ROB BAILEY: Hello welcome to today’s AXA Investment Managers webcast. I’m Rob Bailey and today I’m joined by Jamie Hooper, Fund Manager of the AXA Framlington Managed Balance Fund, and Nick Hayes. Nick is responsible for the fixed income portion of the AXA Framlington Managed Balance Fund. Morning gentlemen. Let’s start by talking about the Managed Balance Fund. I think one of the crucial things about the Managed Balance Fund really is the team of people that you work with in managing the portfolio, team of people you work with and work with for some time. Can you explain to us perhaps a bit behind the philosophy of how you all work together in the Managed Balance Fund and actually what the Managed Balance Fund’s all about?
JAMIE HOOPER: So we worked together for many years. The guys are very experienced, very capable individuals, and they’re very clear in the objectives, the mandate that we have for managed balance. We run the equities regionally with specialists and indeed with a bond portfolio with Nick. As I said everybody’s clear on the remit. Equities are typically run with a bias towards quality, longer-term structural trends and growth, and then the bond element really forms part of the hedge which dampens the performance when you have moments of distress in equity markets. It’s like an insurance policy if you like.
ROB BAILEY: And looking at the team that you’ve got here, how do they actually manage their individual segments of the portfolio? I mean is it run in the same way they run their individual unit trusts? I’ve got Steve Kelly here for example on the US equities side.
JAMIE HOOPER: Yes. So as I said they run their mandates with a bias towards quality and growth, but it also depends on the nature of their market. So, for example, Steve in the US, Chisako in Japan, there’s far more genuine growth opportunities than might exist perhaps in UK and Europe. So we think about the structure of the carve-outs to reflect the nature of those markets. But their underlying approach is definitely to have growth companies that can compound their returns over time. Consequently the multiples that we’re prepared to pay if one looked at a snapshot of our fund are perhaps higher than that of the market average.
ROB BAILEY: OK so let’s have a look at the performance first of all. And perhaps this graph here goes back to 1992 and I think for the first several years of the fund’s life it was, you know, the staff pension fund, it was unitised in 2004.
JAMIE HOOPER: No, earlier than that, ’92 was when it was actually unitised yes. So it was a £6m staff pension fund, a clear alignment of interest between the managers and the end client. The key to it really is the structure. It’s been very simple, it’s been very consistent and as the numbers show has been effective over time. And I do honestly think that simplicity has had an appeal to both the advisers and the end client.
ROB BAILEY: So a significant outperformance over the lifetime of the fund, some 260% in excess of the mixed investment sector against which it’s compared which is the 40-85% group. Let’s drill down into that performance a bit if we can and let’s look in the last couple of years: clearly two very strong years for risk assets. Last year a marginal underperformance. Explain to us what happened last year.
JAMIE HOOPER: Yes. So let’s set the scene, 2017 as you said was great for risk assets. We had the synchronised global economic recovery due to technology, debt, other pressures. Inflation remained very subdued, which therefore meant liquidity was still expansive and cheap. So if you’ve got an improving world and lots of cheap money that generally is quite good for risk assets. We also saw Europe resolve some of its political issues with the election of Macron in France, and the US had the considerable tax reform as well. So for many it created this if you like Goldilocks scenario. In terms of the ‘the fund’, as you say an absolute return of almost 10% I guess is fairly healthy; when one looks at the relative return to the peer group it’s more modest in its performance.
To consider what was good and what was bad, we had a strong allocation to equity so that was very rewarding, and as we’ll come on to look at perhaps a bit later in the webcast. Our regional returns from North America, from the emerging markets and from Japan were strong; unfortunately those in the UK and Europe lagged.
ROB BAILEY: Yes and so Nick, looking at it from the bond perspective, last year, I mean we’ll talk a bit more in-depth about the bond portfolio later on during the webcast but just give us a summary of your perspective on the bond take within the fund last year.
NICK HAYES: So our bond exposure is purely in government bonds because we want to provide that hedge or a dampener if you like to the risk assets that are held in the equity sleeves. To look at 2017 I guess a couple of things happened. First of all we had a small positive performance from bonds. Which was slightly above most people’s expectations, ours included, where we thought that we would higher yields, so we’re more positioned defensively with a sort of an underweight duration position. But clearly in a sort of, when yields didn’t really move and for choice ended up slightly lower than they started on the year that was a small relative underperformance. And then maybe in an absolute sense where we only owned government bonds, possibly we underperformed some of the other funds that may have owned credit, high yield.
