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

Good afternoon, ladies and gentlemen, and welcome to the 2026 AGM. It's good to see you here. And thank you all very much, indeed, for attending on a beautiful day. As we explained in the notice of AGM, the webinar format does not allow formal monitoring of live votes. So, we've asked shareholders to send in their votes by proxy, and we'll show you all the votes received when the poll is being conducted later on. Please note that this meeting is being recorded. At least 2 shareholders are present, which means that we have a quorum, and I declare the meeting open. Before we begin, please turn off your mobile phones. Thank you. In the event of a fire or other evacuation, Janus Henderson staff will guide you to the appropriate exit. With me at the top table are my fellow directors. Ankush Nandra, who's the Audit and Risk Assurance Committee Chair; Charlotte Valeur, who's Non-Executive Director of the Trust; Richard West, who's the SID; Hannah Philp, who's the Marketing Committee Chair; and Sami McDonald, who represents the Corporate Secretary. We're holding a question-and-answer session with Alex Crooke and Richard Clode, the managers, moderated by their colleague, Jane, who's Client Portfolio Manager. It will last around 30 minutes. And I'd now like to hand over to Jane or Alex and Richard.

Delighted to be here again. I think it's my third year in this role. So, for those that have been in the last few years, nice to see you again. We are going to go and talk about performance and what's been going on in markets. But before we do that, I just thought it would be interesting for Alex, just to remind us how the trust is managed and its approach to selecting investments.

Thanks, Jane. So very much think of Bankers, it's investment in companies around the world. So, we try and give you a nice diversification of different regions. The bulk is in America. That's the largest stock market in the world with some of the best companies in the world. So, you wouldn't be surprised to see the largest portion of our assets there. But we've got representation in China, in Asia, in Europe, in Japan, et cetera. So that's -- we're investing in the best companies we can find. We're aiming for capital growth, but also income growth over time. So, feeding through to the dividends we pay you as investors. So that's really important to us. But capital appreciation is equally important. That's really the dominant driver of returns over the long term. So, we're trying to buy good companies at reasonable prices. Some of them are expensive, but they're in the world's best class companies, and we pay up because their earnings are going to grow quicker than the rest of the market and therefore, our returns over time. So, I think you'd think of us as well, I think we've -- over the last few years, we've consolidated. We're about 100 holdings across that whole world. And what defines what we try and look for in a good company is companies that generate surplus amounts of cash. So, we look into at all that free cash. So cash that is generated after you've maintained your assets, paid your staff, paid your taxes, your interest, what have you got left? Because if the company is growing that pool of cash, we feel they're the best companies to invest in because they can buy other companies, they can advertise more, they can take on more employees, they can grow quicker. But also, for us, they can return it as dividends as well and grow their dividends quicker. So, we're looking for the best quality companies that can really grow their free cash that they generate. And then finally, we're looking at really where the risks are, the concentrations and trying to make sure, yes, we're investing in good areas of the world and good industries, but we're not too concentrated in one area or taking too many risks in one region. So, again, that's something we try at the end when we're building the portfolio to make sure those risks are contained.

And you mentioned there that you've consolidated over the last year. What other significant changes have there been over the last year since we were here last?

Yes. So, I think maybe extend that for 2 years and just think how after a period of -- a bit of a tough performance -- so it was through '22, '23 and growing. I think we did look really deeply at how we're managing the portfolio. And to my mind, we have probably had too much diversification. We had too many holdings. So, we've consolidated -- many of you I recognize over the years. We've come down from sort of 6 regions to 4. We've concentrated the number of holdings. So more of our assets are in the ideas we think will add value over time. So, I think that's -- you're beginning to see that in the performance. It's a much better year here to present to you. We're not too diversified now. I think we've got some strong investments that we really like. Richard, I'm really pleased, Richard has joined as a co-manager alongside myself. And now the 2 of us really, Rich is going to -- is managing North America and I manage European. So, between us, we're sort of 80% plus of the assets now. And I think, again, increasingly, you're seeing us where we've got tactical decisions that we think are right, where we've got thematic investments or areas we think are very interesting. More of that's feeding through into the other regions as well. So, I think more control is leading to better performance as well.

Well, Richard, on that, I mean, can you tell us a bit about your background and what changes you've been doing since -- what is exciting you about managing this trust and being involved now?

Exactly. Well, I'm honored to be in my first AGM and really appreciate the opportunity to be stewards of your capital. And it's almost full circle for me. So, I was hired straight out of university by Herald Investment Trust and worked under Katie Potts for several years. And I've always been a technology manager. So, this is moving into the global world. But I think what I'm trying to bring is that understanding in the last 20 or 25 years, the impact that the Internet had to all of our daily lives, but also to the stock market. The industries like high street retailing or traditional media that were disrupted, some of the new companies that came through like Amazon or Netflix that performed very well. And I think we're now in this new era of AI, and again, trying to understand where there are opportunities to take advantage of that, not just within technology, but within other sectors as well, to Alex's point about keeping that diversification and then avoiding some of those areas that are a risk and should provide us with a great opportunity set to add some alpha and deliver both that capital appreciation plus some strong dividend growth over the years to come. So, that's what I'm hoping to bring to the table and the expertise that I can sort of help complement what we've had and continue that journey that Alex was talking about in the last couple of years.

And Alex, you mentioned the performance has been strong over the last year. The NAV is up around 18%, the share is up about 23%. Could you tell us what worked and what were the challenges over the last year?

