The Bankers Investment Trust PLC ($BNKR)

Hello, everyone, and thank you very much for joining us today on the week's first webinar for the ideas for your ISIS series. I'm Jospeh Licsauer from Kepler Trust Intelligence. And today, we're going to be turning our attention to the world of global equities. And in just a moment, we'll be hearing from Richard Clode, Fund Manager of The Bankers Investment Trust. Now before I hand over, a very quick word on the format for those who may be new to these kind of sessions. Richard will speak on the trust for 20 to 30 minutes, sharing an update on the trust itself but also a perspective on the kind of current market backdrop. And after that, we'll leave some time at the end to move into a live Q&A session, where we'll aim to cover as many questions as possible. [Operator Instructions] So with that said, Richard, it's a pleasure to have you with us today. Over to you.

Well, thank you very much. And I know there's an awful lot going on in the world at the moment. So a great time, I think, to have a conversation. Please do take advantage of asking those questions. And I'll spend a little bit of time first just laying out what we're trying to do with Bankers and then very much looking forward to answering those questions. So I'll try and just take through -- I know many of the people on this call will be shareholders, many, many maybe not so familiar with Bankers. So I just want to spend a little bit of time just laying out what we're trying to do, why we think global equities is a good place to be and how we do it with Bankers managed by Janus Henderson. So in terms of what we're trying to do here, this is a capital appreciation plus we provide a growing dividend over time that's going to grow above inflation, but we're trying to deliver double-digit returns over the long term by doing that through -- mainly through capital appreciation. So again, that's a little bit different to maybe some of the more income-oriented trust out there, but we're not as growthy as some of the sort of Scottish peers that we have out there as well. We invest in -- globally in the broadest possible opportunity set in listed equities and try and find a core portfolio of around 100 high-quality companies that we think offer some exciting stories, but more importantly, deliver that profit and cash flow growth that we think can ultimately deliver that capital appreciation and also give us the income to be able to provide you with the income. We're benchmark against the FTSE World Index. We're a pretty sizable trust. We're about GBP 1.5 billion net assets. We're pretty flexible in style, which I think is important, and I'll get into that in a bit more detail. But I would very much position Bankers between a Scottish mortgage at the more sort of growth at any price private SpaceX sort of end of the market, but not at the sort of value end of the market. And so I think we give a very nice balance of that sort of growth versus value. We're not sort of any particular style we can provide both, which we think provides consistency over the long term, but also I think ultimately helps deliver that double-digit earnings and cash flow growth at a reasonable valuation. We think ultimately, that's what's going to deliver consistent capital appreciation over time as well as providing some nice income along the way. And we have grown that dividend in absolute terms for 59 years in a row, and we're very committed to keep doing that, plus with some pretty reasonable charges as well, particularly when you compare that to some of the open-ended funds out there. So you probably -- many of you maybe have seen Alex Crooke, my co-lead manager on Bankers. He's been managing this since 2003. So you would have seen him many times presenting on Bankers. This is a bit new for me. So just maybe a little bit of background on me. Actually, I was hired straight down at University by Katie Potts at Herald Investment Trust. So started life an investment trust, and I feel like I sort of almost come full circle. But in the intervening period and still, I'm actually one of the lead managers on our global technology leaders strategy. So running about GBP 7 billion in global technology. And I was brought in to be one of the lead managers on Bankers in September of last year, and I started taking over our U.S. sleeve, which is the largest sleeve in Bankers at the end of October of last year. So I'm relatively new to this. But building on just that consistent journey that we've had where we leverage some of the key managers at Janus Henderson to run regional sort of sleeves within Bankers. So Junichi there, who runs our Japane sleeve and Sat, who runs the Asian sleeve. But then also more importantly, and I think this has been part of the journey of Bankers, leveraging effectively the whole of Janus Henderson to deliver that portfolio of 100 sort of best ideas in global markets. So we're a big asset manager. We've got some real expertise, both regionally, as I kind of mentioned with Junichi or Sat, but also just from a sector point of view, so we're one of the biggest dedicated technology managers out there, managing the best part of over $20 billion in dedicated technology funds as well as in health care and biotech, very strong as well as global property. And again, we can take that regional sector expertise and bring those best ideas into bankers to deliver that global sort of very diversified portfolio. This is one of the longest-standing trusts out there. But again, I think just for anyone who's less familiar with Bankers, the name maybe in situation is the financials fund or something else. This is a global equities portfolio, nicely diversified. We'll go into a bit more into that. It's been around a very long time, and we see as a great way of getting exposure to global equities over the long term with a nice little bit of income on this side. So just to feed into a little bit what we're exposed to. So this is truly global. So we've got exposure across the world. Again, we think that's the best way to harness key trends and innovation that we're seeing all around us. We'll get into a bit more about AI, but also just in terms of geopolitics and risk. We want to be diversified in terms of geography, and you can see that on the left-hand side. But then again, I would always note that geography doesn't necessarily mean that the companies we are investing in are actually exposed to that geography. A good example of that is last year, everyone was very excited about the KOSPI or the Korean market. I sort of highlight that 35% of the KOSPI is to Korean memory companies, and they're selling their chips into -- with NVIDIA chips into data centers, mainly in the United States, not really got much to do with Korea. So again, it's really important to think about what that end company that you're investing in, not just where they're headquartered, but where are they actually selling to, where are their end markets dependent on much more than just where that company is listed or headquartered. But again, the important thing