But, again, it comes back to the philosophy of the fund in that what we want to do is own interest rate sensitive assets that offset the risk assets that are purely equities. We think if we ended up owning credit or high yield these would perform very much in line with, equities wouldn’t provide that hedge or that sort of low correlation.
ROB BAILEY: And we see, looking back at the discreet performance over previous years, consistent outperformance with the fund structure that we’ve got in place. I want to talk a little bit about the fund structure and the percentage. You mentioned that you felt you were overweight equities. I mean typically equities in this fund between 75 and 85%.
JAMIE HOOPER: Yes and currently sit at 77%. And in a moment we’ll move on to asset allocation to give you a feel of where we are and where we’re moving, but you’re quite right the structure is key to the longer-term performance over the 25 years. This is a global equity biased fund for the conservative investor, hence why we have that hedge structure permanently in place. With regards to the equity 75-85% as we’ve said is in global equities. We like equities. It’s that unique ability to reinvest profits and compound. As I’ve mentioned the way we run those equities are through regional experts. We have this bias towards longer-term structural trends. We have many specific trend funds within the AXA Framlington, AXA Investment Managers range. And then finally we have this bias towards quality. We like companies who we think will be here tomorrow, fairly robust, and if they have improving fortunes even better.
That is then assisted by the bonds and cash hedge. And, as Nick has already touched on, what are we trying to do here, think of this as a simple insurance policy to dampen the volatility when there is distress in equity markets. Most importantly we’re trying to avoid the 3Cs which we would term as we don’t want it to be costly, we certainly don’t want it to be complex and we don’t want it to be correlated, which is why we would name credit or high yield or index linked. And then finally because we had the structural hedge in place, investors aren’t guessing whether we have been able to position that ahead of any downturn. For me as an equity investor it has two sizeable benefits. One, I’m not a forced seller of our preferred holdings; in fact quite the opposite it gives me the firepower and my regional colleagues to go out and pick up prized assets in moments of market dislocation.
ROB BAILEY: And we’ve had several of your fund manager colleagues on these webcasts in the past and they always talk about the long-term nature of our investment. I guess just from the title of this webcast that’s a philosophy you share?
JAMIE HOOPER: Oh for sure. I mean it’s been the hallmark of the fund. And if something isn’t broken what are we trying to fix? We have reservations about the ability to market time. I mean it’s probably worthwhile moving on to that. Some investors will claim to be dynamic in their tactical asset allocation but we see limited evidence of being able to do that on a consistent basis.
ROB BAILEY: OK. So there’s not tactical asset allocation within the fund and I guess this next graph here demonstrates a bit of the volatility that you’d be competing with if you were doing that.
JAMIE HOOPER: So we like the cult of equity, which is why the fund is biased towards equity and that has been attractive over time. What we’re trying to show in this chart, it looks at discreet years the capital-only return of the FTSE All Share going back to the early 90s. Of course you could add the dividend yield. The UK is always a very strong dividend yielding market so you could add 3, 4, even 5% to the numbers you’ve seen; however with those super returns comes volatility, so that’s the very nature of equities. And therefore we’re showing with the red crosses the drawdown in any particular year. So whilst the full year returns may be positive, there are always opportunities intra-year.
Now, this could be due to concerns about policy, the macro environment, the geopolitical risks, changing governments etc. particularly over time this is noise and provides opportunities. But our simple observation is we think investors’ ability to consistently tie markets is fairly limited and in fact is perhaps foolish to try. It is very difficult to say when a selloff is coming and the magnitude that will subsequently occur. So, from our perspective, we stick to the point of just trying to find good quality companies assisted by this longer-term structural hedge.
ROB BAILEY: And looking at the graph here, I mean obviously it’s been, the volatility is sort of, the maximum drawdown you’re seeing is about 10% during any year and a lot of those years as you say have been positive years. This year we’ve already seen volatility of that kind of nature. Do you expect that to continue?
JAMIE HOOPER: So the volatility genie is out of the bottle and this concerns some people. What I would say is the drawdown at the beginning of this year was long overdue. It was almost unprecedented the period that we had. There are a number of theories as to why this volatility occurred. I would just say that the overriding message, however, is the world is transitioning from one that was supported by central banks to a more solid corporate and economic fundamental, and ultimately that has to be a good thing for risk assets.
