductors AI. There's a lot of reshoring going on. So a lot of companies, governments want shorter supply chains, they're worried about almost every chip is manufactured in Taiwan. What happens to that over the long term? So you're seeing big, big investments in onshore semiconductors, and that's overriding -- so we've got lots of that in the portfolio. We own companies that make chemicals that go inside semiconductors that make the massive machines that make semiconductors. So not just Nvidia, we've got a lot of investments in that place there. But another area is the green transmission. So again, trying to get us to net zero. I have lots of doubts we'll get there. But this is data from the IEA, the International Energy Authority. If you can see that shades the tone is there, this is their view. If you want to get to net zero, you need to spend -- I mean, the scales in trillions, by the way, on the right there. Huge management spending. But to me, what's interesting is [indiscernible] bottom is new energy supply. So wind farms, solar, et cetera. Actually, to get to net zero, it's not about, let's produce 3x, 4x what electricity we have today. It's how do we use it more efficiently. So carbon dioxide management, R&D, infrastructure as [indiscernible] talked about infrastructure spending in India. So one of our big holdings in the Power Grid is all about more efficient use of movements of energy around the country getting it from the right places to the people who use it. So -- and that's a theme for a lot of holdings we've got. And again, as a team, we keep talking how can we benefit from all this investment spending. But I don't think it's just about buying yet another, investing yet another wind farm. So we're thinking there. And then finally, Japan, it's got a graph of really sort of returns to shareholders. So I think a key area for Japan for us is about companies getting a bit real about balance sheet about returning cash to us as investors more efficiency. When you look at the return on equity, so how efficient exactly the business is in Japan. It's half the level of America. -- has got a lot of scope to improve. So again, if I put a real name on our [indiscernible] group is a company we own in the portfolio. It's a bit like a high mark. It's sort of discount sort of low-cost clothing company, a bit smaller stores. They're not massive, but they're in every town really city in Japan. And the fact that they set it up on about 37%, 38% of the stock, but the family not managing the business anymore. They've exited. They want to cash that holding in. And the company has half the balance sheet, half the -- not actually half the value of the company is cash on the balance sheet. So it's usually the [indiscernible] really -- and you can see there's clearly an opportunity there and swap that stake for that cash. And we end up with a company that's growing very nicely, could be on 7x or 8x earnings post a swap like that. So pressure is building on companies. and we expect that to continue. And we've seen here over the last 10 years, Japanese earnings have grown by 9%. It says there, but dividends have grown by 12, cash coming back, share growing by 25% annually. So it is happening. So I think that's a really great opportunity for us to continue with Japan.

Indices of Japan seen in the Dow Jones [indiscernible] big move in the last year or so. So we've talked about there's a lot of opportunities. There's a lot of exciting things going on, structural growth drivers and happening. What are the risks that you perceive looking into this year? And what worries you?

I think it's the lack of interest rate cuts. I mean I think in my view so Europe, U.K., we need to be cutting rates fairly shortly. And the market -- I think the nice thing about Europe, U.K. is it's not pricing too much in some very depressed earnings. But equally, the U.S. market is expecting rate cuts to sort of kick through. So if we don't see the [ best ] I'll go over there late, then the market could get disappointed by that, I think. And I see the U.S. is more challenging because I think we're in an election cycle. The Fed doesn't tend to cut rates around the election. So that's sort of September onwards. And the market is pretty hard. It's creating jobs. All that government spending is creating jobs creating wage growth, and that's supporting the market. But equally, why would you cut rates if life is good. So I think there could be a disappointment there. And then lastly, that U.S. election, I still worry wonder what Trump. We don't know quite his policies. Will he get in, will Biden get another one. I think there are some binary decisions in there that we need to keep looking at. My key one is a sort of universal 10% import tax. That has implications of trade wars again and how we would get affected in the companies we own and the volumes of product they can sell in different markets. So Yes, there's always lots to worry about. But I'm very sure that a lot of equities really -- most equities that we say, are trading on pretty depressed multiples, and they're very well run. They like us to restructure their debt. A lot of good companies have locked in very low cost of debt. So the future looks, I think, bright for a lot of companies. We just need a bit of confidence to come back.