is to have diversification, particularly given what's happening at the moment and some of those black swan and left field events that we can have. And then from a sector point of view, again, plenty of diversification. So within that, we want to harness innovation in technology, but we also want to have some more defensive sectors in there like health care or REITs or utilities. And again, we can provide that balance in there as well and provide strong ideas from a variety of sectors rather than just being a technology trust like some of the ones out there in the market or being overly focused in one area or overly defensive or value orientated in just like some of that U.K. exposure where you're more exposed to telcos or banks or to materials and oil. Again, we want to have that broader exposure in the portfolio so we can genuinely give you a global footprint and exposure. We think, again, that's the best way that we're going to be able to deliver consistently double-digit earnings profit, cash flow growth to ultimately deliver strong returns in that Bankers share price for you. And that's the key for us to be global. We don't think geography is a lens of really being able to invest. Again, as I said, the bottom-up companies might have exposures to all sorts of different areas. They might sell luxury goods to China or selling industrial equipment to China or they might be selling pharmaceuticals to the United States. Just where their headquarters are listed doesn't really sort of tell you what the end market exposure is. And again, even if you kind of felt that you had exposure to strong GDP growth in one economy somewhere, again, there's no real correlation between GDP growth and the performance of stock markets in that country. So again, for us, it's all about that bottom-up stock picking to try and find great companies that we think can deliver double-digit growth. So well in advance of GDP growth globally, where can we find those. And again, we've got the widest possible opportunity set to be able to find that with some of the experts that we have at Janus Henderson. We can truly capture those major trends and themes that we can all feel around us, whether that's AI, whether that's deglobalization, and aging population, geopolitics, we can really sort of harness that across the globe and be able to, again, find companies that can benefit from that. I know there are a lot of risks around what's going on in the world at the moment, but that also creates investment opportunities, and we want to be able to harness that to deliver that capital appreciation as well as that income growth. And just a little snapshot on the right-hand side of where are we actually taking bets. So not just our absolute positions, but where are we taking big bets versus our benchmark. And you can see I'll go into Amazon and some of the utilities like NextEra later. But RTX, unfortunately, in this world, we're very rapidly depleting missile stockpiles in terms of both offensive and defensive missiles. And those missiles, whether they be Tomahawk or Patriots are made by Raytheon, which is part of RTX. So again, that's a company that, again, unfortunately, does benefit from the world that we're currently in and all of those horrible sort of images and videos that we're seeing at the moment. But that company is aiming to double its Tomahawk capacity. And again, Trump was meeting with the CEO of that company just last week to try and push them to even more urgency ramp up that capacity. But also on the defensive side and again, all of those drone interceptors or ballistic missile interceptors to be able to defend countries, again, that's made by RTX as well. TSMC, I'm sure many of you familiar with, but again, we think is a great player, obviously on AI compute. But you'll see some of the banks there, whether that be Morgan Stanley, that gives you a bit more exposure to some of the investment banking and some of the -- if we're going to have SpaceX IPOs or Anthropic or OpenAI IPO-ing, again, that could generate some significant fees for companies like Morgan Stanley in a way that the U.K. banks don't benefit from that so much. But we still like U.K. banks like a NatWest that, again, we think are still very, very cheap even after a very nice move, again, getting more surplus capital, which they can use for M&A as we've seen recently, but also to return that to us as well. And then companies like Applied Materials, the reason why we like TSMC or Applied Materials is effectively post ChatGPT, the likes of NVIDIA were able to grow so significantly by using excess capacity in the semiconductor industry. from post the pandemic when we all thought we were going to be working from home forever. And so the industry built a huge amount of capacity. That then ended up with a massive amount of oversupply. That was used up by the AI sort of ramp, but now we're effectively full. And so that's why TSMC has just committed to building significantly new fabs and capacity as well as in the U.S. through the end of this decade, and that's leading to significantly more semiconductor equipment spending, which is, again, a reason why we want to own a name like an Applied Materials. But you've got everything there from Italian and U.K. banks to investment banks in the U.S. to defense companies, to semiconductor manufacturers in Taiwan to Meta, to Amazon. You have the whole sort of swadee. And again, that's why we think it's important to be global to truly capture these trends and again, to have some differentiated exposures and where we think that the most exciting growth opportunities are out there in the world. In terms of some of those trends and themes, just to give you an example of what we're looking at. So obviously, I sit here with a lot of technology expertise. And obviously, I see there's huge build-outs of data centers. I just had my team out on the West Coast in Seattle, meeting with Amazon and Microsoft. Another one of my colleagues was just out in San Francisco at the Morgan Stanley conference, meeting Jensen Huang and Satya Nadella. And again, all of that data center build-out is going to require a huge amount of power. And again, to harness that opportunity, let's think about that globally, let's think across the entire supply chain. So whether that be grid-based companies or people making the electrical equipment or the power equipment in Europe or actually the utilities themselves. So again, utilities are normally seen as being quite boring. But actually in the United States, in a lot of those states where they're building these data centers, that's putting a huge amount of pressure on the electricity pricing. And that's going into midterm elections at the end of this year, that's actually quite a topical and very sensitive voting issue. And so actually, what you're seeing in a lot of the states such as Florida, where NextEra are very involved and have a big kind of energy sort of not just producing the power, but also just selling that to a lot of households in Florida. They're being able to actually bifurcate the