ROB BAILEY: OK, let’s move on and I mean you mentioned before that your tactical asset allocation isn’t a core part of the philosophy of this fund. I guess that’s highlighted a lot in this chart we have here showing the long-term allocation towards individual countries but also with your sort of cash and bond exposure.
JAMIE HOOPER: Yes, so it’s a deliberate attempt to try and show the long-term approach that we take. We’ve touched on what’s been going on in markets more recently. We’ve also confirmed that we’re not really into dynamic tactical asset allocations for the reasons explained concerning market timing. If I think about 2017 specifically there were no meaningful changes in terms of our asset allocation. And by that I mean we remain overweight equities, we remain overweight cash, we remain underweight bonds and we don’t have any property exposure direct. We might have it through stocks but not in terms of a specific direct asset allocation. A bigger issue perhaps is the UK.
You can see that the UK has trended down over time from approximately 55% at the beginning of this chart to low 30s today. That’s in part the structural move. Investors are becoming far more confident in their international exposure. The UK though is currently under the cosh if you like; it’s certainly unloved and underowned at the moment, perhaps a number of reasons for that: the dreaded Brexit. Also concerns about the fragility of the domestic government. Also if you look at our growth rates they kind of lag, whilst they’re OK, actually lag the G7. So there’s been a number of reasons why asset allocators and international investors have chosen to avoid the UK at least in the short term.
ROB BAILEY: And in your gradual reduction of the UK weighting within the portfolio, how much of that is driven by consciously deciding that you wanted to invest overseas or more in bonds or whatever, and how much of it is driven actually by that gradual underperformance of the UK market over the recent times?
JAMIE HOOPER: Yes, so I would say the bulk of the transition has become the internationalisation of markets and a desire to increase our exposure to some of those overseas equities. And in the last few years as bond yields have risen, we’ve revisited the bond exposure because we’re meaningfully underweight and taking a view whether actually at these more attractive yields whether we wish to increase the bond exposure. But that UK element has been more though recent phenomenon. And perhaps is worthwhile discussing actually what is going on regionally within the markets and perhaps why we still stay positive on the UK.
ROB BAILEY: OK so let’s explain this chart first of all. This is the performance of the value stocks relative to the growth stocks in the international markets in which we invest.
JAMIE HOOPER: So it’s an observation of style. I said at the outset that we have a preference for quality and growth. Now the way the chart is constructed, it’s the performance of a basket of value stocks over a basket of growth stocks. So when that line goes down that is actually good for our style; that’s a tailwind.
ROB BAILEY: That’s growth outperforming.
JAMIE HOOPER: Correct. And therefore when the line goes up, that’s a headwind for our approach. Now you can see the differences regionally over the last year. So it’s been good in the US, it’s been good in emerging markets and it’s been good in Japan. Technology’s a big driver of their performance, certainly if I think of holdings in Japan such as Cyberdyne, which is a rehabilitation robot to help people walk and to move again, or SBI Holdings which is an online bank venture capitalists, lots of technology investments. Or I think of emerging markets, they own a position in Tencent, which is a very well-known Chinese online company. In the US, it’s been slightly broader in its growth perspective but nonetheless technology is a key driver.
Conversely, if I look at Europe but particularly the UK, the technology weighting is just over 1%. The UK is also far more dense with oils, pharmaceuticals, utilities, telecoms, which had not performed as well. What I would say therefore stylistically it’s been headwind, but why should we therefore persist with an overweight position in the UK? You have to remember that 70% of the FTSE 100 sales are overseas. So however concerned you may become by the fortunes of Maplins, Mothercare, B&Q, Moss Bros, New Look, all the domestic retailers that are currently struggling, that’s not necessarily what you’re buying with the UK. You’re not buying the UK economy; you’re buying UK PLC which is a play on global growth at an attractive valuation.
I would also argue the more recent transition agreement with Europe probably gives us greater visibility over the next couple of years. And the biggest point is look at the mergers and acquisition activity that’s now happening in the UK: it’s double from last year. Hammerson in the property sector, NEX in the financial sector, Fenner in the industrial sector, international corporates are seeing the value that is now available in the UK market, which we feel won’t persist for much longer.
ROB BAILEY: OK. So with that, you know, against that backdrop where you have significant corporate activity, you’ve got perhaps a bit more clarity coming on some of the macro issues, explain to me the equity characteristics you’ve actually got within the portfolio particularly within the UK leg.
