WAM Global Limited (WGB) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today for the WAM Global FY '25 Interim Results Webinar. This is your company and we're pleased to provide you with an update on the half year results and the opportunity to ask us questions. I'm Catriona Burns, the Lead Portfolio Manager for WAM Global. With me today is Nick Healy, Portfolio Manager; and Senior Investment Analyst, William Liu. Before we begin, the disclaimer is displayed on screen. What we talk about today is general in nature and shouldn't be considered financial advice. In terms of agenda for the call, as I said, I'll run through the half year results, give a bit of an update on the portfolio and the general market outlook, before handing over to Will and Nick to give some more specifics around key topics in the markets at the moment and some more detail on some of the stocks that we have in the portfolio. Let's turn now to the half year results. So, in terms of the half year results for the half year to 31 December, the investment portfolio was up 13.4%. Now pleasingly, the strength continued into the month of January with the portfolio increasing another 4.9%, which was outperformed the MSCI World Index by about 2%. In the calendar year to 31 December 2024, the portfolio was up 23.7%. And the strong investment performance has enabled the Board to declare a $0.065 fully franked interim dividend and an additional special fully franked dividend of $0.04 a share. In terms of the yield that that's equivalent to pre that special dividend, the fully franked dividend yield is 5.4%, grossed-up 7.7%. And including the special 7.5%, grossed-up 10.7%, which is significantly higher than the U.S. global equity or the global equity market yield, which is 1.7%, and then the U.S. market yield, which is 1.3%. In terms of where the share price is trading relative to NTA, we are at about a 10% discount, which there has been a bit of a lag in terms of we've had that strong investment portfolio performance. But the share price has lagged that and particularly with that additional 4.9% performance in January, it has lagged. But it has come in since we've announced the results, which is pleasing and that special dividend. And we'd expect it to continue to narrow as we commence now an additional call campaign out to shareholders and do our national roadshow. So yes, we are working on continuing to close the discount and actually see it as an opportunity right now. If we turn to the next slide, in terms of dividends, as I said, pleasingly, we have consistently increased the dividend since inception in June 2018. And that special is an extra reward to shareholders and possible because we do have that accumulated profit reserve and had accumulated enough franking to be able to fully frank the dividend yield. So, the profit reserve is very high. And we have got over 6 years' dividend coverage. But what we do over time is pay the tax that enables us to be able to fully frank those dividends. Let's turn to the next slide. In terms of the big picture topics and for the markets over the 6 months, it was really all about Trump and AI. Leading off with Trump, clearly, we had that election win in November. And it was an interesting time to be in the U.S., lots of bifurcation and polarization around media, et cetera. But ultimately, markets reacted positively to the certainty of the result, no debate around ballots being counted, et cetera. So, the market has continued to be relatively strong since that win. In terms of his policies, he very much ran on an America First as candidacy. And that's centered around areas such as immigration, deregulation, the potential for tax cuts and a focus on trying to drive American manufacturing back onshore. So, for us in terms of the portfolio and how we've thought -- we thought about it, I mean going into the presidential race, we very much were identifying that tariffs would be another topical issue under Trump and moved the -- like had the portfolio very much tilted away from companies that we think would be affected by those tariffs. And then -- and as we look at the portfolio now, we're kind of thinking it. We've thought through other beneficiaries and have -- I'll talk to it in a little more detail later, but have at the margin, tilted the portfolio to be even more benefited from a Trump presidency. In terms of the portfolio, as you can see from the slide here around the sector and geographic exposure, we do have a number of U.S. listed stocks. Some of them are multinational in nature. Some are more U.S.-centric. And we do think that the stocks that we have will ultimately actually be beneficiaries and extremely well positioned under a Trump presidency. Now, the second big topic of the 6 months was artificial intelligence, once again AI. But unlike a year or 12 to 18 months ago, there is a lot more debate now around winners and losers, a lot more focus on these very high levels of CapEx that are being spent by the big tech companies, and more volatility as seen through the DeepSeek announcement on the 27th of Jan. In terms of how -- Nick will actually go into some more detail around that topic and some of the winners that we have in the portfolio from artificial intelligence. Aside from Trump and AI, interest rates and inflation continued to be key topics and hotly debated throughout that first half of FY '25. We did have rate cuts through the U.S., Canada, Europe and the U.K., and inflation whereas in Japan, they've been slowly increasing. Inflation has been coming down. But now the topic of debate is what happens with the tariffs and does that lead to inflation remaining sticky and harder to get down from here or ultimately, does it end up being deflationary because of the negative effect on consumption? If we look further afield in terms of the Europe and the U.K., growth more generally is relatively sluggish. In Europe, German manufacturing has been a particular weak spot. And in the U.K., policy missteps and immigration challenges have continued to weigh on that economy. For the WAM Global portfolio, Europe is still a very fertile hunting ground though for ideas. When I look at our European exposures, they're nothing to do with European. They're not -- it's not European manufacturing centric. It's not geared into the U.K. economy. It's very stock-specific catalyst-rich ideas where they should be -- they can grow, whether it's via penetration such as -- or just because they're strong, they're extremely strong market positions, which have them -- enable them to have very strong pricing power. So, we have a number of stocks still in Europe, for example, even though we think the global -- the European macro backdrop isn't particularly strong. China, again, a debate country in terms of what will happen with growth going forward. Will was on the ground there in October and can answer any questions you have in the Q&A on what he saw on the ground. But more generally, the consumer has been weak. House prices have been under pressure and stimulus from the government thus far has been relatively underwhelming. And just our view on that is, there was clearly the possibility of Trump getting in. So, the Chinese government didn't want to -- one, they tried to crack down still on corruption. But secondly, they didn't want to shoot all their bullets before Trump came in to give -- so have some still firepower depending on what happens with tariffs. So, we don't -- we do have limited exposure in the portfolio to China directly. But we -- for us, the Chinese consumers are a really interesting opportunity still, because it is massively -- a market where consumption as a percentage of GDP remains very low relative to places like the U.S. And that rising middle-income consumer still has huge potential, but right now has been under enormous pressure. So still an area we watch, but don't yet -- haven't dialed up the exposure at this point. I mean the broader point on talking about the macro is to update. But in terms of the actual process for WAM Global, we are geographically unconstrained. We do hunt actively for ideas wherever they are from a geographic standpoint. And if I talk more specifically on markets, I mean the markets have been very strong in the last couple of years. The MSCI World Index is up over 20% a year for the last 2 years with the U.S. really being the amazing outperformer there again. It is 70% of the MSCI World Index now. The next best performing markets being Japan and then Europe and then the laggards being the U.K. and China. And Nick will give some extra context around this a little later. But what's talked about frequently and is the reality is just the concentration of the market, particularly in the U.S. where those big tech stocks have really now make up a very high percentage of the market. So yes, Nick will go into that in a little more detail soon. In terms of the outlook and what we expect going forward, we do think with Trump and the announcement of -- I guess, what's going to come in terms of announcements from him, there will be ongoing volatility, whether it's around tariffs, whether it's around fiscal debt -- the Musk commentary on Twitter around cutting fiscal deficits, et cetera, there is going to be a lot of noise. And on the geopolitics, likely we have ongoing noise. There will be retaliation from certain countries, et cetera, on these tariffs. Fiscal deficits more generally will be a topic. And you've seen that through the Bessent 3-3-3 plan. And again, once again, as has been the case over the last few years, that Central Bank policy around interest rates, again, will be a topic that will repeatedly come up, because now the debate in the U.S., for example, is that what I [indiscernible] around stickiness of inflation and can the Fed keep cutting with that backdrop. For us, when you look at the market, it has been very momentum-flow driven. But ultimately, fundamentals are what matter over the long term. And our view is that returns will spread beyond that very narrow subset of companies that have driven the market in recent years and which should be really positive for the portfolio, which is largely positioned outside those big tech names. We have a range, as I said earlier, of businesses that have pricing power and durable earnings that we've really bought with valuation discipline and are confident that the fund is really structured to perform well going forward. I mean, we always put the next slide in around the process and nothing has changed there in terms of how we hunt for ideas and what we focus on. It is really those companies with strong industry positions, competent management teams, sustainable and durable earnings growth bought at reasonable valuations, and then where we've identified a catalyst to drive the share price. The team and I spent an incredible amount of time traveling around the world, visiting the companies that we invest in. We see over 700 companies a year. And we are always just hunting for new ideas and opportunities, and that hasn't slowed down in the last half year. The team and I have been across the U.S., Europe, China, and that won't slow down as we go forward. When I think about the portfolio, as I said, we're excited for the growth opportunities that the companies in the portfolio have ahead of them. In terms of the last 6 months and the positioning of the portfolio, we haven't made dramatic changes. But one of the things we consciously did going into the presidential race is took a view that the tariff debate and risk would once again increase under a potential Trump win. So, we positioned away from companies that we thought might be at risk there. We also continue to hold and think will be beneficiaries the exchanges like Intercontinental Exchange and CME Group because they actually benefit from volatility as people trade through around volatility. So, we think they will actually win as that volatility continues, which is how we think this presidency will continue. Other than that, in terms of the tilt to the portfolio, more recently we have started to add some more cyclically exposed businesses, companies that we think will benefit from U.S. re-shoring, renaissance of industrial activity in the U.S. And we'll talk to some more detail around that as [indiscernible] speaking a little later. In terms of that AI space, we do have some concerns around the hardware layer and the build-out, but continue to see AI as a real technology and a massive breakthrough, and have a number of names that are exposed to that. And then lastly, as I mentioned earlier, we do own a selection of really individually catalyst-rich names that we think will continue to grow regardless of the macro backdrop. And that's companies like Hemnet, which is the REA equivalent in Sweden; CTS Eventim, which is the Ticketek equivalent in Europe; and Expedia, which is the travel booking platform. So, with that context, why don't I hand over to Nick and Will who will dig into some of the topics that I've talked about and then other things that are going on in the market now, and then some -- a lot of specifics around stocks.