Maybe we start with the challenges. It's always nice to get the difficult things out of the way. I mean, I think we talked a lot of this about in the previous set of accounts. To us, going back a year and a bit ago to entering this period with the accounts covers very much worries about tariffs. That was the big world works because it's connected, and goods are trading. So, if you break all that connection by suddenly slapping tariffs on goods, that could have led to a lot of dislocation. So, we did worry about that. We're worried about the macro politics, particularly out of the U.S. And then valuations were at pretty high levels. It was a really good year, the previous year as well. So, stocks and shares looked expensive. So those, I think, were the 3 challenges. And if we sort of address those quickly, I mean, the tariffs, a lot of noise, a lot of bluster, but actually it didn't lead to rising inflation. That was the worry that prices would have to rise to pay for taxes. And actually, inflation has gently fallen away, particularly in the U.S. market. And so, it hasn't led to a big rise. There was a lot of dislocation of trade in the first sort of half of last year, but it's beginning to settle down. And I know the Supreme Court has thrown out his current mechanism of applying tariffs. There will be a new mechanism, but they're here to stay. And I think companies are getting the hang of it, should we say. And I think, therefore, there has been a bit of dislocation of trade, but it's manageable now. And when we're talking to companies, they feel they can work around the sort of tariffs that were negotiated prior to the last week. So, I think that's settling down. Macro politics, again, Trump, there'll be a lot more noise into the midterms in November in the U.S. But again, it's sort of more bluster with -- the wonderful line was TACO, Trump Always Chickens Out, wasn't it? So, he does float a lot of things and talk about a lot of things that don't always occur. So, I think, again, companies and consumers are working that one out. Valuations was more tricky, though, because, again, a lot of sectors, we haven't had a lot of earnings growth in the last sort of 2 or 3 years, particularly out of Europe. The U.S. has been pretty strong in earnings growth, but it's been in a small set of stocks. And so that was a challenge last year. We did see some of the rich valuations come off. So, good companies that I own or we own things like Compass Group in the U.K., which many of you may know, has delivered earnings exactly as expected, 10%, 11% growth, but it's gone from 26x earnings to 19x. So we've seen some stocks go down in value in a year when the market is up 18%. They're not broken. They're not performing badly, but that valuation probably just got too rich. And we did try selling a few of these, should have in hindsight, sold more. So those are the challenges. I think what worked well, though, things like Japan has a cracking year. The stock market has carried on into this year. It's been the strongest performing market year to date as well in sterling. So that's a nice one that's worked well. Some of the technology names, Richard, have worked quite well, [ haven't you ], in the U.S., if we look over the 12-month view. Would you like to...

Yes, exactly. I think we're seeing some very strong trends. And again, maybe just that continuation of the journey, trying to harness that a bit more globally. So whether it'd be in Japan, there's a strong domestic story, but also you can get exposure to semiconductor equipment spending. And then we can have that with ASML in Europe. We can have that with Applied Materials in the U.S. The same with, say, memory, which has been very strong, where, again, we can get plays in Korea, but also have some exposure in the U.S. or TSMC, which has performed very well. They're in Taiwan. But again, we actually we can own some of that stock via an ADR in the U.S. And to Alex's point, as we concentrate that portfolio and as the 2 of us manage 80% of the portfolio, we can just raise that conviction level where we see those earnings coming through, that cash flow coming through. So we think that's -- the picks and shovels have been a great place to play. AI and all of that CapEx spending we hear a lot about. And so again, we've been able to harness that in the portfolio in the last year.

Yes. And you see it when you look at the stocks, so which stocks did really well in which regions? So on that theme of sort of AI and capital spending; in Asia, it was the memory chip manufacturers, so Hynix, SK Hynix, Samsung performed really well. And then Taiwan semiconductor manufacturing, TSMC was the next best performing in that region. So very strong on that chips manufacturing. Same in Americas. So, Broadcom in the portfolio was the biggest producing sort of performance in the portfolio last year. Again, it makes sort of special chips that do a lot of the AI inferencing and processing of data. So those were the big standout ones. It's a bit more different in Europe. So it was really financials were a strong driver. There's obviously less technology in the European market. So, things like NatWest Bank was -- boring on NatWest, government owned it. It was our best-performing stock in the European region, followed by UniCredit in Italy and then Safran, which is sort of aerospace and engine. So a very different dynamic there. And then in Japan, again, it's a total switch, much more about the consumer, about consumer spending finally. So, Sony Entertainment was the best-performing stock, again, sort of films and gaming and things like that. And then followed by Shimizu, which is a contracting builder, so makes buildings. So very different -- Japan was very different in the stocks and the performance to some of the other AI technology in the larger regions.

It's nice to see Japan performing well. After most of my career, it's been quite a bit of a laggard over the last 30-odd years. Just turning now to the dividend. That grew about 2.1%, but you did use a bit of reserves. What does that tell us about your approach to income now going forward?

Yes. So, we flagged that again last year that I think we do want to capture the best companies in the world. And I think that's what we want to deliver to our investors to you. And so doing that, a lot of those names are in America. And the American market is a lower-yielding market. So as we move assets into that region to capture that value and that return, it does reduce the income in the shorter term. Now we hope they grow profits quicker. We expect their dividends to come through, and we see more and more technology companies paying dividends and they never did. So you look at Apple and Microsoft and the dividends they're paying now relative to 10 years ago, order of magnitude higher. So we do expect good growth to come from income. But in doing that, there's a little bit less coming in the door in the short term. But we've got revenue reserves for that, and we've built them up for decades. If you go back over 30 years, a bit longer than my history with the trust. We've only ever dipped into reserves twice. Once was 2011 when we went to Japan, I had a very good investment case, I think, for Japan at that time and Japan was a lower yielding. So it sort of parallels to today, and that worked, which was quite good. And then 2020, when we obviously had COVID and a lot of companies' uncertainty, they temporarily cut the dividends and they will return. So we've done this before. We've got revenue reserves, a very comfortable position. But again, we're buying companies that I think you should expect us to see the dividends growing quite strongly. But this may be 2 or 3 years where we have these investments, to say, slightly lower-yielding stocks, but much more opportunity for capital appreciation.