JAMIE HOOPER: Yes, as we look across our regional carve-outs, growth is the overriding, the consistent themes. What I’ve tried to give you from a UK perspective is divide that up. So we will look for a basket of companies that have reliable growth characteristics. These are the strong, stable, resilient companies. Then we have those that display structural growth. And again particularly if you were looking at the US region or the Japanese or the emerging markets, you would see lots of those opportunities. And then improving growth, companies where things are getting better. This is the importance of having those meetings with management to understand the change. So for each instance we’ve sited a number of criteria that we would look for, and also given some UK examples of stocks that we think meet those attributes and are owned within the managed balanced portfolio.
ROB BAILEY: And against that backdrop where you’ve got lots of corporate activity going on, I mean I saw some statistics there about the fastest year ever in terms of reaching I think it was one trillion dollars of corporate flow. You see that. How important are these companies in terms of their growth trajectory? How important is that or how important is it maybe that it’s in recovery or it’s in the right sector?
JAMIE HOOPER: I make the observation simply relating to the UK and the undervaluation of the UK market and the under-ownership - we’re about two standard deviations away from where we normally are - we would never buy a company simply because we thought it would be taken over. These are quality companies with strong balance sheets, improving dynamics and expanding margins. If they were to be taken over, well that’s all well and good, but that’s not the key motivation. Again, back to the ethos of the fund, we’re looking for longer-term structural trends. If though a holding such as Arm Technologies that we owned, which was the IP, the infrastructure for mobile phones and many internet of things, activities, if someone should come along and recognise the value then clearly those stocks will be taken over.
ROB BAILEY: OK. Nick, I want to move on and talk a bit about the bond portfolio because we’ve obviously seen a long positive run for bonds generally. We’ve seen a bit of a change in direction of central bank behaviour over the last six to twelve months, and we’ve just recently seen the Fed adding a further interest rise in the US. Is this the end of this long bond run?
NICK HAYES: I think we’re certainly at a very important turning point. And if you look at the chart we sort of show 30-year history of US tenure yields that have gone sort of top left down to bottom right, you know, 9% yields down to 1½% yields. So certainly we think that we have seen the lows in yields. We think that those yields will rise. And you can see that on the chart that how it’s started to break out of its channel. It’s moved through that sort of blue line at the top. But I think to call it a sort of reversal or a very nasty bear market is slightly over-exaggerating. I think what we think is that you will see yields gradually rise. We certainly don’t think we’ll get back to those sort of 1½% levels in the US and the UK we probably hit the lows in yields, but I think the recovery or the sort of reversal of QE is going to be incredibly slow and gradual.
If you look at US yields they’re probably only 30-40 basis points higher than where they were in Q4 of 2015. Since then we had five or six rate rises in the US so it tells you that if this is a bear market it’s not too bad. But certainly we don’t think that you’re going to see an aggressive reversal of yields and we think there’ll be opportunities. We think we’re not far away from being much more bullish on government bonds and duration exposure. Probably more so in the UK than the US because we think the challenging outlook for Brexit, we think that some of the rate rises that are already priced in in the UK are starting to be reflected in the market. And we think that then the sort of low yield environment will be with us for a while, so we think there are some opportunities.
But I think we come back to the chart. You can show some cynicism if I replotted that chart on a daily basis rather than a quarterly basis that that yield wouldn’t have broken out of its channels. This has a healthy cynicism which shows you can prove anything with charts I guess. But certainly we’ve hit the low in yields. We think that yields will rise but very gradually, very slowly. And more importantly when I come to think about what the bonds are doing in this portfolio, they’re there to provide a hedge. We’re not trying to make money all the time with bonds. It would be nice to do that but clearly impossible, but what we are there to do is provide purely interest rate sensitive assets that offset some of the risk assets held within the equity portfolio.
ROB BAILEY: So in that role then as a defensive part of the fund, as in a risk mitigation as in avoiding losses, in asset classes which clearly are going to be dominated by interest rate moves and monetary policy and so forth, how do you actually ensure that you then don’t become a drag or a lag effect on the portfolio as a whole?