Yes, absolutely. Thanks, Catriona, and thank you, everybody, for joining in today. We really appreciate your time. Catriona did a fantastic job of running through what we're seeing in the world. Why don't I just double-click on a couple of the topics in particular, artificial intelligence, and I'll do the small and large cap disconnect. So, if we start with the artificial intelligence story, clearly it's a high news flow environment. DeepSeek in January as well as the Hyperscaler CapEx, there is a lot going on. In our opinion, in periods like this, it's always useful to take a step back and maintain perspective. And I think the perspective here is artificial intelligence is going to be a real meaningful technological breakthrough in the world that drives productivity gains very broadly. The news around DeepSeek for me was most interesting around seeing a leading-edge model that's able to be used at over 90% cheaper costs. This is great for AI. In fact, if we're thinking about mass adoption of AI, these kind of technological breakthroughs are critical. We expect more to come. However, it really does lay into our -- or like drive our view around the fact that we think the software AI winners are going to be increasingly interesting as we move away from that hardware space as the focus. The Internet is a perfect analogy here. Hardware providers like Cisco were first out of the gates. But with the benefit of time, we've seen the software layer captured a lot of value. Now, we feel really well-positioned for this. We hold a number of AI infrastructure and software winners. Let me take you through a couple today. So, the first one, SAP. SAP is a fantastic business in its own right. It's the leading choice for enterprise resource planning software globally. Now the story with SAP is a very successful shift from on-premise software to cloud software. However, as you make this shift, you un-silo a lot of data and unlock the potential for AI-use cases. Their recent result really built confidence for us that they will be an eventual -- they will be an AI winner. They grew their total cloud backlog over -- higher than prior quarters at 40%. And they actually highlighted the fact that they had found AI solutions, including EUR 300 million in saving in 2024, and that, that would grow through time. So, this result, combined with their positioning, we're very confident SAP is an AI software winner. And if we can just go to the next slide for these 2. The other AI software winner I want to discuss is Alphabet, also known as Google. Now the first thing to note, obviously Alphabet Google is one of those Magnificent Seven stocks we do talk about a lot. The fact that we hold it reflects the fact we are willing to hold any size company in the market, from small to large. It just has to offer the most compelling risk return. Now, for me, the risk return is compelling in Google for 2 reasons. So, if we start with valuation, firstly, so the primary reason we're not invested in the other 6 of the Magnificent Seven today is simply around valuation and because of these valuations seeing better opportunities elsewhere. Google is different. It trades at over a 50% discount to the group and is, in fact, over 25% cheaper than the next cheapest of these Seven stocks. So, Google is very much undervalued today. But that's not enough for our process. We need catalyst growth and quality. And we think Google has this because we see it as an AI winner. Now Google's AI advantages, I think, are almost too long to go into. So, I'll really just hit the high level. They have a wonderful industry position as one of the 3 scaled cloud software providers alongside Amazon and Microsoft. They also have great internal silicon with their TPUs. This will lower the cost to serve. For me, the DeepSeek news, it's all around cost to serve AI. We think Google is really well positioned there. They also have a leading LLM in their Gemini 2.0 models. Again, by not having to go to a partner, that reduces cost to serve and positions them fantastically. And lastly, we think data is absolutely critical in AI. And we think Google is fantastically positioned here as well with Search, YouTube and Android and other properties, giving them a really strong data mode. So, putting it all together, very, undervalued company, clear AI winner in our mind. We think it's a great holding in the fund. If we turn to the next slide, so the second topic I want to touch on, and Catriona mentioned it. But we've talked about this in the past. But it is just an incredibly narrow market that we see today. The 2 charts on the slide demonstrate this. The left one showing how much of the market is made up of those top Seven Stocks. The right one showing that the valuation disconnect is historic. Any way you look at it, we think that there is a compelling opportunity in SMID Cap stocks today. Now, our process, as I just ran through with Google, is to hold any size company. However, with this valuation disconnect in play, it's not surprising to us that we do have a fund that is predominantly in the SMID Cap side of the world at over 60% versus the market at 27%. Now, to be fair, to get to this point, it has been a headwind being overweight smaller companies. Since we launched the fund, SMID Cap companies have underperformed the broader index by 4.6% each year. Our view is as this headwind abates or turns into a tailwind, we actually think our exposure here is very compelling and should benefit the fund. I'll briefly give you a couple of our smaller company investments that we think are fantastic. I know Will, will give some as well. So, I'll keep these brief. But we hold JTC, a fund administrator that provides compliance, tax, accounting for funds globally. JTC are a leader in the industry and it really comes down to their people. Founder and CEO Nigel and his team, he's built a great team around him. He believes in equity ownership. So, he's ensured that every employee of JTC has equity in the company. And in an operational industry like this, this creates better performance that leads to higher retention and higher organic growth. And I've met with and talked to Nigel and his team many times through our holding. The most recent conversation confirmed the fact that this is just a very well-positioned business set to grow at good rates, particularly thanks to the opportunity in the U.S. JTC have actually more than doubled their earnings over the past 3 years. And yet the stock price in U.S. dollar terms, the earnings have more than doubled in U.S. dollar terms. The stock price hasn't moved. They've set out a credible plan to more than double earnings over the next 3 to 5 years. And we do love these situations where businesses are growing their earnings, they're getting stronger. They're a better business and yet they're becoming more undervalued. So, we think that's a great holding for the fund. Stroer, so they are the leading provider of out-of-home advertising in Germany. Out-of-home advertising is simply billboards on -- at train stations, at bus stops, on roadsides. They have over 60% share. Similar to JTC, outgrowing the market, creating value, but not seeing it reflected in their share price. Now, they've actually had outside interest approach them late last year for a bid for the out-of-home assets. This bid may or may not result in a deal. But the price has been discussed by this private equity buyer are in excess of the market capitalization of the company despite only talking about a portion of their assets. So, we think clearly, sophisticated buyers are reflecting the fact that there is underlying value here. And we see this as a potential catalyst to unlock value for us as shareholders. So, a couple of stocks on the smaller end of our holdings. Why don't I pass over to Will to take us through a few more stocks and a few more themes in the market today.