And then, given that we've mentioned the U.S. and AI, Richard, you've taken over management of the U.S. portfolio. Can you talk a bit about how you've changed that portfolio and how it's currently positioned?

Yes. So I've been a technology manager my entire career. So, 20, 23 years, and I've been one of the lead managers on the Janus Henderson Global Technology Leaders Fund for the last 12 years. And in the last decade, we've done about 20% annualized in sterling. And you sort of think back to how do we deliver that? We delivered that because effectively, we had a portfolio of companies that were growing their earnings at 20% a year, and you don't overpay for that as long as you can keep the valuation stable, then effectively, you pocket that earnings and cash flow growth every year. So, that's exactly the same philosophy, I think, when we come into a Bankers format. I think the thing that maybe we just continue that journey of just leaning a little bit more into that growth in the U.S. I mean that is the market that has consistently delivered that stronger growth. If we want to deliver as global equities and deliver for you double-digit returns over the longer term, where can we get consistent double-digit earnings growth and cash flow growth? A lot of that is in the U.S. and a lot of that is in some of those technology companies. So we want to be able to harness that. And then, maybe think about that portfolio a little bit more globally that if there are better yield opportunities in Asia, but maybe some slower earnings growth there or in Europe, we can take advantage of that, but balance that out by having a bit more of that growth and maybe capital appreciation in the U.S. So, I think the only changes we sort of made since the sort of the end of the year was just to bring that growth rate up a little bit, but then crucially not overpay for that. And that's been sort of the core to sort of the way I invested in some more growth areas or technology areas. over the years. We can't rely on 0 interest rates or QE. That was an anomaly, not the rule. So, I quite like the current environment where the market has been much more rational, much more stock dispersion and not willing to overpay for certain stocks.

Because if we think about what happened in the U.S. over the last few years, and particularly last year, there was a lot of discussion around these -- the AI data centers and the CapEx that was being spent, but that sort of slightly rolled over this year into the concerns that AI is going to disrupt literally everything, and we never -- none of us are ever going to have a job again. What are your views now about how you can play those winners and those losers in that sort of AI sphere?

And it can't be both, right? Either AI is real, and it's going to incredibly disrupt our world and a lot of industries and impact a lot of stocks, in which case, we're probably going to need more CapEx or it's the other hand, in which case, it's not real, it's going to disappoint in which case that CapEx is going to be too great to build. I think we've got to kind of look for those opportunities where, particularly in the U.S., if you look at the U.S., particularly in the last few months, it's lagged a lot of the other markets, as Alex was saying, because there's been a lot of emphasis on the fear side, these areas and sectors and industries that will be disrupted. Someone launches an agent or Anthropic talks about something and all of the stocks go down. And that's a function of the U.S. market is very dominated by retail, by ETFs, by basket trading and you're just buying a bunch of stocks that may or may not have some real risk of AI or not. And I think as active managers and having the team at Janus Henderson as well as the dedicated team to Bankers, we can really drill down into, no, we genuinely don't believe that the stock is at risk from AI, and so the stock is now just sold off 20% or 30%, that gives us a great opportunity. We think people are overly worried about the CapEx spending or free cash flow of this company. And again, it's significantly derated, an Amazon now trades on half the multiple of a supermarket like Walmart. Again, that gives us an opportunity to step in. But I think these are rational debates. And again, it just needs you to do your homework and be able to build conviction that these are great opportunities to hold in a portfolio of the 100 best stocks and opportunities we see globally. That gives us the broadest opportunity set to be able to deliver, hopefully, the best outcomes for you.

And that plays to the strength of active management and making active choices over which ones you think are going to win versus those you think are going to lose. I mean we've talked about AI. We've talked about technology, but also financials, aerospace and defense did really well over the last couple of years. You've mentioned the exposure to banks, Alex, NatWest. Just talk a bit to us about how you're exposed in some of those other areas.

Yes. So, definitely within financial services, our favorite sector is banking under a -- number of reasons. One is, they've sort of captured the slightly higher interest rates. Now rates are coming off. But actually, suddenly, they're getting a real return on deposits when they've got virtually nothing. And so they capture more of that as well. They also hedge that rate forward, so they get more of that for longer. So that's feeding through in terms of returns increasing. So, return on the capital has risen from sort of low teens sort of 10% to almost 18%, 19% in best-in-class like a UniCredit. So, that's generating more cash. They're lending more. So that's, again, good building up profitability for the future. And then finally, they don't need to build more capital for the business. The regulators are telling them now you've got enough capital for the cycle. And so we're seeing very strong dividend growth coming through. So, dividends and share buybacks coming through. So that, I think, still got more to run. The valuations have recovered, but they're still on a 10-, 20-year view below their long-term averages. So, for businesses that are better managed, performing better. And I think the economy continues to grow. I mean the worry is unemployment goes up and the economy stagnate, that would be bad for banks, but I don't think we're in that scenario. So that looks good for us. And we've got very strong positions, mainly in Europe, mainly in Asia through Singapore, very high-quality banks in Singapore, good wealth advisory businesses, less so in America, where we've probably got more of the money center, so the investment banking, there's some big IPOs, a lot of capital market activity in the next 12 months. So we think we'll capture more of that in those sort of Morgan Stanley is a big investment for us. And the mid-range sort of regional banks have still got problems, I think, with real estate -- too much real estate lending. So those -- that's banks. And then aerospace and defense, we've definitely -- my view is the aerospace is a longer-term cycle story. And so we own Safran makes jet engines. It's the #1 jet engine manufacturer in the world for narrow-body aircraft. We've got RTX, which is a U.S. company, which is also in aerospace, but also defense, makes the Raytheon missiles. And I think the aerospace is interesting because of Boeing's problems building planes, even Airbus had problems with the interiors. The average age of a plane is getting older and older. So, it's up to 14, 15 years now on average. It was 12 before COVID. And air travel is likely to accelerate and continuing to grow, I think, around the world. So, there's a big replacement cycle. The new stuff is better than the old stuff. So I think you've just got a very nice model, whereas defense spending is -- it's big now. It might not be big in 5 years' time. I think it's probably more volatile in terms. And so, we're getting much better ratings, cheaper stocks in the aerospace cycle than I think in defense. But we do own defense. So we're not ignoring it.