market. And on the one hand, we're used to kind of these regulated returns, you're only allowed to charge so much or increase prices so much. But actually, they're being allowed for these data center customers, the Amazons and Microsofts to be able to charge them much higher pricing and keep that separate and be able to make much higher prices, much higher returns on that capital, much higher margins, and that's encouraging them to build more capacity. So not only do you get faster growth, but you're getting faster growth at higher margins and higher return on invested capital, which again, we like. So again, even in boring old utility land, we think there's some interesting plays we can take advantage of globally as well as trying to take advantage on that equipment side and infrastructure side from Hitachi in Japan back to Europe, back into the U.K., just given the strength of this trend that we see continuing for many years to come. So we can play these data center build-outs, not just through technology companies, but through the broader supply chain and enablers of that as well. And then I don't think we could really talk about global investing without talking about AI and especially with my technology hat on. I would just -- I know there's been a huge amount of debate around AI. So recently, we was talking about whether we're in a bubble or not. I certainly -- I've done this for 23 years as a technology investor. Just to give you my sort of two cents on this. Effectively, in terms of what I'm hearing from Anthropic and OpenAI as well as the big listed tech companies, we effectively hit a bit of a mini ChatGPT moment at the end of last year with the launch of Anthropic's Opus. So we got to a point where effectively agentic coding or an AI agent that does the coding is now better than a human as of that release at the end of November. And that has very profound implications. So you will have heard the Spotify CEO say that basically since December, none of his software engineers do any coding anymore. They just supervise the agents doing the coding. Now if AI is about coding new algorithms and new large language models, and then we've got new faster chips coming from NVIDIA and new GPUs coming from Google, we're going to get a much faster feedback loop that you can make -- you code and program these large language models much faster. You can then iterate them much quicker and deliver them to us much quicker with much faster chips. And so the feedback loop and the flywheel just keeps getting faster and faster. So we're at a period of actually accelerating innovation in AI rather than some idea that after 3 and a bit years, we will start slowing down. And that's why you're seeing the impact in the stock market. You're seeing just every day, it seemed before this war that there was a new sector that we thought was going to be disrupted. It was the software and the SaaS-pocalypse, but then it was financials and banks and insurance companies and marketing and every other sector was being disrupted. And that's because we really do think we're at the precipice or the start of this agentic AI world, which is going to be very disruptive to white-collar work in the way that sort of automation was to blue-collar work over the last sort of 50 or 60 years. And it's going to happen in a pretty compressed time period. Now from an investment point of view, obviously, we want to harness the key sort of beneficiaries of that from the technology side in terms of who's winning there and enabling that in terms of the actual large language models, whether it's an Anthropic when they list probably later this year or an Alphabet that did very well last year, the enablers of that and the supply chain through the chips, through the data centers, through the power infrastructure. But then also, I think on the other side, as we think of global investors, we want to avoid the areas that are genuinely going to be disrupted. Now at the moment, there's a lot of baby out with the bathwater and someone launches an agent and suddenly that sector is going to get killed, particularly in the U.S., where a lot of people trade ETFs and baskets. But actually, when we talk to the analysts here who have known these industries very well, talking to me and to my team about what Anthropic is saying, what OpenAI is saying, can we put 2 and 2 together to figure out which areas are genuinely going to get disrupted by AI and we really want to avoid and which are the areas we want to invest in because actually they're not going to get disrupted. And this is so important because I've done this for the best part of a quarter of a century. Not much else you needed to get right in the last quarter of a century that realized that the Internet was real and that the FAN were going to be the winners and you wanted to avoid high street retailers and traditional media. If you've done that, you would have done pretty well in global equities and generated some pretty nice returns and massively outperformed over the last 20, 25 years. We've effectively got to try and do the same thing through the next decade to harness great returns for you and avoid some of those disrupted areas and those risky areas. And the challenge and the reason why I think you need some specialism and expertise is I remember 20, 25 years ago being told by every high street retailer and every company that came in that they were going to be beneficiaries of the Internet. And in many cases, obviously, they were not only not beneficiaries, but they're actually severely disrupted and losers from a new technology because unfortunately, every new technology comes with opportunities, but it also comes with a lot more new competition. So in theory, high street retailers could have used the Internet to sell a lot more and have much higher growth rates. But unfortunately, it enabled people like Amazon to come in and disrupt them. And the same with traditional media. Again, it enabled people like Google or Facebook to come in and dominate advertising, enable people like Netflix or Spotify to come in and disrupt music and TV. And again, we'll see something similar in AI. Every company comes to meet you today and tells you they're going to benefit from AI. In many cases, they will, but in many cases, they won't because there'll be new companies that come in and disrupt them. And again, we're trying to sort of harness that as well as some of the -- again, some inflection moments we're seeing on the physical AI side in terms of robotics, humanoids, you saw the dancing humanoids in the Chinese New Year Gala, but also robotaxis. So again, we're going to see Waymo launch in many more U.S. cities through this year and into next year and also probably in London this year as well along with [ Wave ]. So we're going to see robotaxis come to the streets of the U.K. this year as well as in Tokyo as well as in the Middle East and in Europe. So we're at a point of, I think, significant acceleration in AI, in innovation, and that should create new opportunities for us to invest and harness those growth