It's encouraging to hear. We had such a strong year last year, but we still got some positive into the [indiscernible]. I think it does take us to that half and hour. I thought we might open it up for questions from the [indiscernible]. That's okay. Anyone has some questions. We've got a microphone if you wouldn't mind making someone to get you with the microphone if you have a question. And also please state your name and say the question clearly, particularly for those people online. That's been really helpful. But yes, has anyone got any questions?

I would like to say can [indiscernible] be direct use?

Yes, this is about investment. Yes, the report that came up shortly, anybody?

Yes. Hello, Henry Langley. Can I just sort of refer to Page 13 of the annual report. I noticed looking at the largest investments that from both tables, there must have been quite a bit turnover because on my reckoning only is top 25 investments in 2022 was still in the top 25 in '23. And it looks like there's been quite a big turnover of stock. So -- can you sort of comment on that? And also, do you think the turnover of stocks would be less in the coming year? And couple of other points, if I may. Do you still think that -- or do you think that the amount held in the U.K. stock market will continue to decline. And finally, is the -- there's a reference to discount, I couldn't find the historic figures, but my impression is the discount is sort of almost -- well, certainly a long-term high -- or do you like to comment on that and any trends on that?

Yes. Okay. If you remember all those [indiscernible]. Let's start with the portfolio. So a little bit of history there. We -- last time I changed U.S. manager, we changed in 2012 and we changed to a wonderful man here in [indiscernible] who produced some great performance, very growthy though. And I think we discussed this in the end of [indiscernible] last year and at this meeting we had said that -- I just felt it was time for a bit of a change of all that growth into sort of growth, but also what else in the market could be very interesting with a bit more value tilt. And so the portfolio, yes portfolio is still growth orientated, let's be honest, but it has exposure to some of these financial travelance everyone was talking about general insurance premiums going up and we've had great figures in that one. So the last December '22, which is in, obviously, our financial year, we changed manage from the global team I have in Scotland to Jeremiah Buckley's space in Denver. And that resulted in quite a bit of turnover the U.S. name. So what you're talking to really was that turnover, which happened last December, and therefore, I expect turnover, yes it declined rapidly back to the usual sort of 20%, 25%. -- which is historically what we've been doing, if not lower, I think, because a lot of managers have got quite good conviction in the store -- that was principally what happened I think, why a lot of those -- some of those U.S. names have slightly changed. We've just brought some breadth into the portfolio which I do feel next 2 or 3 years will pay handsome dividends. In the last 12 months, we've maybe missed a couple of names that it would have been nice [indiscernible] -- we actually didn't never owned NVIDIA, unfortunately, but I think it will pay dividends. The other question was, well, I did turnover discount, it is very wide. It has been despite before in my time in 2000, it was pretty wide. And it was also very wide around the GFC in 2010, '11 we expect at a higher level than 2010, '11. A large function is sadly investors their attitude to what they can invest with and being closed end if there's more sellers and buyers, you can see the discount widened. My reassurance is I've seen this for a number of times. We've seen it. Mr. Bruce is here and former Chairman. I'm sure we had it in the '80s and the '90s as well. And once investors, I think, want to be -- they've definitely been investing in money market funds. You can see how with a 5%, 5.5% return on cash and investors' natural worries about the economy, they might switch from an active equity investment in sort of cash I do think it will come back. We are trying to support the market, I suppose, with the share buyback, which we've done about 5% in the last 12 months, some of the buybacks which are connecting as counter to that. And I think that, again, is the right way to cancel shares. We've issued shares at a premium. Let's cancel them at a decent discount and there's a journey in the middle that's beneficial for shareholders. I might take a question behind you, just the gentleman, this again.

My name is William Wingfield. And along with Bankers Trust. I'm an investor. Two other Trusts with broadly the same global remit and similar dividend levels, namely Alliance and [ Bruna ]. And I had to say that the difference in performance is startling. I wouldn't bother everybody with all the figures, but bankers are lagging badly behind both of these over 1, 2, 3 and 5 years, and particularly over the past year, when as of yesterday, the share price was up 0.5%, 0.7% [indiscernible] 12% for [ Bruna ]. So my question is to what do you attribute this underperformance? And what are you going to do about it in the near future?