And when we look at the portfolio in totality, when we look at the future, the gearing and the approach to gearing, you've gone from about 2% to 6%. So what does that tell us about your outlook for the markets looking forward into 2026 and into '27 and beyond?

Well, I think we're pretty constructive. We think that inflation generally is under control. There's rate cutting in many bits of the world. There's some stimulus and some tax cuts coming through, particularly in the U.S., where we'd probably be a little bit more incrementally sort of positive. So that combination of -- you don't tend to have recessions or stock market crashes without a major tightening of financial conditions and in most places, we're seeing a loosening of financial positions and generally a bit of fiscal stimulus in most places. And as a result, that's a pretty good backdrop for companies to deliver better earnings, better cash flow. We think we just got to manage that sort of valuation. The stock markets have gone up for a little while now. And in many cases, particularly outside of the U.S., a lot of that's come from some low valuations that have rerated to some degree, and now they've got to sort of follow through with some of that earnings growth. But again, I think that's a pretty sort of decent backdrop to be able to invest and that reflects in the gearing. And then as interest rates come down, that allows us to maybe be a little bit more tactical with some shorter-term borrowing that we could use to potentially increase that gearing if we see a nice sort of period to be able to step in. So, I think 6% is comfortable, and we've got some optionality to maybe increase that if we need to.

And the other sector, I think, that's been quite interesting in the last few months has been some of those mining stocks, gold, silver, everything you read about what's been going on in some of those commodities, it's been extraordinary. So, just a little bit about how you're positioned in some area like that, mining?

So I think on gold, so I've always tried to stand back a bit. The drivers for those are very -- they're often sometimes a bit challenging to really get a handle on. They're about sort of people's worries about currencies or store of capital. And so us applying our lens of free cash flow, long-term investment stories, how can we buy things and benefit for the long term. Gold and silver don't really stack very well in those areas. So they have gone up a lot. And it's sort of an area I think we've always -- I've always resisted going into. It doesn't pay a dividend. There's no return on those assets. So I think lots of areas of the world, you've just got to leave and get somebody else to do it. So we don't do that. But we have increased over the year exposure to mining. We entered sort of 12, 18 months ago with virtually nothing. It had a cycle -- a difficult cycle of CapEx growing, worries about China, a lot of dividends got cut. So it was definitely an area to underweight. And we've been buying back mainly through Rio Tinto, which again, we see as a very strong company, good assets, very low cost of production, predominantly out of Australia. So, again, it's a long-term winner, but we're still underweight the sector. So building up, as Richard hopefully saying, if the world picks up a bit, GDP picks up, we should see some more building, some more demand for these raw materials and maybe we can increase that. But we've been on the sort of slightly -- a sideshow of that. We probably had more energy. It was as an area where we have picked up, where the oil price has actually recovered reasonably well. And particularly the companies we own have been improving profitability. So, again, moving around assets, spending CapEx in better productivity areas, and we're seeing returns pick up. So, that's an area we've captured reasonable value.

Yes. Energy sector has been one of the best-performing sectors this year, actually, I was looking at the returns. But on that -- I mean, we've talked about you being very constructive about markets generally going into '26. Just anything that you're particularly nervous about your key concerns, risks that you worry about? Where do you start?

I think with the current incumbent of the White House, there's going to be volatility. I think we know that. I think that's kind of exacerbated in stock markets where there's a lot of leverage as well. And so we've seen various bouts of sort of fundamental selling than sort of with in-force selling off the back of that. We had that with Liberation Day last year, you go back to the summer of '24 as well. So, I think we just have to accept that. Sort of there's a slight degree of chaos is the new normal. But whether it's TACO, whether it's the fact that there's just a little less sort of extreme sort of tail risk when we think about tariffs or whatever it is, that again makes us a bit more constructive about the world. So I just think that we're debating interest rate moves of 50 basis points, not 5% anymore. We're thinking about tariff increases of 5%, not 50%. Again, that just makes that the outcomes just a little less kind of variable. So, don't get me wrong, there are risks, things will happen that will be unexpected. But especially when we think about the future in the stock market, the stock market is a future discounter. So most of the things that we talk about are in the newspapers every day are being debated and discounted in stocks and in stock markets today. It's normally the left field ones that we have to sort of worry about. I think AI risks and disruption to areas will continue through this year. But again, I think every time that should give us an opportunity if we're picking the 100 best stocks in the world, that should give us an opportunity to step into areas or avoid areas that we think are particularly at risk.

And as always, being diversified is very important and recognizing the risk/return characteristics. So, thank you very much for your time today. I really appreciate that. Is there any Q&A for anyone in the room? Happy to take any questions.