opportunities in this portfolio while avoiding some of those more disrupted areas. I often -- again, when we get sort of shown the charts of that we've got more exposure to the U.S. and more exposure to technology or they see some of the big tech companies we own in our portfolio. I often get pushed back as to, well, God, well, the U.S. is really expensive and technology is really expensive and some of these big tech companies are really expensive. I would just warn people just to say, just look at the numbers yourself, be careful with averages because if you have an average of 7 companies like the Mag 7 and one of those companies trades on 154x PE, then that's quite distorting to an average of 7 stocks. Actually, if you look at many of the other names, we would argue, in many cases, they're actually reasonably valued, if not, in some cases, actually quite cheap. I think it's extraordinary that Amazon would trade at half the valuation of Walmart, given we think that they have a very strong e-commerce business and retailing business as well as being very well positioned on the cloud side with AWS and actually their recent deal with OpenAI really positions themselves to be the leaders in agentic sort of commerce in the future. We would also argue that even a name like an NVIDIA, where again, people always tell me NVIDIA is so expensive, NVIDIA is trading at a discount to McDonald's. So again, we would argue that people very much are saying that this isn't sustainable, which is very different to an AI bubble when everyone just thinks that this is going to go on forever. So again, we think that there's some fairly reasonable valuations out there. And you'll notice the 3 companies that we have significant weights and significant overweights in Amazon, Meta, NVIDIA are the 3 cheaper tech companies and Mag 7 companies out there. So again, that's where we're just trying to provide a little bit of reasonable sort of rational valuation discipline around some of the names we own. So provide some really innovative companies and the innovation that comes out of NVIDIA is extraordinary, but we don't want to overpay for that. Again, we're investing in stocks, not in technology or innovation. And for a stock to work, we think it needs to be reasonably valued. So again, that's what we're trying to provide in bankers. The other thing to say is that I know that the world seems an incredibly volatile place at the moment. I've done this long enough, and I'm sure many of you have been investing yourselves for long enough to know that there's always something going on, unfortunately. Last year, we had Liberation Day, not long before that, we had COVID. The GFC wasn't that long ago. There's always something going on. And it always seems like the easiest thing to do is worry and not have your money in the market. We would sort of highlight this chart sort of slightly arbitrarily goes back to 1989. But over that very, very extended period, if you just kept your money in bankers, you would have returned 3,763% and done a nice 10% annualized over the very, very long term. And as I said, how do we do that? We do that by delivering 10% sort of earnings and profit growth over the long term, having a little bit of the dividend yield on top of that. You can see on the right-hand side, that's our sort of dividend growth versus CPI. And again, we've been just aiming to deliver around that or marginally ahead of that over time. And as a result, in absolute terms, we've grown that dividend 59 years in a row. We think that's important. We don't want to be a big kind of income trust because we think that, that just really undermines your ability to deliver the capital appreciation. You skew to value, you skew to income. It limits the stocks that you can own because you can't harness much of that sort of growth and innovation because they might not pay dividends even if actually many more technology companies do pay dividends these days. But we want to have as much freedom as possible. But I think it's important to pressure our companies to pay dividends because I think it provides some discipline to them. And then I think it provides some discipline to us as investors to have to provide dividends to you. So again, I think that just keeps us investing in more reasonable bits and parts of the market where they have that growth potential, but also more reasonable valuations. We're not investing in private companies. I'm not adverse to investing in the old private company. We meet all of them given my sort of technology hat, my technology team. But again, we don't want to have 30% of the portfolio in private companies. Again, I've done this long enough to know that, that can be a problem in periods of market drawdowns and significant stress as I've seen even in my career several times. So we think that this is the right balance, as I said, of providing good growth opportunities, but at a reasonable valuation, you're not having to go into major bits of the private world and paying ridiculous valuations for SpaceX or those sort of names, we can do that in a balanced way, but still provide that exciting trends in innovation and growth. versus some of our more value-orientated or U.K.-orientated peers here. So again, we would like to think the bank is very much sits in the middle of that. So for us, yes, probably the why now and the case and the concerns for investing in global equities seem to be changing day by day. But for us, just given the trends that we're seeing, if you want to beat cash and you want to beat inflation over the long term, global equities has really proven over the very, very long term to be one of those asset classes that really can deliver consistently over the long term. And as I showed you that chart, being able to do 10% compounded over decades we really do think that's a good place to be. You do want to be balanced within that. There are times when super growth works like back in 2020. There's been times, but it's been a little while until more recently that values work. You want to have a balance between the 2, and that's what we do in terms of the managers that run this portfolio, even if you think about between me is a bit more growth oriented and Alex is a bit more value orientated, then you throw Junichi and Sat in there. But I think in Janus Henderson generally, we've got a bit of a balance there. And that's really trying to deliver what we're trying to do with bankers, which is to provide that sort of consistent sort of return over time, both in terms of capital appreciation and net income growing over the long term. You can't do that if you're just a pure growth manager or a pure value or you're just focused on one market or in one sector. You've got to have that diversification. And I think that's what we provide there to give you your kind of core exposure to global equities, which we think is a great way to find that long-term capital appreciation. So I'll leave it there and very happy to take some questions for the rest of the session and answer anything that's on your mind at the moment.