Great. Great. Thanks, Nick. As Catriona mentioned, it is clear Trump has an American First economic, trade and foreign policy agenda. So, we've positioned the portfolio to take advantage in a number of ways. First one being leading into the election with reduced areas exposed to risk such as tariffs and potential reduction in government spending. And we increased investments in companies poised to benefit from deregulation and improvement in the U.S. economy. Being on the ground and speaking to various management teams, I would characterize the sentiment as being relatively optimistic with confidence improving. On the slide, you can see a recent uptick in small business optimism and the U.S. manufacturing PMIs post-election outcome, showing some green shoots. We believe there are parts of the U.S. market that are poised to recover in 2025. And they are incredibly exciting opportunities. Some of the key areas include industrial activity, household construction and mortgage activity. RB Global and Ferguson are 2 stocks that we own and we believe are set to benefit. Starting with RB Global, the company is a leading global marketplace for buying and selling heavy equipment, commercial assets and salvaged vehicles. One of the great qualities about this business is that it delivers steady earnings growth even with a weak industrial end market demand, which we have seen over the last little bit. Importantly, this accelerates -- and earnings accelerates in an upcycle. This is because RB Global is an auctioneer of second-hand equipment, which is driven by inventory availability to generate its unit economics. In a weaker environment, such as the period we have just seen, sellers have excess equipment, they need to move on, and buyers may choose to purchase second-hand equipment. On the flip side, in an environment where industrial production improves, RB Global also benefits from demand for new equipment flows and higher prices realized through its auctions. In a similar vein, Ferguson is another name that we own and is poised to benefit from a pickup in industrial activity and residential housing. Ferguson is a plumbing and heating distributor, and occupies leading positions in fragmented end markets. Ferguson is positioned to capitalize on structural tailwinds, including aging and underbuilt single-family housing in the U.S., multiyear mega project demand and pent-up waterworks demand. We expect Ferguson to outgrow the market because of Ferguson's size and scale. This allows them to access better products with advantageous pricing and terms, while they're still investing in key competitive differentiators such as value-added services, delivery capabilities and omnichannel selling. So, there are 2 names which I think were really constructive on the earnings outlook. And we think they're leveraged through a U.S. economic recovery. One of the other changes in the market dynamic that we're excited about is the prospect for more M&A activity, which we believe will help close the small and mid-cap valuation discount and serve as a potential positive catalyst for the companies that we invest in. In fact, I recently attended a fireside chat here in New York with a commissioner from the Federal Trade Commission, which is an independent government agency whose mission is to enforce antitrust law and consumer protection. And I'm excited to share with you some of our feedback. Under the Biden administration, FTC Chair was Lina Khan, who had adopted a highly litigious stance and made efforts to block deals across almost every sector. This discouraged activity and led to a loss of confidence from corporates and the financial community. You can see on the slide that M&A as a percentage of nominal GDP is at its lowest since 1995 as a result. This tone has since shifted. The Trump has appointed FTC Chair Andrew Ferguson. And we believe the commission will be more pragmatic in exploring remedies, providing better transparency and communication in an effort to regain the trust of the market. We expect M&A activity to recover and an increasing number of transactions, which typically carry an acquisition premium, will help improve sentiment in the small and mid-cap part of the market. So, I wanted to share with you some examples of exciting small and mid-cap companies in our portfolio as well, Sportradar and Genius Sports. In fact, I recently met with the management team at a small and mid-cap growth conference here in New York. And I believe they have a fantastic earnings outlook. Genius Sports and Sportradar are 2 B2B technology companies that have their exclusive data rights to the sports leagues such as the NFL or NBA. And they're commercializing this content with the sports bookmakers, including the likes of Sportsbet in Australia or FanDuel and DraftKings here in the U.S. Our investment is really centered on 3 key things. Firstly, online sports betting, is an incredibly attractive industry. Particularly in the U.S., we have seen the states legalize online sports betting and it's driving a double-digit compound annual growth rate. Secondly, the industry structure is increasingly becoming a duopoly. Genius Sports and Sportradar are the dominant industry leaders with the rights to the major sports leagues and are taking share from the rest of the market. Finally, we expect a period of significant operating leverage with the market is underappreciating. Both companies experienced double-digit revenue growth and have very high incremental margins as the major sports data rights costs have largely been locked in. So those are a couple of examples of stocks that we own in the portfolio. I hope that gives you a sense of what the team is looking at and the work we are doing on the ground, finding some really interesting names with attractive growth prospects, potentially also less discovered by the market. And with that, I'll pass back to Catriona.

Thanks very much, Will and Nick. So, to summarize before we start the Q&A, we do, as I said, think there may be ongoing volatility with noise from the Trump administration. But we think the portfolio itself is really well positioned in those high-quality undervalued growth companies. And do see a number of positive catalysts ahead for the portfolio, including that U.S. industrial resurgence, very carefully chosen AI exposures and beneficiaries also of volatility like CME and ICE, the exchanges. And then those other individually catalyst-rich companies that really aren't dependent on the macro, such as CTS Eventim, such as Hemnet, et cetera, we think will continue to do well. And then lastly, as Will pointed to, the potential that M&A activity picks up should benefit a number of -- could potentially benefit a number of our companies and make them takeover targets. In terms of the fund itself, as I said, that we are still trading at about a 10% discount to NTA. But we see this as an opportunity and have -- because we have now issued the results and announced the special dividend, have commenced a call campaign to focus on informing shareholders of that discount and the portfolio performance, et cetera, to work on closing it. We have the national roadshow coming up, which will be followed by a regional one. And so, we're actively continuing to engage with U.S. shareholders and are really excited about the prospects for the portfolio. With that, why don't I hand over to April to facilitate Q&A?

Thanks, Will, Nick and Catriona, for your insights. And thank you to everyone for joining the webinar. We have quite a few questions coming in from the audience, so I'll kick right off. First question comes from Deborah. Which stocks in particular, led to the recent outperformance? What was the catalyst the team are now seeing play out in these stocks? And then the third part of the question is which stocks were exited as a result of underperforming expectations?

Sure. In terms of the contributors to the performance, it was quite wide in terms of the names. Such as MSCI, TransUnion, Expedia, Quanta, as examples have contributed. SAP has been very strong. So, we had a number of contributors that really led to that -- to the strong investment portfolio performance. And I'm sorry, what was the second part?

Yes. I'll touch on that. So, I think Deborah asked about stocks that had underperformed expectations and being exited. I'll kick off and then anyone can add. So, I think two jump to mind. So, we held a company called ICON. They're in clinical research, outsourced clinical trials. We held it for a number of years. And frankly, we're very happy with the holding, great management team, integrated the PRA acquisition well. Around the middle of last year, we started to think that potentially there were headwinds impacting the business. Organic growth was slowing and the catalyst with PRA had largely played out. So, we started to take the view that this would be one we would look to reduce or exit. As part of the work we do, some deep dives and some travel and some meetings, we came to the view that this wasn't catalyst-rich anymore and actually exited that holding in September. So that's kind of like that brings to light how as the catalysts play out, we look to exit holdings. Another one briefly. So, we actually held a company called Ashtead frankly for only 2 or 3 months. We invested in, I think, September. They are a rental equipment company, primarily operating in the U.S. The thesis for investing there was a lot of build-out of data centers and infrastructure, an improvement in U.S. industrial activity like Will talked to. So, it would be a good winner of the 2025 themes we were viewing. The challenge for them is so we follow results from the likes of CAT and Deere and AGCO and Komatsu very, very closely. We could clearly get the sense that this was a company where there was just too much product in the market. The actual manufacturers of this equipment were reducing production to try and soak up some of the excess supply. Now, if you're Ashtead or your United Rentals, too much product is not necessarily a good setup. We actually think this is probably a better industry than people think it is. And we do think at some point, this is extremely interesting. But after a few results from other companies that we didn't think were the strongest and some real-time data we weren't overly impressed with, we took the view that the thesis had shifted sufficiently. And so, we exited that one in, I think, early December. Just a couple of companies that come to mind around just making sure that if the thesis isn't holding and if the catalysts aren't rich, we are exiting the holdings.

Thanks, Nick and Catriona. The next questions come from Kenneth and Philip on the profits reserve. It looks like we have 6 to 7 years of profits reserve. Why is this so high?

Yes. So, as we generate investment performance, we allocate like the -- and we can allocate money into the profit reserve. And so that's built up as the performance has been strong. What the reality though is that money still sits in the portfolio. It's not sitting there unused as profit reserve. It's just part -- it's an accounting treatment for how you realized -- recognized profit. It is still invested. The part in terms of -- and I'm guessing this will be the next part, well, why don't you pay it out? And that's because we don't have franking alongside that. So, we pay -- to generate franking, we pay tax -- company tax because WAM Global is a listed company in Australia. And so, we don't -- it's not like we have the 6 or 7 years of coverage on the franking side to be able to fully pay it out as fully franked dividend. So, it accumulates as we continue to perform and grow the NTA. But there isn't the associated franking that gets accumulated over time.

Thanks, Catriona. You've mostly covered this. But just to clarify from Philip's question, do you have the intention to declare any further special dividends?

Look, that's a Board decision ultimately. And at this point, we had -- we did have -- we had accumulated franking of $0.13. So that enabled us to pay the $0.065 and then the $0.04. And then we haven't fully got the franking tax paid to be able to fully frank the second half dividend. But that will be able to be paid a little while so that we will have that accumulated. So, the special for now was because we did have -- the performance had been strong. The NTA had gone up a lot. We did have both the franking and the profit reserve there. But in terms of what we'll do going forward and whether there will be additional specials, that's ultimately a Board decision based on those factors.