We need to [indiscernible] ask questions, I think we'll give you a microphone, which is important so people online can hear the question. And could you also say your name?

Martin Brooks, ordinary shareholder. Thank you for that discussion. I just wanted to try and make sure I understand the roles of Alex and Richard in terms of their portfolio going forward. Because I've always -- Alex has been here a long time, and I've always assumed he's the one in charge of like the fund allocation between the various regions and things like that, that hits his responsibility. Now we seem to be in a situation where Richard controls the North American portfolio, which is 65%, but he's also a co-manager now. And so, I'm not quite clear whose responsibility the fund now falls in terms of investment. I'm not sure if I'm making myself clear.

Very clear.

But I think it's like, for example, the allocation of investments between the countries -- the regions as such. Before it was very clear, it was Alex. Now we've got Richard, who controls 65% or whatever it is in the U.S. Alex is only controlling the Europe, which is about, what, 16%. But who actually is in charge of that allocation process, for example, when it's co-manager?

That's a very good question and the question the Board asked when it came about, but I'll let them answer.

Yes. Genuinely, it is a joint decision. We sit and talk about things. And I think I enjoy that debate. And it has -- you're right, for many years, it's been -- it's just been on my shoulders. It's nice to debate. I obviously before debate with the sleeve managers, I would debate internally with other peers running sort of global money. But I think it's nice to debate it with somebody who's really involved and responsible because we both have to share in that responsibility for the performance of the trust. And so we talk and we debate and we make decisions together. And I think it comes out as a single decision, but it's the pros and cons of what we're doing and where we're moving things are joint. We're used to this. I mean we run a lot of -- I've run joint funds for many years with other PMs. You run a -- in your other roles. So I think at our side, we're used to this. It might -- your side, think, well, hang on, shouldn't there be one person making one decision. I think fund managers are used to having -- trying to share these decisions amongst themselves come to one decision, but it's a joint thing.

So from our perspective, it works very well.

Yes. I mean, I think just as a sort of follow-up from my personal viewpoint, if you look at the holdings, we've got the top 18 holdings all in the U.S. market. We've got over 65% of the assets in the U.S. market. So extra expertise from the U.S. side, I think, is extremely valuable. So, it wasn't a comment as regards...

Question?

My question being -- sort of suggesting I'm not happy with the arrangement because I think the U.S. and also technology is such a big area of the fund going forward.

I think maybe one other element about, I think and Alex is very strong on the macro side and brings that in terms of the asset allocation. I think maybe what I can bring is a little bit more on that sort of bottom-up on the stock side. So when you think about geographies, one of the best-performing markets last year was Korea, and KOSPI was incredibly strong. But the KOSPI was incredibly strong because 35% of the KOSPI is 2 stocks at the beginning of last year, which were 2 memory stocks, Samsung and SK Hynix, and they were up 150%, 200%. Micron was up 200% in the U.S., but it's not 35% of the S&P 500. Otherwise, those returns would have looked very different in the U.S. So, I think a lot of what we think of as top down, actually, when we think about those companies, Samsung and SK Hynix are not selling chips to Korea. They're selling chips to go into a data center in the U.S. or in the Middle East or somewhere else or if we buy a European consumer goods company, again, a lot of that luxury goods will be going to China or the industrial equipment will be going to somewhere else in the world. So a lot of what we're investing in, even if we're investing in that from a -- that's where it's headquarters, that's where it's listed, actually, their exposure to end markets will be somewhere completely different. So I think that's where we can marry some of the top down with some of the bottom up when we think about that asset allocation.

Any other questions?

Colin Beckham, shareholder. I always like reading the annual reports, and I always like reading the activity, the buys and the sales and whatever. But I noticed a phrase in here that I've not come across before and I'll paraphrase. We sold it because it reached our price target. So my question is, when do you decide what the price target is and what is the price target?

Usually, when we buy something, we say, well, what in our mind is the fair value? And hopefully, we're paying -- well, we're paying less than the fair value. So we've set a price target when you normally buy a stock, and we often record that in some spreadsheets and track them towards that. But that's -- it's an evolving price because obviously, new results will come out and you might say the cash flow is better, the profits are higher. That target price can move a little bit higher up, maybe the peer relative valuations move up. So they're evolving things. But I think once the stocks move up and through those price target, you're beginning to wonder, well, why do I own it now when I can't justify -- reasonably justify the share price. Momentum is carrying it through. And it's at those points, you either -- you do want to genuinely start taking some profits and selling positions. That's how I think about it.

And I think when you think about maybe some of the growth areas, the key is trying to find that unexpected earnings growth. If the stock is very expensive, again, we're investing in stocks, not because it's an exciting company or it's got some AI or it's great. Those are reasons why it's a great company, but not necessarily a great stock. So I think whenever us or any of the team are looking at these stocks, we think about what is the realistic forecast for this company and what are we willing to pay for it. And that's a dynamic conversation because I think those earnings forecasts can change over time. Hopefully, if we're owning it, for the better. And then on the other side, what's a reasonable valuation? We have stock markets go up over time, again, we're thinking about the opportunity set sort of relative to the rest of the world. So again, how does that look relative to where everything else is sitting. So it's not a -- once we set the target price when we initiate the position, that will stay the same at an item. It will be dynamic along the way, but it's very important to have that discipline. And again, from my side, having kind of managed some of these technology stocks over the time, you have to be disciplined. It doesn't pay to just kind of play momentum and create a full theory. Eventually, you'll get caught out doing that, and we won't have consistent returns.

Any other questions?