Brilliant. Fantastic. Thank you, Richard. I think that was a really good update on both the trust, but also some pockets and themes that are going on in the broader kind of market backdrop, I think is really, really interesting. But let's move straight into some of the questions.

I think that's always the fun bit. AI, as you mentioned, has been such a big theme, such a driver of returns in recent years. But then there's also been a growing debate and growing evidence really that it's a source of concentration risk, a handful of stocks in the U.S. There's a handful of stocks in emerging markets that seem to tie themselves together and dominate a space. So from your view, and I guess for a longer-term investors' perspective, where do you see the most compelling AI opportunities? And equally, what are the risks that you and the team are kind of most conscious of?

Yes. And I think in contrast to, say, 2000, we're having a really rational debate around this. I mean, I think fairly consistently through the last 3 years, there's been this debate that this AI CapEx is too big, and it's not sustainable and where is the monetization, where the return on investment is. I would really point people to look at a few things that we've been looking at recently. I gave you this technology update. But the other thing is I've never seen in my technology career, and I've seen some pretty extraordinary companies through the last couple of decades, a revenue ramp like what Anthropic has just shown us. So Anthropic was annualizing at $9 billion of revenue at the end of last year. They gave an update in the middle of February that they got to $14 billion, and they just told us they've got to basically almost $20 billion. I've never seen anything like that in terms of the growth rate and also just the scale. I mean, again, just adding billions of dollars of revenue is not easy. Now that's revenue, that's not profits. But again, when they look to IPO later this year and in our conversations with them, they're going to show us a pathway to profitability and a positive sort of cash flows. Probably it was meant to be 2028, just given the inflection in the business, probably something a bit earlier than that and even an OpenAI. So I think we've been very laser-focused on ultimately the end customers that are giving the money to the hyperscalers that are giving the money to NVIDIA. Yes, we can be concerned about circular financing. But at the end of the day, the end customers need to make money, and they need to be self-sustaining. That's what's going to make this all sort of viable. Now to do that, they've got to give us technology that we all want to use and actually have some value and is productive for us. I think they're certainly delivering that. They then got to show they can monetize that. And again, I think they're starting to show that. So again, I think that gives us opportunities across the whole spectrum. I very much use a framework like the Internet. The first thing you do with the Internet is you have to build infrastructure. So the problem with 2000 was we had a dial up broadband and Nokia feature phone. And then we had to build fiber broadband. We had to build 3G, 4G, 5G networks and you to get everyone an iPhone. So we're seeing that with AI. We're building out the infrastructure. So I think there's opportunities there. Then you have a platform that was the App Store and Android. I think in this AI world, it's the hyperscalers, the cloud, we're seeing an acceleration of cloud adoption. And then ultimately, then you get the applications and the services. Uber was only founded in 2009. So 2 years after the launch of an iPhone because without an iPhone and apps, you couldn't have ride-hailing. TikTok wasn't founded until 2016. So 9 years after the launch of the iPhone. So again, I think that will give us a very long-dated opportunity set in some of these areas and some new IPOs. So I think there's a very broad spectrum of investment to be made. You want to pick a few of the mega caps, and then there's probably also some interesting opportunities across the whole spectrum, and that's how we're sort of approaching this opportunity.

Brilliant. And I guess staying perhaps less specific to AI, but on the technology theme, we just had a question come through, Richard, on quantum computing. And it would be interesting to get your thoughts on that and how you and the team at Bankers would play that theme.

Yes. So it's something -- a technology that's incredibly interesting. We spend an awful lot of time talking to companies from startups all the way up to the Googles and Microsofts are very involved in that space as well. And I think an important distinction to make is we're investors, not technologists or futurologists. So the difference is that we're investing in a company, if they're not meaningfully going to make more money from that new technology in the next kind of max 3 to 5 years, that's the difference between being an investor and a futurologist. And so basically, if any company -- and I come out of that meeting and think realistically, that technology is not ready for kind of prime time for at least 5 years plus, then that's not in the investment horizon for me or my team or any other Janus Henderson investor that's feeding into this. And that's where Quantum would be at the moment. I mean I think there's some good progress that means that we're on a more -- I think there's more conviction that we're on a pathway to something. But when that something is going to be and what that something is, I think, is still at least 5 years plus away. And the evidence I would provide for that is that in terms of the technology itself, there's so many different paths still being pursued to get there. No one's really agreed on kind of 1 or 2 ways that we're actually going to get there. And the companies that tell you it's going to happen the soonest are the companies that need to raise money and the more sensible people that don't need to raise money will tell you it's going to be at least 5 years plus until we can get something that works well enough, let alone going into sort of more of a mainstream sort of adoption. And we also think quantum will ultimately be delivered through the hyperscalers, the cloud guys because actually, you need a huge amount of traditional compute to make quantum compute work. And so they kind of need to go side by side and the most natural place for them to go side by side is in an Amazon or a Microsoft or a Google or GCP.