Thanks, Catriona. Rod and Peter have asked why is the share price at a discount to NTA and what is being done to address this?

Sure. So, it's interesting. The NTA discount, we did a big call campaign, shareholder engagement program like last year. And it was really pleasing the discount narrowed from about 18% to, I think, at the low about 6%. But it's just been such a strong period for market. So, the NTA has gone up quite a lot. And there's just been a lag in the share price. And it was pleasing even when we announced the January NTA, I mean, we were -- it was -- we did add another 4.9% performance in the January month alone. So, the share price is getting there. It's just a bit of a lag between announcing the NTAs and that share price catching up. And then also, it's that engagement piece, which is crucial to Wilson Asset Management and what part of our DNA is engaging with shareholders. Now that the results have been released and the special announced, another call campaign has begun, we'll have the national roadshows in April. And then as I said earlier, the regionals after that. So, I think for us, it's really important to engage with shareholders, to keep them informed in terms of where the NTA is. But there is often a lag because people don't know where the NTA is at until we release it. And the markets have just been incredibly strong.

Thanks, Catriona. The next question comes from Elizabeth and it is for Will. Can you give us some more information on your trip to China, including some insights from the trip? And in terms of the portfolio, how exposed are you to the region?

Thanks for the question. So, I was in China in October. And we met a whole range of companies. I was in 3 different cities: Beijing, Shanghai, Hangzhou. And so, it was really insightful to be on the ground because I think the market was a little bit excited that stimulus was coming. And then potentially, we've reached a bottom in terms of sentiment, valuation and earnings expectations. I think the feedback is that demand continues to be weak. I think the tone was quite cautious over there. A lot of excess supply because demand has been weak and obviously, with potential tariffs in the U.S. and competition is incredibly fierce. So, where -- we think it's a potentially interesting market to keep a close eye on. But we don't have much exposure at all. We have a 1% position in Alibaba. We think there's some idiosyncratic opportunities here with their cloud business with the recent announcements of DeepSeek helping that as well, but also shareholder returns. So, we don't have a lot of exposure to China. We're keeping watch of it closely. It's just finding that positive catalyst to have enough consumer confidence rebound for the property market to stabilize and for investors to be comfortable investing in that region. So, we're staying cautious, but keeping a close eye on that region.

Thanks, Will. The next question comes from Daryl and it's for Nick and Catriona. How regularly is the portfolio turned over?

Sure. In terms of the average turnover for the portfolio, it's about 0.4, which says that we, on average, hold stocks for a bit over 2 years. But that really within that, that's an average. And so, as Nick said in the example of Ashtead, we owned it for a few months, whereas some of the stocks like Thermo Fisher Scientific, for example, we've owned over the life of the fund. So, it really depends on the individual stock. But the average turnover is 0.4. And it's really dependent on that just following our process. Does the company continue to have catalysts? Do we continue to see strong earnings growth? Is the thesis still continuing to play out, which will determine how long we own a stock for.

Thanks, Catriona. And Will has asked, how could the ripple effect of a potential Bitcoin or cryptocurrency crash impacts the portfolio? And is there a way to protect against this?

Yes, I'll start us off. I think there is -- I guess, so first and foremost, we would feel very confident in the companies that we hold in the fund performing very well through that type of scenario. We do come back to our process as the way we choose to invest, undervalued growth companies with a catalyst. We really like sustainable, proven business models, high-quality management teams. This hasn't historically led us into having significant crypto exposure. I am aware of the fact that I think both of our exchanges, ICE and CME, given they want to be markets that enable the trading of commodities and financial securities, they do have crypto markets. So, they do stand to benefit. However, this is really at the margin. So yes, I think that would be how we would expect to navigate that type of scenario.

But we don't -- the fund doesn't invest per se directly in crypto at all.

Thanks, Nick and Catriona. The next question comes from Noel. Earnings season is underway. What have been some key takeaways from the team? And how are you applying this to the investment portfolio?

Yes. Look, I guess I'll kick us off on that. Earnings season certainly is underway. And I think we've probably seen the majority of companies report their results. There are some things continuing to play out that we think are broadly consistent with things in prior quarters. I think McDonald's and other companies called out the fact that the consumer is very value conscious and is seeking out deals. Certainly, Target in the last earnings season made that comment. We don't think that's changed. That would come back to a preference for holding companies that offer a need-to-have products. So, it's nice to have, because if the consumer is just a little bit more tight, it's those at-the-margin products that would be less favored. Some other thoughts from earnings season, so clearly tariffs is something a lot of investors are trying to get their heads around. Everybody is asking the management teams what the impact of tariffs will be on their business. I think management teams broadly are punting on that question, choosing not to specifically answer. However, you can do the work to understand where they manufacture, do they import goods into the U.S. And so do your own work to see whether they will be impacted. I think one that comes to light, e.l.f. Beauty imports a lot of beauty products from China, clearly had a bad result and was impacted by tariffs. So, it matters. And we feel really well positioned. We're still in a position of trying to, as a market, fully figure out the ramifications, but we feel strong there. I'll give one more and then I'll pass it on. AI CapEx spend remains a huge focus for the market. Broadly, that is going to be a very strong set of numbers this year. Although I think both Microsoft and Google mentioned the fact that from these higher levels, they now expect to sequentially maintain the number rather than grow the number, which unless something shifts and they have talked about supply and demand reaching balance in 1 to 2 quarters. So, unless something then shifts, you're talking about 2025 being the big growth year and potentially lower growth CapEx numbers after that. But look broadly, we're very happy with how our companies are performing through earnings season. And that's just some of the things we've noticed. I know it's a fairly long answer. So hopefully, that helps.

Thanks, Nick. The next question comes from Jeffrey and it's for Catriona. Has it ever been considered to convert WAM Global to an active ETF? And would this eliminate the discount?

It hasn't in terms of -- I mean, we look at what other funds are doing, et cetera. The genesis of the LIC structure for WAM was researched Geoff had seen out of the U.S. back when we were doing our first LIC WAM Capital around closed-end structures and how they, over time, outperformed open-ended structures just because with an open-ended structure, you have the risk that money -- at the lows, money is running out the door because people are fearful and at the highs, money is running in. And so, that over time, closed-end structures outperform by about 1% a year. So that was why we like the LIC structure. And I guess his core belief also is that he loves the idea of premiums and discounts because sure, at a premium, you should be reducing exposure. But the fact that LICs do trade at discounts gives you the opportunity to buy $1 for $0.80. And we try to -- when our funds are trading at discounts, we are very active. Unlike some other -- there are other managers that aren't so active, but we definitely actively try to close the discounts and as I said via things like the call campaigns via constant engagement and with shareholders so to close these discounts. But we do think the LIC structure is a preferential structure. And we do -- in terms of when we look at our investor base, it's about -- we think about 65% of our investor base is self-managed super funds who, in particular, with the franking, et cetera, and the ability to stream dividends over time do benefit from the LIC structure. So no, we haven't considered turning the fund into an active ETF.

Thanks, Catriona. The next question comes from Peter. And it starts very well with Wilson Asset Management needs 5 Catrionas. Why did you sell Microsoft a few years ago? And how do you see Trump and Musk affecting the portfolio?

Thanks, Peter. So, in terms of why we sold Microsoft, it was really -- it's a wonderful business, amazing products and exposures, both in terms of their cloud exposure, et cetera. So, it's nothing in terms of the quality of the business. We just took a view that there were better opportunities elsewhere given where the valuation had got to and where we were finding other ideas. So, look, it's not to say that we wouldn't own it again, but it was just where we thought -- we hunt for ideas. We only want to have a certain number of stocks in the portfolio. And we were finding better opportunities elsewhere. And then, sorry, April, what was the second bit?

How do you see Trump and Musk affecting the portfolio?

