Speaker 0:
It's been an incredibly busy three years. There was a huge amount going on in the environment around us both. From a political geopolitical standpoint, markets have obviously been exceptionally busy in terms of the types of companies and the investment backdrop that we were faced with. The other point we should really highlight is that internally, there's been

Speaker 0:
a lot going on as well. From a team perspective. Um, you know, we wanted to change the investment process that we inherited and really enhance the elements of that process which have been successful in the past and try to, you know, reduce out any error rate that was being made. And you know, that process, I think, has really led to a very clear framework now about how we operate the type of companies we want to invest in, um, from a bottom up perspective and really focusing on those idiosyncratic risks. So

Speaker 0:
look over the last three years, when you think about it, we've had obviously covid we took on the portfolio right into the teeth of the into the crisis. We've had a huge amount of political churn. The Trump Administration moving to a Democratic administration under Biden. We've had any number of prime ministers and chancellors in the UK, you know, tensions flaring across the world. Obviously the,

Speaker 0:
um, you know, the tragic events in Russia and Ukraine that we've had in the last year or so as well. So it's been a very challenging backdrop. Frankly, for investors, you know, we've had to, you know, move the move the portfolio and really change the approach and the types of companies that we've been invested in along along that three year period

Speaker 0:
performance has been strong over the three year period. The portfolio is ahead of the market, which is really pleasing, that we've been able to deliver strong returns for our investors. Really importantly, a lot of that has been driven by those process improvements that I referred to, and in a market which has been very volatile and

Speaker 0:
huge changes in terms of interest rate policy in the inflation dynamics fiscal policy, that process has really driven us to focus on the bottom up, stock specifics of the companies that we've invested in and try to avoid any excessive factor and correlation bias, which has given us the opportunity for the stock picking element of the process to really to really drive performance.

Speaker 0:
The process that we've really embedded in the team now is very much focused on the bottom up stock selection, the idiosyncratic drivers of the companies that we've invested in and avoiding too much factor or correlation bias. And so what's really pleasing is when we look at the performance attribution of the portfolio. We've had success across different sectors, so technology, financials,

Speaker 0:
industrials, consumer staples and some health care businesses as well. So I think what that really highlights is that the process is working as it should, frankly, which is that it's able to, you know, try and find those companies in those sectors across different geographies and really isolate where we can the idiosyncratic sort of alpha opportunities. That is exactly what we're trying to do.

Speaker 0:
The last three years have obviously had a huge amount of macro or geopolitical events going on. Yeah, therefore, it would be perhaps hopeful that the next few years might not be quite so volatile, but unfortunately I think that's unlikely. I think we are likely to be faced with a period of more inflation volatility. We actually believe that there are good reasons to think that inflation will trend down

Speaker 0:
quite substantially between now and the end of this year. But I think this might well be short lived, and we may well live in an era now where we have slightly higher levels of inflation volatility. I think the you know, the decade that we enjoyed from, say, 2011 to 2021 was a period where there was a relatively reduced level of macro economic volatility. And I suspect going forward, you know, we might well have

Speaker 0:
to a slightly more normal period where there are higher levels of inflation, volatility, interest rate volatility and therefore making sure that we, you know, we really stick to our knitting focus on that investment process to define the idiosyncratic opportunities across geography and across sector, and avoiding excessive build up of correlation or factor buyers. We hope that that process will continue to serve our clients well.

Speaker 0:
I think the last decade was a was a really interesting one in terms of lower levels of macro volatility. It was also one in which, um, you know, discount rates obviously fell to very low levels in terms of interest rates being so low and for such a long period of time, and that, I think, gave a tailwind to the market in terms of, um, the rating attached to earnings within the market

Speaker 0:
over that sort of decade from 2011 to 2021 the global markets generally compounded at rates, which was above the usual level. So I think given where markets are now given where valuations are now, I think it's rational to believe that perhaps the types of growth rates which markets compounded at for the last decade, are unlikely to be matched in the near term

Speaker 0:
and therefore dividends, I think will become a far more important of total shareholder return. Now, critically, I think if you know where we can find dividends, but particularly dividends, which can grow, I think that will be a particularly sort of fruitful area for the portfolio going forward.