Interesting. Very interesting. And I guess technology and AI is a theme or a structural trend potential. seems to kind of dominate a lot of the conversation, right? But outside of that theme, it would be really interesting, Richard, if you or the team see any other themes or structural trends that are offering quite either early stages of value or those kind of multiyear, long-term growth potentials as well. And it can be either regional sector, but just outside of the kind of main hot topic themes, it would be interesting to see if you see value elsewhere.

Sure. So I mean a couple of things to pull out of that. I mean, actually staying on the AI side, our framework of trying to find companies that are genuinely going to benefit from AI outside of the traditional technology areas. Actually, one of the areas we would throw out is banks. And the reason what we're looking for is that, as I said, new technologies bring great opportunity and so the ability to cut cost and generate more revenue, but they bring more competition. Now a lot of people have said, oh, actually your competitive moat against AI is proprietary data. In a world of generative AI, I'm a lot less sort of convicted in that because I just think you can create a huge amount of synthetic data these days. And so actually, what we're looking for is distribution and network effects and/or regulation or licensing. So actually, 2 of the areas that we think are quite interesting are banks because you're a white collar work, you can really automate a lot of that and have a lot more productivity and grow a lot faster, have a lot more customers without necessarily having to hire significantly more people, but you've got the protection of regulation, which means that you're not going to have a start-up sort of AI bank providing you agentic AI banking all coming through the door tomorrow because they're going to have to get that banking license. And the same for, say, a Spotify or a Netflix, again, we saw everyone was playing around with sed over Chinese New Year. But the problem is a lot of that IP was copyrighted and was Hollywood. So Hollywood sent those seats to assist let us pretty quickly. We think the people who are best placed to actually be able to take AI tools so that you can create really exciting new things to listen to or to watch will be the likes of a Spotify or Netflix because they already have those licensing deals with Hollywood or with the music label. So we think there's an interesting sort of opportunities there when actually many of those have actually been in the AI loser camp in terms of market perception. And then beyond that, I think what's happening, unfortunately, at the moment, only plays into our sort of deglobalization trend. We had 50, 60 years of globalization post sort of China coming into WTO as sort of the poster child for that. And for various reasons, we're going the other way. And that just means that supply chains are getting more complex. They're having to be built regionally, not just outsource everything to China. When you build them regionally, you're often having to build them in more high-cost locations. And that means that you're building new factories, which normally means you adopt new automation and industrial equipment and technology and AI. But also that just -- that return just becomes more compelling when you're thinking about the labor costing so much more. I remember talking to one of the contract manufacturers that we own Jabil, and they were saying cost comparison between Mexico and the U.S. is $33 for a Texan worker all in with health benefits versus $6 or $5 or $6 in Mexico. So again, the way that you're going to offset that or increase the productivity of that worker in Texas is to have a huge amount more automation. And that's where we're seeing Amazon actually got a Project Vulcan this year, which is a lot more intelligent robot that they're rolling out in all of their warehouses globally starting from this year. Again, we think that can generate a huge amount more efficiency. But again, the building out of these regional supply chains, much more complex supply chains gives us a lot of opportunity to invest from REITs and from the property itself in terms of people who actually own those warehouses and logistics centers to actually what's going in those logistics and warehouses and factories.

And I guess a lot of opportunity, a lot of value as well, like you said that you're able to find not just within the AI, but supporting AI and broader. But no matter what theme or opportunity that you kind of come across, it's always going to be exposed to some uncertainty, particularly around geopolitics. And I know you've alluded to that throughout the presentation. But for you and the team, I guess, how do you go about thinking about geopolitical risk and particularly when it comes to building a portfolio, allocating capital, recycling capital, just managing that risk because there is so much of it is changing so frequently. It would be really good to understand that process, but then also where you see perhaps some investors overestimating the risks and the opportunities that have been brought to life by those geopolitical tensions.

Yes, absolutely. So I think it's important to have balance, and I think it's also important to have investors that are focused on their areas, not just generalists, but really understand not just I think the industries that they invest in the stocks they invest in, but also the sentiment and positioning around those areas. So no one came into this year feeling any goodness around oil. And everyone just thought oil was absolutely terrible. Actually, we had a pretty big overweight in Chevron coming into this year. Now I'll say that I was mainly on the sort of cash flow return story and then you had Venezuela and then you've had what's happening in the Middle East today. But again, that's played quite well for us. We own a company called TC Energy, which is a natural gas pipeline in the United States. We've had more broadly this halo trade, the sort of hard assets with less obsolescence, but we've owned 2 of the big U.S. railroads where again, they're not being replaced by AI anytime soon. We talked about some of the utilities before. So it's just by having that balance in the portfolio because I always remind people that the market is a forward discounter. So anything that we're worried about, the market does discount pretty quickly. The things that get you are the unknown unknowns, the things that come out of left field and really hit markets hard. And your best defense against that is, I would argue, a couple of things, diversification for a start and then also buying companies that are profitable, have strong balance sheets and are reasonably valued. You're just going to take less pain versus if you're in kind of areas that are ridiculously highly valued or super small cap and illiquid. You're just taking on additional layers of risk that we feel we take less of in bankers. And again, that's why we think we're a good sort of core allegation in global equities. And we give a good balance between the 2. But geopolitics, the media always focus on the risks. We would say, yes, there are risks, and we want to mitigate those, but we also -- it also creates opportunities. And again, can we harness those as well.