Sorry. So, in terms of Trump and Musk, I mean, noise, lots of noise. Anyone who's on X, it's highly entertaining, if not whatever else, following Musk on Twitter. And look, some of -- what are you actually saying in terms of going after efficiencies in the government, et cetera? Like there's a lot of validity in that. Having lived in the U.S. and dealt with the health system, with the IRS, et cetera, there is no doubt that there is that to be cut and lots of layering and that the America, for example, is funding the rest of the world in a lot of areas, in particular, in health care, for example. So, I do think there is opportunity. But the reality will be what can he actually cut out? Because when you look at the big buckets of Social Security and defense, these are -- when people are given something, it's incredibly hard to take it off them. And particularly through COVID, the problems have increased even more because people have been gifted -- given even more. So, it's -- I mean it's an absolutely valid and heroic goal to cut out $2 trillion or whatever from fiscal -- of the fiscal deficit. But let's see what he can actually achieve. And if we -- and I mean potentially given his knowledge base around AI, et cetera, like there are various efficiencies that might be able to be driven out of some areas of government, but the big numbers that are being thrown out, it will be very interesting to see what he can actually achieve. So, yes, I guess to summarize, in terms of -- there will be ongoing noise, as I spoke about earlier, in terms of Trump and just whether it's tariffs, whether it is anything around the fiscal deficits, et cetera, and from Musk. But we think the portfolio itself is well positioned. As I said, those exchanges which benefit from volatility, the fact that we're very cognizant around the tariff risks when we look at the exposure and the other factor being that we actually think with a potential U.S. renaissance in the industrial side that we have some exposure there that should benefit the portfolio.

We have a few questions on currency. The first one is from Sean. The USD has been very strong compared to the Aussie dollar. Does the strength influence your investment strategy? And he says thinking specifically about your currency exposure and hedging.

Sure. So, the portfolio itself is unhedged. I mean, going back to when we started the fund, one of the reasons for starting the fund was that a lot of -- so many of our shareholders are very Aussie dollar and very Aussie stock heavy in terms of how their asset portfolios. And so, the idea was to do a global fund to get exposure to both global stocks and by virtue of those holdings to foreign currency. So, it is unhedged. Managing currency per se, we manage it more broadly in terms of aligning with the index for where our cash is held. But we don't -- like we're not trading currency picking whether the U.S. dollar is going to go up or down, et cetera. At real extremes, we could hedge if we wanted to. But our general policy is to keep the portfolio unhedged. As the U.S. dollar has been very strong, I mean it's obviously benefited our U.S. investments. But then you've got to go another layer down in terms of the individual businesses and where their earnings come from. So, I mean, that's one topic that's come up in earnings season is depending on companies' individual earnings and revenues and where they come from, what impact that's had on underlying earnings. But our general view in terms of FX is, we do have an unhedged portfolio. I mean in terms of the risk around the U.S. dollar going down, from a relative to benchmark perspective, we would actually benefit because we're slightly underweight the U.S. and overweight Europe. So, we would actually benefit. But as you see from the performance, it hasn't been a big detractor being underweight the U.S. market more generally.

The next currency question comes from Philip. Has the low Australian dollar affected share valuations either positively or negatively for overseas shares in the portfolio?

Yes. So, look, as the Aussie dollar goes down, all our international -- relative to -- depending on which currency it is, the value of our holdings go up, whether they -- if it's the cost from Aussie to U.S. or cost Aussie to euro, et cetera. So yes, we have -- as the Aussie dollar has gone down against particularly the U.S., that has benefited the NTA.

And I'm not sure if this was kind of part of the thrust of the question, but I guess just the valuations of businesses. If they're earning in U.S. dollars and the price of the company is in U.S. dollars, currency fluctuations in that sense wouldn't necessarily make the U.S. market more expensive. But if that was the thrust of the question, but Catriona's point is absolutely valid.

The next question is from David. How much of the performance is due to FX? I know you touched on it, Catriona, but if you can add a little bit more color.

Yes, sure. So, in terms of, as I said, the exposure to actually -- when I look at the entire portfolio relative to the index, we're actually underweight the U.S. so relative to -- and overweight Europe. So, currency has actually been a headwind relative to index performance.

Thank you. And last one on currency. Denton has also asked, do you think the U.S. dollar will strengthen against other currencies, especially the Australian dollar? I know you mentioned it's a difficult one to predict.

Yes. And look, we don't claim to be currency. We obviously -- we have views and debates and not just within the WAM Global but within the broader investment team around what will happen, but it's not driving our day-to-day, like, decision-making. We're focused on finding individual stocks. You can argue both ways, because if the world was -- just the economic growth was to slow, if China -- and look, it also depends on what currency you're comparing it to. So, is it U.S. dollar strengthening versus Aussie dollar? And then you're looking at the Aussie dollar is somewhat of a proxy for China. So, what happens in China? If China continues to slow and struggle, if interest rates get cut in Australia relative to the U.S., that could drive the Aussie dollar down. If the U.S. was to slow economically, like there's so many variables that you can run through in terms of up and down. I mean, Damien, who's our portfolio strategist, he thinks the U.S. dollar is about 10% overvalued. But look, it's a -- we could, yes, debate all day. And there's reasons why it could go up and reasons why it could go down. But as a portfolio, we'd actually benefit more if it went down, yes.

Yes. I mean just one interesting observation from my end. Certainly, this isn't around trying to predict the direction of currencies. But I think Trump has a very interesting setup for himself where a lot of the policies he's trying to enact like tariffs actually drive a stronger U.S. dollar. He is looking to re-shore manufacturing activity to the U.S. where you would arguably want a weaker U.S. dollar. So, you've got this kind of forces acting in opposite directions. And frankly, I think it would be a bit of a conundrum for him and his team. And you can see that's why he's trying to jawbone down the dollar. But inevitably, which force is stronger and so on, on those kinds of things, that's the hard to predict thing. You can certainly understand what drives currencies in which direction.

And there's that also the link between fiscal deficits. And so, there's, yes, lots of correlations to think about. But yes, he will be wanting to get it down, but let's see what happens.

Thanks, Catriona and Nick. The next question comes from Dan. Both Quanta and Tradeweb trade on high price to earnings multiples. They're high growth and it's a crude measure. But what do you think about this?

Yes. So why don't -- I'll kick off on Quanta and then, Will, you add to on Tradeweb. So, on Quanta, look, it's a matter of what you think the earnings growth will be. So, on consensus numbers, the stock is on about 25x growing about 18%. But it just depends on what the earnings do. For us, we think the company has done an incredible job in terms of getting it being a wonderful play on that rebuild and maintenance of the grid and energy infrastructure across the U.S. They've continued to actually beat earnings and upgrade earnings over the last few years. And so, for us, the valuation relative to the growth isn't a reason not to own it. But it has been a great performer and the management team have done a really outstanding job.

And I'll just touch on Tradeweb. So Tradeweb is an electronic platform that's electronifying predominantly credit and U.S. treasury markets. So, in fixed income markets, the way they trade is quite archaic and it's not electronified. So, when you're trading fixed income securities, dealers will call each other via the phone and settle all of the process manually. Tradeweb is digitizing that process. So, it has a really big runway for compound earnings growth. Tradeweb is trading at 35x, but we're expecting a long runway of mid to high teens EPS growth, and we think it actually surprises to the upside, because the U.S. treasury market is roughly 60% electronified, credit markets are roughly 40% to 50% electronified. Once you start reaching that 50% to 60% threshold, you really get volumes accelerating. And so we think there's positive catalysts where earnings could surprise to the upside as volumes come in and you really get some torque in the system. So it's a valid point, but Tradeweb's always been expensive, and it's got some really attractive qualities where it's got a net cash balance sheet. It's done some acquisitions, which is integrating well, which could also be accelerant to the EPS growth. So we're quite comfortable with the valuation of Tradeweb.

Thank you. We've got a few questions coming on, on the geographical split. And the first question comes from Roderick and Rob. Do you have any plans to invest in Asia outside of Japan? And specifically, do you ever think about investing in Indian companies?

Thanks for the question. So look, we will hunt anywhere for ideas, but it really comes down to our process and does it tick all the boxes. And that can be a number of -- we have the core of our process around industry position, quality of management, earnings growth potential and valuation, and then a catalyst to drive a share price re-rating. So we would absolutely look anywhere around the world. Given prior experience over the years in terms of the different markets around Asia, the governance question is really crucial. And I've had good and bad experiences on that front, whether it's China, Indonesia, India. And I think you really have to know what you're investing in. You really need to trust management and have done the, like, due diligence to understand what you're investing in. And you've seen that, whether it's India, the Adani issues, et cetera, like there's a lot behind the scenes going on there that you -- when you're a long way away, you might not be fully on top of. There is some great businesses in places like India. But often for us -- and it is a market we've looked at. And as I said, I've invested there previously. We haven't, in the WAM Global portfolio, had investments there. And instead, we've directly, because we've looked at -- our view has been around valuation and quality not linking up at this point. So look, there's some wonderful quality businesses, but they've tended to be extremely expensive. And the cheaper ones, the quality hasn't been there. We've instead got exposure through some of our multinational businesses. So TransUnion, for example, owns the largest credit bureau in India. So we've had -- we do have exposure to India, but it hasn't been through direct holdings. But absolutely, we look everywhere for ideas. And if it fits our process, we will invest.