My name is Sally MacDonald. I'm a shareholder. I've got 2 questions. One is on portfolio construction for Alex and Richard and the other is on gearing, a question for the Board.

Sorry, I didn't hear your last question, your second question.

Second question is on gearing, which is a question for the Board. On portfolio construction, there's quite a tail of very tiny stocks at the bottom end of the portfolio. Obviously, some of those are just coming in and some of them are on their way out. Perhaps the team could comment on that back end of the portfolio for us. And on gearing, my question is, whether the Board would consider different types of gearing. You have been using short-term borrowings. Would you consider CFDs or some kind of longer-term debt? I appreciate the markets have been in turmoil recently. So it's been quite a smart move to not go down that route in recent years, but perhaps we could have your thoughts.

I think just in terms of that tail, as Alex has said, if you kind of rewind the clock 2 years, I think part of concentrating the portfolio was to make sure that we had real conviction and those weights were higher and they were actually going to punch in the portfolio. I think the other thing that we've tried to do a bit more sort of recently is to think about, well, the challenge with some of the sleeves in Asia or Japan is if they're 10% or a smaller sleeve, well, unless the manager is going to just own 5 stocks, in terms of their actual size in the total portfolio, they're not going to necessarily be as big. And so, again, how can we help solve for that? And one of the things we've done is to -- on the same theme, try and get more exposure in different areas. And the other thing is, as I was mentioned before, like a TSMC, again, unless [ Sat ] wants to have half of his Asian sleeve in TSMC, we're maybe not getting a top 10 position in TSMC in Bankers. And we like -- we want to because we think it's a high conviction name. So again, what can we do? So we bought -- one of the changes I made in the U.S. sleeve was to buy the ADR and to buy a big position there. So we had 2 positions that end up being a big position in TSMC, reflecting our conviction. So I think we're trying to find different ways to be able to make those high conviction names punch a bit more in terms of the actual sort of attribution we can ultimately deliver in the results and in the performance. And I think you'll see more moves from us to come in as we try and just make the most of our conviction in the opportunity set in front of us.

And then if I address the gearing. So, actually, we're all geared -- all our gearing is out in the distance. So the next loan stock to retire is in 15 years' time and then 20 years plus. So the average cost of borrowing is sort of 2-ish, 2.3% or something, which is fantastic. It's lower or not far off our yield on the portfolio. So all the 20-year return and income growth is coming to us as shareholders. So, I gave up the short-term facility because it got expensive. It got to about 7%. So we let that lapse. We may or may not put that back in as we're looking at that as rates fall, but it has to be at a reasonable rate. I want to be borrowing with a 4 in front of it. So there's -- I think there's room to put even more long-term debt on if we see rates of that sort of 40-year money come down again. The pension funds are basically the issuers of that. And so if we can get some cheap 40-year money, we'll put it in. The question you're asking a bit more technical about CFDs. And I think that goes back to the heart. I think of this trust being 100 -- nearly 140 years old. It's got there because it has an element of conservatism, and it doesn't always push the boundaries, and we do things in the right way with a considered way. And I've seen enough times, I think, where you can push that envelope. And in CFDs, I know many of you might know what they are, but you're basically relying on a bank to be the counterparty. And we've seen those bank go bust in times. And what the contract you thought you had, you didn't have, whether that's a Bear Inc. or it's Credit Suisse or it's others. And I think that's just a step too far. I think we should be conservative. We want our assets to be managed by ourselves to be in a safe place, and they're all in our name and not sitting in an investment bank. And I think that's probably the right thing. We could shave a few basis points, but why would you for the risk? The old adage of picking up coins on the railway, I think applies to some of these. Let's not push that envelope too far. But hopefully, we will put some more debt in, in due course. There's one here and then come back to you.

[ Martin Stenson ], private investor. Your -- the first 25 -- the 25 or the largest holdings, right, are in American tech companies. Now they haven't been doing very well over the last year. As a matter of fact, Microsoft, I believe, is about 25% down. And the American market is very, very high P/E ratio. What's your view of not diversifying from these stocks because you are very exposed to that particular -- those 7 large tech companies?

As I just point out, I think you're right in that they've had a slight -- and Richard will touch on it in a minute. But the NAV, the net assets of this investment in Bankers today are an all-time high. We're just a nudge 150p. We've never been that high. So I appreciate, yes, the things are rolling over, but other things are doing really well. And so yes, they've gone a little bit down. But the aggregate, back to Jane's point, diversification, having investments in Japan and other markets, they're doing phenomenally well. We can't hit everything out of the park. And so I think we -- that diversification is really coming through. Yes, we do have some large tech names, but we've got lots of other things that are doing well. But Microsoft is one we have addressed a little bit since this period end.