A bulk of that is the share price from the discount, we've moved to 2021 when we on a premium and we're now on a discount. And it is a function of Investment Trust. So that's a big component of that. You're approaching the share price and that and that's a big fit -- that's what we buy and sell. So I'm not being complacent and so it doesn't matter. It matters immensely. And our activity, how do we correct that? We're working very hard on marketing. You heard earlier this marketing committee, we set up, we're working very much in terms of promoting the Trust -- and this is Janus Henderson supporting a lot of this. New website is on the way, retail friendly. I've been out seeing investors in the last -- certainly the last 2 or 3 weeks being trying to again, get the message across. So I think we're kind of back there as well. So the share buyback will help in time. But we have to go and get some performance back. I mean, Alliance had a great year. It's definitely been very much in a lot of those technology names when you look at it, it's very technology-heavy for them, and we'll see where that one goes. But I agree, we've got to work a bit harder for everything both the discount and performance.

Another question just is coming to you..

Good afternoon Shareholders and Board, Davis private shareholders. I'm looking at the graph, the U.S. growth and the other and the U.S. values. I just have a tough [indiscernible] in the U.S. growth. The ones that you talk about as a big 7 -- or is it more companies in that.

So they take half the market, I think, and they did 50% [indiscernible] market value. So -- the key those stocks trillion separate companies [indiscernible] the market, yes. Well, I want to know what to you on U.S. value that you've got, you've sort of worked out of the year

I don't know. I would guess it's dividend on the region of 2.5% to 3%. It will be like that. And the other one will be barely 0.3 or something. I mean most of those names don't have dividends. Most of them has one but it's what it is quite what the yield annualized yield well. But I think you're looking at something like just short of 3 on value and then 0.2 or 0.3 on that. Yes.

Thank you. And if you complaining -- everybody is complaining about nobody is interested in the British stock market.

That was the other question, right?

A lot of -- a lot of companies have been taken out on the sheet by foreign companies like the we cancel [indiscernible] opposing bid, carries is probably going to go to the same time with there's was 600, 700 stores, they've got something like that, [indiscernible].

Should we say, let's not forget part of this expect some consistency in returns and the currency stock falling looks sort of pretty stable, if not reasonably. But what drags you investors back to their stock market. You tell me, I think that needs some reforms and some changes. It is difficult, yes.

One other thing sort of recently, especially over this weekend, it's been reported that Germany is going into sort of quite a deep recession, they think. And is this because they're not trading with Russia anymore probably?

Well, I think it's a deep recession. I think we're [indiscernible] in historical terms, to be honest with you. But they -- I think their more challenge was probably China and shared lack of growth both in China and a lot of products they produce. That market, the German traded very heavily with China. And I think while China is prioritizing different investment spending, should we say, the growth industries are not some of the ones that the Germans compete with. So just look at the auto sector where the Chinese auto manufacturers are as good and much cheaper than a lot of the Germans are struggling to sell their cars into these markets.

But nobody has ever come up with any sort of figures as to what trade they've lost with Russia because they must have been trading with Russia because they were buying all their energy from Russia. And I think that was [indiscernible] actually. Yes.

A couple of years ago, that one. I'll have a chat to you over us. We'll take 2 more, and then we will see online if we have any questions.

Phil Clark, a long-term shareholder. On Page 11 shows the geographical split of our assets. And we're very heavily overweight in the U.K. and underweight in the U.S. I was wondering about that because obviously, the heavily overweight U.K. actually does support the dividend and it generates a lot of cash for the [indiscernible]. I'm starting to wonder if U.K. is such a drag on performance. I wonder if the dividend has become [ arbitros ] for us and whether it's become. It's notable that in the accounts on Page 2, the very first chart is a graph of the dividend progression. So are you feeling pressure to generate cash to pay the dividend? And is that becoming an issue? And do we need to reset?