Stephen has also asked on this topic. I noticed you have no significant investments in Asia or maybe outside of Asia, Japan or Canada or in Asia, Japan or Canada, sorry, any specific reasons?

Look, I guess just to round out what Catriona mentioned. So I guess if you take a market like Canada, we're probably much more focused on what's the quality of the business, what's the growth opportunity of the business and where does it trade on a valuation basis versus is it domiciled in Canada or the U.S. That broadly would hold throughout all geographies. Japan was mentioned. I won't go into -- there's a stock that we're currently looking at doing the work on. It's a great business. Since we haven't bought it, I won't say the name. The challenge with Japan or other markets is often what you find is these really good businesses. India and Japan, in particular, come to mind. They're just a little bit more expensive than what you would want to pay. And so the broad statement like a certain market is cheap, in our experience, doesn't really hold when you go into a stock-by-stock analysis and you look for those things we like, like quality and growth. Anyway, the big point is happy to invest anywhere. It just has to be sufficiently compelling to make it into the fund.

And in that vein, it's the same with a market, say, like the U.K., which has been an incredibly tough economy, but we're happy to own a name like that Nick mentioned, for example, before like JTC.

Yes.

Because we think the individual stock stacks up, the management team is outstanding. So...

And to your point, prior, so more than 1/3 of JTC's business is in the U.S. So domiciles can be kind of quite a misleading way of thinking about a business. Sorry to interrupt. But -- yes.

Yes. And I guess more specifically on a market like Canada, absolutely, there's some -- like TMX, the exchange in Canada is a great business. For us, the valuation relative to what we were getting at ICE and CME led us to say no, let's own ICE and CME over TMX. But it's a wonderful business. A lot of the other -- there's a lot of resources and mining companies on the Canadian exchange per se that isn't necessarily where we hunt for ideas. But that's not to say that we wouldn't invest in companies in Canada. There are some great businesses. It's just always hunting for that and marrying up that valuation relative to quality and where we can identify catalysts.

Thanks, Catriona and Nick. And the next question comes from Michelle. Which stocks can benefit from AI? And are the team hunting for more AI-focused stocks?

Yes. Look, thank you for the question, Michelle. I'll kick us off. So we've run through -- I ran through a few during the more prepared remarks section. We think there are a number of other companies that we hold in the fund like Intuit or Adobe or on the smaller end Alphawave that we think will win. Broadly, the structure for us on AI is, do you have differentiated data? Are your management team investing and do they have the right people? And are they pushing forward the R&D required to actually develop the solutions in AI? And do you have use cases that suit artificial intelligence and can be monetized over time? So that's the setup. I think we are very much on the lookout for those -- for any -- for additional AI software winners, given we think AI is a multiyear theme. We think that shift to the software focus is going to play out. So we think it's a great place to be invested, feel very well invested, but absolutely, we would look to add at the margin.

Thanks, Nick. Rob has asked, in your monthly reporting, you should show EPS and the amount of franking credits. Would you consider this, Catriona?

Yes. So, we do -- we put the franking credits in the annual report, and we do show the tax paid. So you can back solve to work out the franking. But the franking, it is a cash balance and can -- so we don't want to mislead in terms of that -- as that fluctuates up and down. And so we do choose to just put it in the annual report. And we've updated -- I mean, I mentioned it earlier at the moment, it's tracking about $0.13. But yes, that's kind of the thinking around disclosing the franking balance.

Thanks, Catriona. Rob has also asked, do you ever sell an investment sooner than you want in order to get the franking credits?

No.

Quick answer. Very good. The next question comes from Saranjit. If the tariff wars escalate and affects global trade, how will the portfolio be managed?

Well, I guess -- Yes, Will, go for it.

Yes. Maybe I'll just kick it off in terms of like where we're bottom-up stock pickers. So during our fundamental analysis in the names that we pick, we look at where supply is coming from, where customers are coming from, what is the tariff risk, and we make an assessment there. Generally, we've tended -- like even pre-Trump coming into power, we really -- we tended to avoid names overexposed to tariffs. So we think we have limited exposure in our portfolio companies. I think if tariff war escalates, there's potential impact sentiment on the names. I think by sticking to like bottoms up, making sure our companies individually aren't fundamentally overexposed to tariff risk, then we can position ourselves to outperform. So, that's where I'd start. I'm not sure if you had anything else to add, Nick.

No, I think that's great. Yes, I think broadly, a lot of investing comes down to where is the expectation set versus reality. We've observed coming into the Trump presidency that there was a lot of complacency around the potential for tariffs, which is great if nothing happens. But then if there are tariff impacts, you're not really pricing that into the stock. But I think we'll absolutely nail that, we're bottom-up stock pickers. So it will be -- should that change, we'll change our approach.

Thank you. The next question comes from Stephen, who says, you have about 10% in health care. Are these companies in the U.S.? And do you see any risk there with the health policy?

Yes. So in terms of the names that we have within the health care bucket, there's Thermo Fisher Scientific and Avantor, which are very much selling medical equipment and consumables across the world. We've got Edwards Lifesciences, which is in the heart area. And then we've had HCA Healthcare, which is the largest private hospitals operator in the U.S. In terms of risk and risk from the Trump presidency and RFK Jr. in particular, it will be really interesting to see like Musk in driving out government inefficiency, what actually happens in the health care space and whether RFK Jr. has to choose between going after food and agriculture or health care and vaccines, et cetera, and because history shows that it's hard to get everything done in a 4-year period. So there is some belief that actually he'll probably go after food and agriculture more and the food chain rather than health care, but we're not betting on that. You never know in terms of direct concern around Trump and health care space. HCA, we have been reducing because they've had a fantastic run in terms of the -- both the health of the underlying population. They are wonderfully positioned in terms of the states that they are, which have net migration into them. So great business with great exposures. Where we have a little bit of caution is just around there's been -- like with Obamacare coming in and the growth in participants in the health exchanges. So access to health care has improved for the U.S. population, but it was only possible for some of the population to access these health exchanges and health care because of government subsidies. So we are a little bit cautious in terms of what may play out there if subsidies were to get cut. It is only 7%, 8% of their business, so not like a disaster. But at the margin, we had like reduced our holding in HCA. Do you want to talk to that?

Well, I suppose one -- absolutely. And I think one thing, I guess, worth pointing out is so our health care exposure is not -- we hold no pharmaceuticals companies. So if you're -- not to pick on any individual company, but if you're thinking of like a Novo Nordisk or an Eli Lilly, if there is a most favored nations change to U.S. drug pricing, that will materially impact the company that owns the IP and produces that drug. We tend to hold the proverbial picks and shovels to an industry, which is the Thermo Fisher and the Avantor side of the world. So long as these drugs are being produced, you need the chemicals and the single-use products that go into producing them. So we think that's a much more sheltered place to be in terms of you're simply betting on a continuation of advances in the sciences here and the technology here, which we think is extremely exciting. Maybe last thought is, so I mentioned ICON who do outsourced clinical trials. One of the proposed changes is potentially speeding up the process by which drugs get to market. We've talked about this in the past. So this is over a decade. I think people throw around the figure of about $1 billion to take a drug from coming up with the molecule through the clinical trials and getting it into the commercial space. That's very costly and that's very onerous. There have been talks of trying to make that quicker and cheaper. Clearly, that wouldn't be good for an ICON or a person who runs the clinical trials. We're not exposed there. But actually, that would be fantastic for companies, actually for the pharmaceutical companies and for the companies that help them make those products, because you'd see more drugs coming to market. So I think there's risks and I think Catriona is right. We want to be very cognizant of those risks. But it is still a space where it's evolving quite rapidly, and there are potential upsides. So we feel quite well positioned amidst that.

And I guess the last, only other point I'd add is just on where we are in the cycle for a company like Avantor and Thermo Fisher. So coming out of COVID, these companies had an incredible run in terms of huge investment in vaccines and adding capacity and so forth and had done really well. Then they -- as we kind of -- as COVID -- as we exited COVID, like there was some inventory unwind and stuff. And we think we're actually at a really interesting point for these businesses where we've kind of worked through the inventory overhangs and demand should actually be picking up going forward. So we actually think they're actually well positioned from a cycle perspective.