Exactly. So, obviously, they're significant parts of our benchmark as well. And so if you think about the big sort of Mag 7 names we're actually overweight, we don't own Tesla. And then the ones that we are significantly overweight would be NVIDIA, Meta and Amazon. Now actually, I'd argue in all 3 of those cases, actually the P/Es aren't and the valuations aren't particularly high. They'd all be high teens, 20x multiple, which is more expensive than some of the U.K. stocks, but actually for the growth that they're providing and from the U.S. market perspective, actually, in many cases, they actually trade at a discount to the market. So, NVIDIA is the cheapest it's ever been relative to the SOX, which is the semiconductor index or even versus the U.S. market that it has sort of ever been. And again, we think that's created an opportunity. So we were in Broadcom for most of last year. But then when NVIDIA derated significantly in terms of valuation, we thought that was a good opportunity to buy it. I mentioned Amazon before, trades at half the valuation of Walmart, which again, we think is an attractive place to be able to step into it because we don't think it's -- the fact that we order everything from Amazon, yes, we do it online, but there's a huge real-world fulfillment and logistics centers that's delivering all of those Amazon goods to us. And again, it's very hard to AI that. And we think on the cloud side, they're delivering good growth to a very diversified group of customers, not just in OpenAI, not just an Anthropic, but many others. And actually, that's the missing part of this AI sort of enthusiasm that actually is significantly accelerating the shift to the cloud. So a lot of people are shifting to the cloud before they then think about what they're going to do in terms of an AI strategy. So I think we think there's an opportunity there because actually some of these stocks are counterintuitively, actually quite cheap at the moment, not just relative to history, but just relative to the broader set of opportunities and stocks that we're seeing. But we're being quite active within there. As I said, we're overweight 3 of the stocks. We've significantly reduced exposure to a couple of other names. We don't own a Tesla because it trades on 200x P/E or so, and we don't -- we're not going to be participating in a SpaceX IPO because we think the valuation is probably likely to be very high. We'll have to see what it is. But at this juncture, in terms of the numbers they're talking about, we think that is too high. So we're trying to maintain that discipline. And as I said, even with my hat on and thinking about these technology companies, we have a U.S. sort of portfolio that is trading only at a slight premium to the U.S., but is delivering that high teens earnings growth, and we're paying about just over 1x PEGs if you think about the valuation versus the earnings growth that we're delivering. That's roughly similar, which we think is a reasonable place to play. I think conversely, some of the other areas that have been a bit more challenged through this kind of AI disruption fears have been these companies that are seen as quality compounders for a very long time, and now their competitive moats may be at a bit more risk, and they were trading at a significant valuation premium to the earnings growth they could deliver. And you've seen some of those stocks severely punish here in the U.K., but also globally and in the U.S. And you've seen quite a few managers that is their investment philosophy to invest in these quality compounders and pay very high valuations for them, and they've seen quite material downdrafts in some of those stocks. So, again, we're trying to balance both of those to sort of where we see exciting opportunities in technology that are reasonably valued and then not overpay for names outside of technology where, again, just because they're not technology, we still have to have that valuation discipline.

Thank you.

Alan, Private investor. Firstly, actually, may I just say thanks for this start of presentation. It does make a change from seeing the same graphs trotted out by the same managers or different managers where they're just swapping them from one company to another, but the information is the same. Going off with the, if I can advert to the first questioner and provide it's not too undiplomatic. Would it be reasonable to assume perhaps that the co-managership, and that's with respect to Alex, who still looks and sounds youthful, a long-term retirement plan.

That's very unfair. I'm still enjoying it. I'm managing the money and enjoy meeting the companies. I'll keep going while I am. Thank you.

And I think maybe also worth sort of mentioning that obviously, one of the other sort of the fleet managers that was working with Alex of a sort of slightly different demographic, left the company didn't want him to leave, but he did. So I think I'm maybe a little bit of a reflection of that, that there was that change and Jamie left. And so maybe I'm sort of filling those shoes.

Any other questions?

[ Tom Trevor ], private shareholder, quite long-term shareholder of this company. So I've been able to observe it over the years and obviously very pleased with it over the years. A couple of sort of observations and perhaps some comments would be appreciated. There is quite a lot of large global trust and There's only a handful of them, ones like JPMorgan Global Growth, things like the Alliance Trust and FMC. And if you're looking for a unique selling point of this trust, it's the area of focus and having managers who you could observe that performance. And you've got a mini-European portfolio here or you got a mini, at one point, Chinese, I don't know any more, but that wasn't mini U.S. And it was good that you had this feeling that was different from the other trusts. My nervousness from 2 areas. The first one is that although we're diversified on all these areas, in every single area I could look and think, we were underperforming the indexes in those areas in Europe by about 5%; North America by 3%; Japan, 4%; Asia, 4%. We're always underperforming in all the areas. And as our unique selling point is to try and be the leader, you can actually see those areas have visibility. That's a bit disappointing, I thought. The other thing that makes me a bit nervous is the discount and the size of the trust. In the era of corporate raiders, trusts tend to either get bigger or they get moved out. Now the size of this trust is about GBP 1.5 billion, GBP 1.6 billion. Now maybe a large trust, but it's a nice mouthful for someone -- it's within the scope of someone eating that up. And particularly if we run it at a 10% discount, that's a consideration that might have occurred to them as well. So, I suppose -- I mean, the 2 key points are, can we get that performance up, which itself would probably then make it a more attractive one and get the discount down. And secondly, are we considering our size because it may be that we need to be bigger in order to be more of a stand-alone one. I just feel we've remained about the same size and perhaps where we're all -- we could become -- I'm sure we're not, but we could become a sitting duck in the market.

They're good questions. They're discussed. And serendipity is always an important feature of any of these decisions. So, on discount, we don't try and maintain a 10% discount. We're below that, and we buy when we think it's appropriate. We don't necessarily have a discount target we're aiming at, but we like to keep it in a range where we feel that we're protecting and also buying it as a benefit to the company because it increases the asset value. So, discount is important. We're not wildly out of line with our competitor group. On size itself, that's a hard one. And I think the right -- the Board thinks the right thing to do is to concentrate on performance, and the manager believes that. And over the past 2 or 3 years, we have focused intensely on performance, why it's good, why it's bad and so on. And the moves we made are designed to help our performance. So you can influence your performance. It's quite hard to influence the discount other than through performance and possibly marketing. On the geographic spread, I think I'm going to let Alex talk about that market opportunity.