That's a good question. Honestly, I don't think it's an arbitros, but I'd like to run an investment company, where it is sustainable. But one of the great things I feel in this role, my predecessor did 25 -- we are custodians of this Trust. I'm not short term. It's been going since '88, and I wanted to go for another 100 years. And so in that sense, I feel you manage over time a responsible income account where you -- what you get in you pay out. And a lot of the markets changed in that perception. So there's plenty of trust, and we've mentioned a few earlier that pay out a lot of capital to support a 4% dividend or whatever it might be. And I -- in my head, I think that somewhere down the road, there are some consequences to that, particularly in down markets where you're paying out capital. You never get it back again. And so in that sense, there's some challenges, yes, for me going right. Let's put it all in America. Point 3 and we'll just pay you a 2.5% yield of that capital. And I can do that for 2 or 3 years, but I worry about that. I don't think, though, in the U.K., I inherited at 60%, 65% when I started, it's down of 15, we reduced it from '17 to '15, it was 40%, but not that within 10 years ago. So I've tried really hard, and I did a lot through Brexit to get that down. Does it go to 10%? Is it 5%? It's starting to not matter too much in the grand scheme of things, I think. And we're finding income elsewhere. The Asia supports our income quite well. Japan is growing income, as I mentioned, actually really well. The U.S. is slightly different. There's a policy there, I think a lot of management to share buybacks as a return of capital. And so a good 20% of the U.S. market doesn't yield anything by number of stocks, no dividends. And so how we deal with that over time. I think that's where the revenue reserves should be used more actively, and we will do that. I mean I'm signaling that in accounts. I think it's time to be much more active than we have been historically with the reserves to allow us to own the stocks we want to own with total return. But I will say, I think over the long term, it's responsible to manage an income account and not just continually pay out capital to support a dividend.

I'm looking at the diagram, the green revolution in this thing. However, where we see clean energy supply CO2 management and research and development. The colors on print are just in distinguish, whereas colors up there are much more distinct. I wonder if there's been a site printing mistake on that one. I'm not that color blind, but...

Apologies.

There's one question that might revert.

We just take one more at the back. I think yes, we can, and then we'll look at online. I will stay around for questions. So through lunch. So please in the room if you want to come and find me. Happy to take some questions.

Monica Rednam shareholder. You remember me from last year, no doubt. I've got six questions, but they're brief into the point, but you might need a piece of paper. Last year, you were the best one predicting the interest rate at Christmas. I don't tell you against you, but could you like to give me another prediction. You were over 4% last year when you were bang on. You -- somebody said you increased your holdings in India. But on Page 23, you only list two companies. And I don't know what sort of income they pay. So I was going to ask where are you looking for more companies? And does India pay better income than it used to. Next question, Page 19. American Holdings. You read -- you say dear and various other companies were detrimental, but you don't give any figures as to what percentage you affected the portfolio or whether they were only blips rather than great collapses, I hold dear, and they haven't done that but of course, it's against your purchase price. Next question, you don't hold BAE at all. Is it because it clashes with the operations of general dynamics about which I don't know anything. So could you please tell me what General Dynamics does? Now there's a deal between Microsoft and Intel recently been announced. I wondered if you would relook at Intel because you don't hold it at the moment? Or would it actually clash with Taiwan Semiconductor, et cetera? The next question relates to what Mr. Clark just said, actually. Something you said in the video, or you said that the U.S.A. is 70% of the global stock market, so I was suggesting you might want to increase your holdings in America, AG by looking at Intel, et cetera. Although I'm not particularly down on the U.K., but they aren't doing very well. And you did recently have something in Australia that mines lithium. Over the years, you haven't been two keen on miners. Are you looking at them again? Is this a change of policy. I think I'll better stop before you get fed up.

I'm sure our stomachs are wondering, we would like some lunch. But -- and I'm very -- online. I'm going to ask a couple of those, and I'll come and find you over lunch and answer all of them. But I mean, just picking a few. India -- we had nothing. So we got completely... Okay. Well, let's rapidly do for you. Then India, we had nothing, so we've got nothing to two, and they're quite reasonably punchy holdings. We bought another two stocks since the period end. So we have been increasing investments in India -- and so that's been carrying on. India -- I was talking [ India ] tend to be the way we have to reference this is against the benchmark, so the stock market and [ India ] as you say, it's sort of down 10%, 15%, -- it's not a disaster. It's a blip, but against the benchmark, all those magnificent 7, it's really struggled. We like it still. It's a good company, and there's a bit of destocking in large tractors going on in pricing. But I think the agriculture industry is definitely, they're in the right place at the right time. So it's just want to be patient with I think, on that one. BAE, might look, I think -- David, do you want to have -- let's have a mic before David manages our U.K. And I think before we just quickly on BAE.