Thanks, Catriona and Nick. And while we're in the U.S., Peter has asked what companies do you see could benefit from the Los Angeles rebuild?

Good question. And I mean, horrible fires in L.A. I think in terms of companies that we have that would be beneficiaries, Quanta, whenever there's emergency service, whether it's hurricanes, fires, anything like that, Quanta, you have to rebuild energy and grid infrastructure. And so, they're always -- as the biggest player in the market in the U.S. there, they always benefit. So, they would be a beneficiary. The other one would be Ferguson, which you might want to...

Yes, absolutely. So I guess, a half residential, half nonresidential, industrial exposed company, they would be a beneficiary of the rebuild, both on the resi side and on things like infrastructure and commercial buildings. I mean I fully echo Catriona's thoughts. This is a horrible event for people to have gone through. But nevertheless, these are well-positioned companies. One quick thing I'd mention at the end. So the losers from this situation from a company perspective would be insurers who are directly exposed to losses here. We're not -- we don't hold those kind of companies. So this is not a potential risk on that side.

Thank you. The next question comes from Saranjit and is for Will. Is WAM Global being socially responsible by investing in Genius Sports?

Yes, it's a good question. I guess when I look at Genius Sports and Sportradar, they're B2B technology companies. So they're buying the exclusive data rights from the sports leagues and selling them to the sports books. When we invested these companies, like we do look for red flags because we look at whether they're having predatory behavior, whether they are doing things that aren't socially responsible. And we came to the view that like part of the reason why the U.S. is legalizing sports betting is because the sports leagues want to engage the sports fans more closely. But also it takes away from a lot of the gray market, black market sports betting. And so it raises tax revenue for the individual states. So when we look at the specific role of Genius and Sportradar within the broader ecosystem, we're relatively comfortable. If we saw signs of predatory behavior, then we would be concerned. But these businesses, they've operated in numerous betting markets. They've operated in Australia, they've operated in the U.K., and there's plenty of regulation around them. So whether that's disclosures, limiting how much people can bet, they're all compliant to that. So if we got the sense that there's risk there, we would reconsider our position. But we think they're being fairly responsible players in the ecosystem.

Thanks, Will. The next question comes from Ian and then another similar question from Tony. Given the positioning of the portfolio, is there any likelihood of a share purchase plan to grow the WAM Global market cap? I suppose that's for Catriona.

So look, while we're trading at a discount, which is about, as I said, about 10%, no, we won't be doing an SPP. Over time, we could do that if we were trading at NTA or a premium, but no, no intention while we're trading at a discount to do an SPP.

Thank you. And the next question comes from Tony. Do you own unlisted assets? And if so, what percentage of the portfolio is unlisted?

So we've got one holding in an unlisted company called Xpansiv, which does -- has -- is an exchange business. So has on exchange things like carbon, renewables, nat gas, et cetera. The plan is for that business to list. So, it's kind of in the pre-IPO bucket, and it's about 2% of the portfolio.

Thank you. The next question comes from Wally and is for Nick. Google's advertising model is linked to their search engine. Is this at risk due to Google's performance given people can do ad-free searches on AI models such as ChatGPT?

Yes. Great question, Wally. So I think there is a lot of debate around that question at the moment in the market. What has given us a lot of confidence on this front is actually Google have been really proactive in rolling out this thing they're calling AI overview such that when you can search -- when you search, you get an AI solution as well. The other -- and they've talked about how that's monetizing. They talked about it on the most recent call. This isn't a problem in terms of how it's monetizing relative to search. It's simply a shift of channel of how people are consuming information or gathering information. The other thing to point out is, so if OpenAI are one of the leading other offerings of AI in the market, Sam Altman has been fairly clear that he will introduce ads to this product at some point in time. So I don't think we're seeing a situation where we have a channel with ads competing with one that doesn't. Both will have ads. And we've been quite impressed with how quickly Google has been willing to innovate against themselves in a sense and make sure that they're still well positioned despite this new technology.

Thanks, Nick. And while we're on this topic, Bill has asked, what's your preference? GOOG or GOOGL, which is G-O-O-G or G-O-O-G-L?

Yes. Look, I think we're -- that's a great question, Bill, but I think we're fairly into the weeds here. GOOG and GOOGL are -- they both have the same economic interest. I believe they have slightly different voting rights. Our holding of Google really won't enable us to become activists in the company. So I think functionally, we're talking about equivalent exposure. Both are very liquid given how big the company is. But yes, I think it's a fascinating question because it means you're certainly thinking about the investment.

Thanks, Nick. The next question comes from Shane. Will the U.K. market ever recover from the self-inflicted wound of Brexit?

Yes. Look, it's been a very tough -- I mean, having lived in the -- both of us have done extended periods living in the U.K. and love it as a place and a country, but it's been a really tough economy post-Brexit with immigration issues with…

The least trust moving asset.

Yes, overlaid with policy missteps. Lack of investment, like the list is long in terms of the missteps, which is -- yes, for both of us having been there, lived there, it's a sad state of affairs. But I think in terms of reaching a steady state and improving, that's yet to be seen in terms of whether they can get policy back on track, whether they -- I mean, the additional issue has been obviously energy prices, which have been a real headwind for the economy as well. So resolution perhaps toward the Ukraine war, if we were to see that would be -- might alleviate some of that energy pressure. But -- and the other factor that's been really interesting is that the market -- the U.K. stock market has really been decimated because valuation -- the market has been incredibly cheap, but there's just been -- the market -- fund managers have seen outflows. So there've been net selling of stock, so they've got cheaper and cheaper. And as a result, you've seen a lot of M&A from offshore buyers and the pound has been low. So you've had the market just get picked away at. So lots of the better quality companies that were on the U.K. stock exchange have been taken out or taken private by the management MBOs, by private equity.

Or relisting in the U.S.

Yes, absolutely. That's been a massive factor as well. So they've chosen. They've realized that the valuations, the management teams that they can get in the U.S. is just so much better than in the U.K. So, I mean Ferguson is a great example.

Ferguson relisted in the U.S.

Yes.

And so we didn't -- at some point this year, it will enter the S&P 500, which will drive buying. Yes. And look, when we're over there, Ashtead, one of the things I talked to them about, they were fairly clear that even though nothing was announced, this was certainly something they were thinking about doing. Any U.K. company with significant U.S. exposure, and I think the line is at north of 50% is thinking about relisting in the U.S. So...

Yes, yes. So yes, it's been a tough place, both economically and from the stock market perspective of what you can invest in. We do absolutely hunt though for ideas. The team will be over -- there's some great conferences coming up next month in the U.K., in the small, mid space. And there is still some interesting businesses there. So it absolutely still is a hunting ground for us, and we do own JTC, Alphawave, et cetera, in the 2 stocks we have right now in the U.K. And we have owned various other ones over the life of the fund. Biffa, which was the waste management company that got taken out. Entertainment One, which was the owner of Peppa Pig and which got taken out. So we've had been a beneficiary of some of that M&A in the U.K. And yes, we'll continue to hunt there. But the underlying economy, as I said, and you're absolutely right, has been very tough. And at some level, at some point, we'll reach a base. But yes, we need some better policy and yes, some other decisions from government, et cetera, that might be -- help drive the growth there.

Thanks, Catriona and Nick. That is fascinating. Michael has asked, he saying great result team, and I think we've covered this a little bit before in the prepared remarks, but he's asked, can you disclose the main contributors and detractors?

Yes, sure. So I mean, we -- yes, we talked to some of them before, but things like contributors to the fund, MSCI -- in the last 6 months is companies like TransUnion, MSCI, Tradeweb, Quanta.

SAP.

SAP, absolutely. Visa has been strong. So they're probably some of the bigger contributors. And yes, some of those names -- and actually, sorry, one that I missed before was Genius and Sportradar, which Will talked about before, have been great contributors to the portfolio in the last 6 months.

And just on the detractor side, and Catriona can mention. So I think Avantor was certainly a detractor in the 6 months. And we mentioned that stock before when talking about health care. That can be a situation where certainly it's going through a cyclical end market recovery that is taking longer. But nevertheless, we believe in the drivers of the stock. We think it is very attractively valued. So we think that has kind of latent potential going forward.

Stroer would be another.

Yes, absolutely. Stroer, which I touched upon, that's a situation where they're building value, and it's just not getting reflected in the market. And so takeouts come into play. Yes.

Yes.

And while we're talking about Avantor, Greg has asked, could you please provide an update on your view on the medical supplies company, Avantor?