I guess for the trust and you've alluded to this already, there was a big focus on that capital appreciation over the long term, but also that consecutive record of income and growing the dividend over almost 6 decades, which is a very impressive feat given what's been happening over that time period in markets. So it'd be really interesting, Richard, if you could maybe talk through some of the opportunities you're seeing for income. I know it's not income focused and income led, but we're hearing a lot of conversation about evolving dividend cultures, particularly further east in Eastern markets. So it would be really, really good to get an idea on where you're seeing areas that have really stepped up in terms of income over the last few years.

Sure. And I'll maybe put that into sort of a slightly wider sort of question, which is I'd like people to go away from this, people -- people who are less familiar with Bankers with the sense that things are changing at Bankers. Bankers has been around since 1888, and we wouldn't have survived that long if we didn't evolve over time. And there has been an evolution in the last few years. People who have been shareholders and bankers will know this. We've moved a little bit more balanced in that sort of growth versus capital growth versus income, a little bit more balanced in that growth versus value. We brought down the number of stocks. We've kind of harmonized that portfolio a little bit more. So they're not just separate regional sleeves, but they're talking to each other a lot more. There's a lot more sort of coherence in that portfolio. And we've also looked inwardly as part of me coming on board, part of those conversations we have with the Board. We had a new Chairman come in a few years ago. So again, there's been these conversations about what do we want to be and we could have gone -- some of the other trust have gone, let's pay 6% or 7% income and there's various ways you can do that just in terms of the investments you're making or from a synthetic point of view. And we've taken the view that actually in terms of our end outcome to you as shareholders, the best outcome we can provide you to reach your financial goals is to have a balance and not to go too income oriented because that just limits too much of your investment opportunity set. So we want to have that balance between the 2. So that's the first decision we wanted to take. And then when we think about that globally, I think historically, we kind of do that more from a sleeve point of view. So our U.S. sleeve manager would have to still deliver 2%, 3% dividend yield within his portfolio. And that's just harder to do in the U.S. And I think now we just look at that from a much more kind of global perspective in that if it's easier and there's some better opportunities to get better yield and income in Asia, let's lean a bit more into that over there, and then we can lean a bit more into the growth opportunity over, say, in the U.S. and then balance that out. We've also got capital reserves that have been -- revenue reserves that have been built up for many, many years, exactly for this sort of opportunity where we see a bit more of a growth opportunity, we can pay out a little bit more out of those revenue reserves to pay out the dividend, which, again, we've got plenty of coverage for years to come. And then to your point, we're seeing -- dividends used to be a very dirty word, particularly in the growth, particularly in tech. If you were paying dividends as a tech company, you are effectively emitting you mature ex growth or even legacy. And that mindset has really changed in terms of even a Meta or Google would be paying dividends. But if you look at the tech sector, that used to be mainly in sort of semiconductor areas or in more legacy tech like a Cisco. And now we're seeing that some of the Internet companies and some of these other companies are paying dividends. And even a company like NVIDIA, they're probably going to be doing best part of $200 billion in free cash flow this year. So yes, the majority of that is probably going on buybacks and doing a bit of M&A. But again, they have a dividend and there's the ability for that to grow significantly over time. So that's certainly something we've been pushing these companies to do that within a balanced sort of use of that capital, yes, you can go and invest in an OpenAI or Anthropic. Yes, we can do some buybacks, but also maybe you could increase your dividend over time. And we've seen that with, say, Broadcom that is committed to paying 50% of their free cash flow out as a dividend. So I think it's evolving in a good way. And certainly, we think that it will be much easier for us to pay -- to have that CPA plus dividend growth in the portfolio while still maintaining that balance between growth and income in years to come. I think that will be easier. And in the near term, as we just kind of bridge through that, we're happy to pay a little bit extra out of our reserves.

Brilliant. And I guess you've kind of delved in a little bit on valuations, particularly look at the individuals on a valuation ground rather than kind of using aggregates, which sometimes can be skewed. But it's clear that there are pockets of valuation that are both attractive relative to other markets like the U.S. or just versus their own history. So with that, Richard, it would be good to get your thoughts on gearing, how you and the team approach gearing and whether you've seen those valuations as a good reason to think we can really up the gearing now to kind of take advantage of those low levels or if you approach it in a different way and why gearing is the level that it is at the moment?