I mean I suppose on BAE, it's been a fantastic performer over the last 2 years ever since the Ukraine war. So I guess in retrospect, we've kind of missed it. We should have owned it. We haven't. Where we go with it today, it's on 19, 20x earnings, that's pretty expensive in its history. So I think expectations as such that they need to keep delivering upgrades for that multiple fee and to be justified, and I think it just becomes a bit harder. So I think we're still sitting the sidelines for that one.

The Microsoft, Intel, TSMC, see we very much love TSMC. It's in the right place. It's manufacturers the right chips. So all of NVIDIA's chips are manufactured by them. And Intel, it's not a bad company, but on a relative basis, it's just in the wrong sort of chip manufacturing. And the PC market where they're very much more focused on laptop PCs than TSMC. It will struggle a little bit. I think it's, again, not a bad business. It be back to sort of if you've got to own one, which one do you own, and I think we still support earning TSMC. And Microsoft, we love, it's our largest holding and maybe we should buy some more, but it is right in the core of AI and a lot of rolling out of copilot, which is their AI for their office suite of products, again, is all margin to come. So it's not cheap though. Again, we're back to 30, 35x earnings. So there's a lot in the price. So again, we have to be mindful of that, I think. I'm moving rapidly through here. But Mr. Clark's question, on the U.S. again, is it right to be 70%, 80% in the U.S. market at this valuation after this run, we have been increasing it. So as here and there, we keep pushing more money into that market. It's 42 or something percent at the moment. And we keep trying to work at that. I agree it's a great stock market with great companies, but there's always the right time and the right price to pay for those situations. But I would say I'll do my interest rate prediction at the end. But I think if I predict in 2 or 3 years' time that we have more or less U.S., I think we probably do have more definitely. Lithium mining is, again, we had all those minerals taken over really annoying, we like the company. We would have kept going, but it was taken over by competitors. So we haven't found an alternative to that. We actually go Woodside which has done reasonably well for us. But again, lithium, it goes through [ fleet ] and famine. Actually lithium prices have been coming back. There's lots of worries about whether alternative energy sources will drive new batteries. So again, I don't think it's one to just go all in for -- it's relatively inefficient from heavy and a lot of -- particularly if we look at the car industry, -- it could get solid-state batteries at half the weight, quarter of the weight, you go down that market. So again, try not to get sucked into what's currently being sold and is doing well. Half our job is to predict the future and try and see a bit more forward than that. And then interest rates, I put 4 by the end of the year. But then we go -- the market is a bit higher than that is.

Market is a bit higher than. Yes. Yes. Right. So let's go online, if we can. Wendy -- are there any questions of

So the first one is from Matthew Potter. Given the trust persistent and widely discount, why is the Board and manager not advocating a more aggressive share buyback that would deliver value for shareholders -- sorry. So given the trust persisting widening discount, why is the Board and manager not advocating a more aggressive share buyback that would deliver value for shareholders?

So we seek to supply 10% back. Is that right? Yes, every year we've used just over 5% of that in the last 12 months. So we've been -- I mean, within the markets capability to sell our stock. We've been pretty -- I think that's reasonably aggressive. We just continue to look at volumes in the market. I can't force sellers nor should we to come out of the woodwork as it were. So we're trying to be responsible there in that. So again, but it's something we keep reviewing. We talk about it every Board meeting. And it is a topic we keep looking at. Yes. Well, that's exactly what -- I agree with you.

[ Mr. Po ] has said and the U.K., but I think we've covered the U.K. And he also mentioned the number of stocks is extremely large, means benchmark performance. Is that your aspiration?

Well it's a fraction of the benchmark, which has 2,500 stocks in -- so we're 10% or less. But I think the way I think about it is we've got regional portfolio. So we've got six regions at the moment that we choose to invest in. And each of those regions of the U.S. apart, given its size, has slightly more sort of [ 4550 ] holdings, but we've got 20, 25 holdings is the ideal number in each of those regions. So in that context of picking a market, Japan buying 25 stocks, that's reasonably concentrated. And I think that's what we're aiming for. And then once you aggregate that, you do have some [ breadth ]. And we're not all in certain themes or certain investments that might roll over or impact us. I don't believe, over time, that gives you benchmark performance. We're behind a bit of the benchmark. We've been plenty of times ahead of it. So certainly not delivering benchmark performance, but just got to be hard and work harder at picking the right stocks in the right regions.