Yes. Look, Greg, thanks for the question. Look, I think -- and happy to have a call on this, but I think we've covered it decently to this point. Avantor provide a lot of the chemicals, excipients, single-use products that pharmaceutical firms need to actually commercially produce the products that they sell. So they kind of go into that, helping them produce the product side of things. It has been a tough industry actually coming out of COVID. A lot of the COVID work went to zero, so that was a headwind. And as interest rates went up, we had a situation where funding actually reduced, IPOs reduced of these pharmaceutical firms. If you take a step back, actually the FDA approval of kind of new therapies like monoclonal antibodies and cell and gene therapy are remaining really strong. So there are great product, great drugs moving through trials going to hit commercialization. That will drive demand for Avantor's services and products. And actually we saw this in the most recent result of this bioprocess recovery occurring. I think probably the conclusion, though, it is taking longer than I had thought it would. And this is a market that wants to see that definite recovery occurring before it moves the stock up. So I think it is a little bit of a hurry up and wait situation, but we think the underpinnings of the investment remain really strong, certainly undervalued. So we think it's a very attractive holding. It will just be around seeing that recovery.

Thanks, Nick. Greg has asked, are you still holding a private hospital company, HCA Healthcare?

Yes. So this -- that was one I referenced earlier about where we have reduced the holding just because we -- in terms of the subsidies that have come through from government that have really helped drive volumes onto the health exchanges. That's one area where with Trump going after cutting costs and that potentially, there's -- they will be hit if the subsidies were to get reduced. As I said, it's only 7% to 8% of the revenues of the business, so not a ridiculous game changer. The company is not expensive, trading on about 13x PE with an incredibly high-quality management team with exposure to immigration in some of the fastest-growing states in the U.S. And so we think fundamentals of the business are absolutely fine. It's a great business with an incredibly strong industry position as the largest private hospitals operator in the U.S., but we have reduced our holding just on the short-term risk around noise about Trump going after subsidies, et cetera.

The next question comes from Nava who has asked, what is the downside risk on the WAM Global portfolio?

That's a great question, Nava. It's a very broad question, which is why I think we're taking a moment to think it through. Look, I guess there probably -- it's not a downside risk. It's just one thought that pops to mind, and then I'll pass to Catriona. And Will, I love to get your thoughts. So broadly, we are very, very disciplined around sticking to process. So we do love investing in high-quality businesses that are growing their earnings, not paying too much for them. Look, candidly, the market over the past 2 months has been very willing to bid up the price of companies that we saw bid up back in 2021. Some of these are going to prove to be fantastic businesses, but some of them won't. Some of them will prove to be more promise than reality. We are quite disciplined. So I think there is a world in which to take the crypto question, certain assets go up quite a lot. And we would -- in the steady strong businesses at good prices, we think we would do well, but potentially not as well. So that's a thought that pops to mind. It's a broad question. So I think it's a really great one.

Yes. And I guess, look, as Nick pointed to earlier, one of the headwinds on the portfolio has been that we do tend to hunt in the small mid space, which has been a headwind for the last 7 years. That -- nothing to -- like the valuation now is at 20-year lows of small versus large, but that doesn't mean it can't continue. So that could potentially be a headwind to performance relative to the index if that continues. Also with the concentration risk, again, the market is at extremes in terms of top 10 stocks in the S&P, MAG 7, how the components of the index that they now make up. But that doesn't mean that, that can't continue for the time being. So again, if that phenomena continues to get worse and worse, that's a risk to performance relative to the index. As we saw from the DeepSeek January 27 fall of stocks like NVIDIA 17%, wiping $600 billion of market cap off, we tend to do better in those days because we just don't -- our portfolio is more diversified in nature. It is a more -- we do have a lot of those steady Eddie sustainable earnings growth stories. So yes, if the high fliers continue and it's like spicy, it's unprofitable like names that don't fit our process that whether they [indiscernible] -- if they outperform relative to the stocks that we have, we would underperform. But we think how we're investing the portfolio is incredibly prudent in terms of wider, less concentration risk, great companies that have sustainable earnings. So -- and with that backdrop of wanting to be able to sustainably pay great dividends over time, use the profit -- continue to build the profit reserve, et cetera. So that's probably some of the -- there's many potential downside risk to -- from the -- you could -- whether it's wars or like there's lots of different things you could throw out there, but I guess that's some broader thoughts that I'd have. Will, anything you wanted to add?

No, I agree with what you said. I think for the broader market, like if inflation comes back, I think that's going to be a headwind to the market. But then we're looking at companies with pricing power. We're looking at companies which aren't trading on very high valuations relatively more immune. So there's like -- there's headwinds, equities come -- inherently come with risk. So there's always going to be downside risk. But I think our focus as a team is really to minimize those risk where we can see it and maximize the returns while doing that.

There's also a lot of tailwinds there as well. George has asked, is WAM Global open to buying Australian companies with shares listed on the U.S. stock market, but that have global operations? For example, ResMed, which is dual listed and then would you buy ResMed on the U.S. exchange or the ASX Exchange?

Good question. We own ResMed and actually bought it into when there was all the sell-off around risk from GLP-1s. I mean I've covered the Aussie market for a very long time, pre doing global, know ResMed very well. And when -- so we -- like the GLP-1 products are fantastic in concept in terms of comorbidity reduction, et cetera. But for a business like ResMed, which is dealing with a huge problem, sleep apnea that is underpenetrated in terms of the patient population. We thought that -- we took the view that the sell-off in ResMed on GLP-1 fear was overdone. So did take a position in the stock. And in terms of whether we own it in the -- we have bought it in on the Aussie Stock Exchange. I mean it's fascinating. We're talking about the -- like ResMed for forever is an extremely volatile stock around quarterly earnings. And even now, the difference between how U.S. and Australian investors react to results is fascinating like the last result, the Aussie market saw the result, thought it was great then the U.S. opens the next night and wax it because it has concerns. So it's always a volatile stock around quarterly results. But yes, we do have an investment in ResMed right now, and it's been a good performer in terms of buying into the fear around GLP-1s.

And absolutely happy to hold Australian stocks more broadly. Same statement with regards to them just being compelling vis-a-vis the other opportunities in the world.

And the last question we have is a bit of a macro question to end on. Nava has asked, what is the likelihood of the world shifting away from the U.S. dollar as the reserve currency? And do you think -- how long will it be the -- remain the dominant currency for global trade?

Look, I'll kick us off, Nava. I -- look, I've loved all the questions that have come in, but you've sent in a couple of crackers. I love questions like this, and I love thinking this through. Certainly go back to Catriona's point around we're not FX traders. We are looking to make our money through applying our process of investing in stocks. Nevertheless, look, I think of currencies as a very relative game. And I think when people talk about weaknesses in the U.S., they're not necessarily highlighting to the extent they should some of the challenges we flagged in the U.K., Europe has got some challenges. China has some growth challenges as well. My view, and we're not investing on this view, but it's just a view, is probably the U.S. actually looks like the cleanest shirt, if you will, in the world. So in terms of a different current -- and look, they just dominate global flows. Global trade is priced in USD predominantly. And we're not really seeing that shift despite efforts from China to build kind of an alternate option. So broadly, I would say you can kind of keep an eye on this, but not necessarily go jumping at shadows on a U.S. loss of reserve currency. But yes.

Yes. No, I'd echo the same. What -- it's hard to think of a valid alternative. So yes, we wouldn't be betting against the U.S. no longer -- U.S. dollar no longer being the reserve currency.

Sorry. And just to add, like it's fascinating watching even in the crypto space, the stablecoins, the 2 large ones are pegged to the U.S. dollar. So even when people start talking about crypto as an alternate form of currency, even those stablecoins are pegged to the USD. So yes, further reiterate, I think it's probably a risk you shouldn't stay up at night thinking about too much.

Thank you. So that's the end of the Q&A part of the webinar. Some great questions came in and lots for us to think about over the coming months and years. So thank you very much to the WAM Global team for the insights today. For more of the team's market views and stock picks, please make sure you subscribe to our newsletter on our website and follow us on social media. And I'll pass back to Catriona for any final remarks.

Thanks, April, and a big thanks to you and to Nick and Will for joining me today on the webinar. But most of all, a big thank you to all those -- of our shareholders who've joined the call and prospective shareholders. This is your company, as we said at the start, and pleased to answer any questions you have and a big thank you for your support. We look forward to updating you again soon. Please come through, as I said, with any question -- follow-up questions that you do have, and we look forward to speaking to you again soon.