It's early. And I think gearing is one of the great advantages of running a trust. And I think a couple of things go into that. I mean, we're about around 6% gearing at the moment, which shows that we're generally positive, but not kind of the full glass at the moment. We're sort of a little bit sort of half glass sort of full. So we want to lean into that opportunity, but not have serving a little bit of dry powder for maybe environments like this or dislocations like this. And the other factor is just kind of how you fund that gearing. So we've got some sort of longer-term funding for that gearing. But then we took some of the short-term sort of bank sort of loan off because obviously, interest rates were just a lot higher. Now interest rates are coming down, we can start borrowing maybe back with a sort of a number in front of it well before it was sort of 6%, 7% potentially, which was a little bit high for us to want to use that. So again, I think just in terms of kind of where interest rates are going, plus just having a bit of firepower left for those dislocations means that we can lean into the gearing potentially a bit more in the years to come. But it's a great resource to have. And again, we think it enhances returns over the long term.

Good. And there's a couple of questions on a few stock specifics in the trust. And I know one of the funds -- one of the stocks, sorry, you do hold, which is Spotify. So it would be good just to kind of get an idea, get a flavor on your thoughts as what you see as an option and the long-term stock, long-term potential of that stock, that would be really interesting. And another that has come alongside it is Netflix. Do you own that? And if not, why?

Sure. So we own both. And starting with Spotify, we think that they effectively won the sort of music streaming wars. And now that the debate is around this is the potential for AI opportunities versus disruption. And as I kind of saying before, we think that they were very much put in the wrong camp in there new companies like Sonos, where you can kind of vibe code content and music to listen to. But the challenge with that, I think, is twofold. When we talked about distribution being so important in AI before. And we learned this very quickly last year in terms of Alphabet versus OpenAI. If you already use some of these apps and already have them and are already comfortable with them, if they offer you the latest and greatest AI as good as any new start-up, why would you bother moving over? It's much harder for that new entrant to get your mind share to get you to download that app, to engage with that app to use that app. And the other challenge is, obviously, you've got to do that legally and you've got to have the IP licensing. And again, Spotify has got all of that as does a Netflix. So we think that they've got the distribution. They've got your personal history of what you've listened to. And then they've got the licensing, which means that they can put in AI capabilities and charge you more for it. So they've already been taking up the pricing. They've got an event later in the first half where, again, I think they're going to lay out that AI offering and what they're going to be able to monetize for it. And again, I think that people will give more comfort in terms of their future profit and cash flow growth, but also just maybe a potential re-rating that they're seen as being less at risk from AI. And the same with Netflix, although obviously, you had the overlay of the Warner Bros. deal. Now I think if they've managed to get Warner Bros., that would have just been game over in terms of content. But again, good that they've shown a little bit of financial discipline. I think that the price that Paramount had to pay means that they want to get some payback on that. They're going to have to license that content out to Netflix. So they get the access to the content anyway. It won't be exclusive, but probably just because of antitrust, it probably wouldn't have been exclusive anyway. So they get access to the content. They've got a huge amount of firepower and free cash flow generation coming through, so they can buy a significant amount of the stock back if they're not going to be allowed to do these sort of M&A deals, plus continue to take pricing up. The one area that we want to see a little bit more on is there is this shift away from long-form video content watching to short form. Now I would argue a lot of that's just multi-screening. So people are watching something on Netflix while also watching something on their phone. But I think Netflix have to show that they can keep people engaged. And I think part of that is going to be a little bit what we were talking about with Seedance earlier that, again, with sort of more licensed sort of content, can they do some quite interesting things on the engagement point of view to kind of take characters that we know and love and storylines that we know and love and match them up into something a bit more short form that's quite sort of interesting that keeps us engaged while also watching the sort of the long form. So we think that they're well placed to be able to do that. And again, just given what's happened to the share price, again, the valuation has come way down, plus because they've got a set amount that they spend on original content, they generate a huge amount of free cash flow as they kind of build and grow on top of that. So again, we think it's an interesting stock just not in terms of their AI positioning, but also just in terms of their valuation at the moment.

Fantastic. Richard, that's been great, I think. And perfect timing almost. I think we've wrapped up everything we need to and covered all the questions that we can. So I think that's been a really, really insightful update, not only on the trust, but also where you and the team are seeing pockets of value and how you're weighing up kind of the broader risk, particularly on the geopolitical front. So thank you very, very much for going over that with us. For those left on the call that would like a bit more detail on the trust or explore a bit more about the team behind it, Richard and the guys at Janus Henderson published a really good range of materials on their website, both trust-specific updates, but also broader market insights. So I'd really encourage you guys to go and give that a look. And another thing before we wrap up is just a big thank you really for joining us today on the webinar. It's been great to have you all and those who submitted questions that were thoughtful, very insightful. So thank you very much for that. And of course, Richard, thank you very much for sharing your insights on those. I think it's been a really, really good update on the trust and a pleasure to have you on today's webinar.

Thank you, everyone. Thanks, Joe..

No problem. And I guess that brings us to the end of today's session, and we do hope many of you will be able to join us for the rest of the webinar in the series over the coming weeks. So with that, thanks again for being with us today. Take care, and goodbye for now.