Okay. And the last question is, does the trustee make use of derivatives to hedge, for instance, against potential downside?

So if we go back over a long time, -- we don't often hedge currencies because it's very challenging with companies that may manufacture in different areas. They may be listed in Switzerland, but my goodness, they don't -- some of the Swiss names have very little production there relative to the market cap. So hedging in currency terms is very difficult for an equity portfolio. And I don't think should be done. In terms of markets, we have hedged over in 2000 -- we did hedge in the early 2000s, the market where we were very worried about the level there. And we've also put hedges in sort of 2009 during GFC. So if we're sitting there and expecting the market to fall by 20%, 30%, 40%, -- and yes, we would think about it. I don't see that as a best case. I'm sure many people are not expecting the market to fall by that degree. So in that sense, then hedging can cost you quite a lot of money and not deliver the returns you expect.

Just one more question just come, two more. Other trusts run best Ideas portfolios with a small number of holdings will you consider this model?

Well, again, we quoted Alliance. I think Alliance has had a very, very good year, and I respect that very much. They don't -- I bet they own 400, 500 stocks in that model. So there are different horses for courses. And I think this has worked well, I think, over many years for us. It's more challenging when markets are very concentrated like this where you could pick 5 stocks and perform very well. The breadth and diversification, which I think is in over many decades has taught you, that's a sensible thing to do. It hinds out the troughs and the peaks is the right thing to do. But in the short term, yes, markets have been incredibly concentrated and best ideas funds have done much better than we have.

And there's one final question. Would you offer shareholders a tenders NAV.

That's not for me to be commenting on.

so I think that takes us up to 2 time actually. I just I'd just like to thank you all very much for your questions and your interest and your support. I think we're over -- is it lunch now.

We will go to the Chairman to finish business nearly.

Thank you both very much indeed. I'd like to invite questions now on the report and accounts, the resolutions and anything else you wish to ask. For those shareholders in person, please raise your hand again, and somebody will bring you a mic. For shareholders on Zoom type your questions again, same formula. Are there any questions?

Thank you. It was really not so much a question, but on Page 13, the presentation on the largest investments. Well done on presenting it in that fashion, which I wish was the standard for more investment trusts, but may I also suggest that perhaps you could extend that to all of the portfolio, not just the top 25 -- the actual layout of the formats yes.

Thank you very much for the compliment. I was not responsible for that -- and neither am I responsible for the second half, but I'll pass that one to Alex.

Yes, well extends the accounts quite a bit, but let me consider that for next year -- we could do some more -- thank you very much. Diminishing returns as you get down to the bottom of the list, but let's see if we can extend that for you.

Hello, it's Mike Price, a shareholder for a very long time. Across many investment trust, there's been a worrying rise in simple typographic errors in annual reports and accounts. I think you have a marketing committee, and you are the Chair of the Management and insider committee, is that correct?

Yes.

So when you...

I'm not the Chairman of the marketing committee.

No, no. So when you look at the Board of Directors' profiles, there's a mix up because some of them say that some people are they attend the market and management engagement and marketing and insider committee. And it's sort of a repeating error on some of the directors' biographies. But it's obvious what has happened. It's not been proofed, but it's also slightly worrying that sections that relate to the Board members has probably not been read by the Board members. I think there is an answer which the company is actually would be the best place to go.

So just to clarify, and maybe we could put it in a table, which might make it a little bit clearer. So all the directors are members of both the insider Committee and the Management Engagement Committee and the Nominations Committee.

The Management Engagement Committee. Is that not the management engager and insider committee.

No, they are different committees.

So you have a management engagement committee, an insider committee and a marketing.

That's correct. Yes.

So it is misleading the way that it's written in those profiles.

I can look at that for next year. Thank you.

Two further questions.

Mr. Miller kindly tell us why he styles himself care which is an academic title instead of Chairman.

Well, thank you very much for raising that because I probably feel as strongly about it as you do. But my employment brief was to be chair -- and so I'm Chair. Thank you for asking that. And another one. I hope it's as easiest as the last question. Thank you. All right.

Yes. I was interested...

Say your name.