Yes. We were disappointed by some of the performance. As I've mentioned in the report, it basically came in that first month. It's a funny year-end as end of October. But that first month of this period, which is November '24, was a very violent month. It was when Trump got in. The polls were telling you he was sort of trending that way, but he got in and there was an awful lot of noise in turnover. And we had a very difficult time then. So a lot of stocks that we didn't own did very well. And then we spent the rest of the year trying to claw that back. So the numbers were poorer than I would have hoped. But actually, if you track them back from what happened from January 1, '25 onwards, the U.S. portfolio outperformed from that point of view. So, we got an awful lot back, and we've been continuing to improve. As of today, we're broadly in line with the benchmark. but way ahead of some of the names that you just mentioned, year-to-date performance against those much, much better. So, I'm pleased some of that action is things we've done. Some of it is the market. I think another thing we've been trying to do is, again, historically, Bankers with that slightly conservative longer-term view would struggle a bit when the market was up 20%. We were much better when the market was down 5%, we would be flat or up. But we've tried to make sure we do have some more of the market winners and that -- it's called market beta, also your exposure to the market. And we've improved that and raised it, and that's helped a little bit in a strong market, keep our NAV going up. So I feel we're in a much better trend, and I'm much happier with the performance and how we're tracking across the regions as well. But yes, that snapshot, I think we could do better and we have done better.

Does that answer your question?

It's really good intentions, [indiscernible] an interpretation.

No. And I think boards have to think about this constantly. It's sometimes harder to talk about it in public than it is in private. So, if the comments are pretty platitudinous, you'll understand the reason for that. We're big enough to survive and provided performance continues, thrive. There was another question.

Roger Higgins, private investor. Half of my question was taken by the previous speaker, rather through me. But on the subject of reducing discounts, I'd be interested to know, and forgive me, I simply don't know. Do you see a relationship between the level of discount in an investment trust and the price/earnings ratio that the trust trades under. When I look at my Google Finance this morning, it shows whether or not it's accurate, I'm not sure, your P/E ratio as being 6.75. My instinct, given your concentration at the moment on tech stocks is that, that's slightly low. I would have expected it to be somewhat higher, but I may be wrong.

It's possibly inaccurate. That doesn't make any sense whatsoever. I mean you could see a P/E ratio of our earnings, which is basically just the income we generate as a trust. So it's 2p, 2.25 and then 1.35 share price. It's bonkers at P/E. If that's the P/E of the underlying investments, so what's the average P/E of the stocks we own? And that would be roughly 17x, which is broadly in line with the global MSCI world or our benchmark, the FTSE 100. So we're not -- as Richard was saying, we're only paying maybe a fraction above in the U.S. and other regions were slightly lower multiples. So I'm not sure I've ever seen that research of P/E against -- so I'm thinking of underlying P/E against discount. It's more a liquidity and fashion and performance. I think as the Chair has said, I think simply perform is the best measure.

Think what we try -- maybe me coming in and having looked at Bankers from the outside, and I know you all looked at it from your side and invested and we appreciate that support is to have a little bit more -- Bankers is meant to be more balanced. And so when you think about some of the names that were mentioned before, I mean, you've got Scottish Mortgage Trust over here, investing in SpaceX and doing that. And then you've got many more kind of more value-orientated sort of global trust, Alliance Witan or an F&C. And I think Bankers sits in the middle of that -- of being balanced. We have sort of more growth investors here, but we also have some more value-oriented investors. And so we should be able to do well in all environments. And at the moment, growth to value rotation, the U.S. isn't going to be doing as well because of my sort of tilt, but then we're doing phenomenally well in Asia or in Japan. So, it's meant to be that balance for people who want global exposure, but don't want to bet on one particular style. We're able to deliver consistently in the middle. Now if there's particularly growth a year, there will be one -- probably be a trust that does better than us and on -- particularly value year, there might be another one that does better than us. But the key for -- when we think is long term, Bankers has been around for so long, can we deliver consistent capital appreciation, grow that dividend for 59 years, 60 years and onwards? I think we're just trying to continue to do the same thing, but we've made some evolution along the way.

Are there any other questions? Thank you. So if there are no other questions, we'll now proceed to the formal business of the meeting. I beg your pardon. I would have been -- I'm waiting. Thank you. So the 15 items of business to be considered. Resolutions 1 to 12 are ordinary resolutions, Resolutions 13 to 15 are special resolutions. Are there any questions on the annual report and accounts from the floor or indeed online? Nothing from the floor. So, Today, we will conduct a vote on a poll, and the poll will be certified by Stuart Miller, in back from Equiniti, the company's registrar, acting as scrutineer. May I remind you that only shareholders on the register of members, their proxies or corporate representatives of any corporate shareholders are entitled to vote. If you've already returned a formal proxy, your votes will be automatically included in the voting. Unless you wish to change the way you voted, you do need to complete a poll card. If you still wish to vote, you may wish to do so, your poll card will override any previous instructions. If you need any help, please ask now. If there's anybody specifically who thinks they should have a poll card but doesn't, please raise your hand and someone will look after you. Okay. So as it will take some time to complete the poll procedure or may take some time to complete the poll procedure, the final results of voting will be announced to the stock exchange and published on our website as soon as possible after the meeting. The provisional proxy figures received so far will be shown on the screen behind me after the poll has closed. I now declare the poll open, and please complete your poll cards and hand them in. [Voting]

So talk to yourself quietly while we wait. Not like an old meeting, is it? You stuck your hands up and it's all done and dusted. Ladies and gentlemen, that concludes the formal business of the meeting. Thank you very much indeed for attending, including those who have been participating online. For those here, we hope you can join us for some light refreshments now. Thank you very much.