Sorry. I'm Michael Capel. I'm an ex Japan equities fund manager. But I wasn't going to ask about that at all. Going to ask about your risk management, which is detailed in the accounts. And what I was interested in is the whole scope of listed investment nowadays compared to times of your. And whether you've perceived that there's a risk that so many good businesses are being effectively funded by private capital and by models outside of listed investments that over time the banker's model will increasingly not be relevant to the best investment opportunities there. Does that ever come up on the radar as a risk and what you might do about it. So sorry, that is probably slightly more difficult than the chair versus Champ, question.

I answered the previous question. So there are various things you raised. We now have a risk order and Risk Committee, Chaired by my colleague here, Ankush. So the profile of risk is raising. And the manager who pays a lot of attention to risk their profile is raising. We don't consider that specific risk. Perhaps we should. But we do consider other macro risks, which might affect the climate, and that clearly as well. Thank you for asking it. It will be on the agenda of the next risk committee. Are there any other questions? Well, thank you very much, indeed. I suggest that we now turn to the formal business of the meeting and the notice of the Annual General Meeting is set out on Pages 1 of 2 of the document. And the 14 items of business to be dealt with resolutions 1 to 11 are ordinary resolutions and Resolutions 12 to 14 are special resolutions. We will be conducting voting on a poll today and the poll will be certified by Equiniti acting as scrutineer. So I need to say some things, which I regard as a healthy one now. May I remind you that only shareholders directly on the register of members, their proxies or corporate representatives of any corporate shareholders are entitled to vote. Poll cards were issued at the registration desk to those who are entitled to vote and should be completed by printing. Clearly, the full name of the shareholder, including any joint holders, if applicable, the full name of the proxy at corporate representative. If you have already returned a formal proxy, your votes will automatically be included in the voting. So unless you wish to change the way you voted, you don't need to complete the poll card. If you still wish to vote, you may do so. Your poll card will override any previous voting instructions. As you get to the resolutions, responding, please place across in the appropriate box to vote for and against the resolution or to withhold your vote. If you wish to split your vote, then please obtain a second poll card from EQ and ensure that you indicate the number of shares you wish to vote on each resolution. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of votes for or against a resolution. If there is anyone who thinks they should have a poll card who does not, please raise your hand now. Thank you. As it will take some time or may take a little bit of time to complete the poll procedure, the final results of the voting will be announced to the stock exchange and published on our website as soon as possible after this meeting. However, the provisional proxy figures received so far will be shown on the screen behind me after the poll has closed. So I now formally declare the poll open. Please complete your cards if you haven't done so, and the resolutions in the AGM notice are summarized on the screen. I would now just like to say a few words about my colleague, Julian, who is retiring as said of this Senior Independent Director of the Trust. Julian has been said for 9 years. He's had a most distinguished City career [indiscernible], as Investment Director of Rathbones and his career is crowned. I like to think by his role at Bankers Investment Trust. He has real depth and breadth of the investment world and in the investment trust world combined with a compassionate interest in investing. As a nonexec, he's challenged, supported and contributed consistently. As a Senior Independent Director to me as Chairman, he's counseled, prompted, cautioned and encouraged. He is to all of us at Bankers and Janus Henderson a charming brand. Thank you, Julian. On behalf of shareholders, the manager and the Board. Good luck in your retirement.

Thank you very much, Chair, for those kind comments. I think when I reflect back on my tenure at Bankers, it's been both interesting, challenging on occasions, but always enjoyable. My tenure has encompassed a global pandemic, sadly, the first conflict on Mainland Europe in 80 years. But I take great solace from the fact that Bankers 136-year history has seen crisis come and go and continue to prosper. And I'm confident that will happen in the future as well. I would like to think that I leave the board stronger than when I joined and that we have a great investment team at Janus Henderson, who will undoubtedly deliver in the future for all of our shareholders, and I undoubtedly continue to want to be a shareholder in Bankers and enjoy the rewards of a continuing and growing dividend, obviously, Alex. And also capital appreciation in the future. I will be sad to go, but I've had a really enjoyable time. And thank you very much for those kind comments Simon.

I now declare the poll closed. Please raise your completed card if you have filed one in and a member of the Equiniti team will collect it and add these proxy votes which have already been received. The provisional proxy figures, which were lodged before the meeting are now visible on the screen behind me. The results of the poll taking into account these last few votes will be available on the company website later today. Ladies and gentlemen, this concludes the formal business. Thank you very much indeed for coming for asking your questions. And please join us if you can for some refreshments. Thank you.