NICK HAYES: So there’s a couple of things. First of all, it’s ensuring that we have a healthy element of government bonds and purely interest rate sensitive government bonds. So that’s looking at the sort of the major developed market countries. We’ve even stripped out Italy and Spain for example because there is much more credit risk in those markets than historically. Then we have a sort of an outright duration view where we would look to sort of outperform the market and see where we can look for better opportunities. We’re also playing things like curve positions, so being underweight or overweight longer-dated or shorter-date part of the markets. And there’s the cross-markets, so we’re looking at UK against Japan against America against Germany and France etc. So there’s a number of ways you can play a relative value exposure to core government bonds. But ultimately it’s about having a sensible allocation to interest rate sensitive assets that will offset the risk assets of equities.
ROB BAILEY: And looking at this chart here, looking at your duration, where does that sit relative to where you have it, it’s 8.38 within the fund against 9.28 within the benchmark.
NICK HAYES: And sort of the turn of the year we had a sort of 1-1½ year underweight duration position. We’ve kind of closed that in the last couple of months and as I say we’re moving towards a more neutral view. I think if yields start to rise, and we’re talking only maybe 30/50 basis points more, I think at that stage we start to go overweight duration, at that stage we start to think that the rate rises are priced in. And we think that then, you know, you can get quite excited about government bonds, even though they are low in historical context, looking at those 30 years, but if you think more of the sort of the next year or two, we think that there’s going to be some opportunities and I think we could get there quite quickly. We’re certainly not in the camp that says yields have started to rise and will continue to rise for the next couple of years going back to whatever your view of normal is but if you think of normal as sort of 4-5% yields, we don’t think we get there any time soon but actually once you get to maybe something like 2% in UK gilts or 3% in US treasuries that for us starts to get a bit more exciting and we’ll start to be adding duration, adding longer-dated assets in that environment.
ROB BAILEY: OK. So one of the questions we’ve had is around duration, duration within the portfolio. So essentially you can see that lengthening as the cycle progresses over the remainder of this year?
NICK HAYES: Exactly. Yes I think it could happen quite quickly. It might be a little bit more violent. We had more excitement in the first six weeks of this year than we had pretty much for the 18 months prior to that. So I think you can see a sharp reversal but we don’t think it’s a very sustained long-term reversal. And I’ll take you back to what are we owning? We’re owning pure government bonds. Yes we could go into credit, high yield, leverage loans, whatever else people think are fashionable, but it’s getting that low correlation to equities. That’s what we want in order to provide the dampener or the low correlation to equity risk.
ROB BAILEY: And so Jamie, with that dampener effect, I mean the proof of all these things are really is, the proof of the pie is in the eating. Sitting here looking at this slide here, looking at the drawdowns this fund has experienced in times of market stress here. Talk us through this slide and what it is you think it shows.
JAMIE HOOPER: Yes so as we mentioned at the outset the fund’s been in existence for some 25, 26 years now, and what we did was we went back in history to find the largest drawdowns and bear markets and therefore we have five separate instances. Moving across the table we try and highlight the number of days, the magnitude of the fallen equity markets, then the decline in managed balance. And the relative outperformance of managed balance which one would expect because we have this structural hedge in place. We then look at the prevailing bond yield environment. But what’s as encouraging for us in terms of adopting this structure is the equity/bond correlation. And you can see in every instance it was a negative correlation, i.e. the cash but particularly the bond correlation moved in the opposite direction to equities. And then the final column refers to the weighting that we had in the hedge. Back to asset allocation, we currently have 77% in equities. We have 12% in bonds, 11% in cash, therefore 23% currently sits within our hedge, so towards the top of the hedge range and slightly towards the lower end of the equity range. If I think about the drawdown that we had at the beginning of this year, again the managed balance would have relatively outperformed the regional equities because of the structural hedge that was in place.
NICK HAYES: And if you think about what happened this year, I think it’s quite interesting where it was almost, the bond started selling off much earlier. So it was a bond problem. Bonds got too expensive. There was a threat of more interest rate rises, a threat of higher inflation particularly in the US, so bonds started selling off. When that had the knock-on effect to equities and then you had the problems around the volatility indices, actually bonds started to stabilise and then rally. Because I think they still do own safe haven characteristics and I don’t think that has gone away. Yes, they’re expensive, we know why bonds are expensive, but certainly they are sort of credit risk light if you like or of still a very safe haven asset class. Not everyone’s favourite asset class but a safe haven asset class in our view.
ROB BAILEY: And another question we’ve had Jamie here really, you know, taken into account the perspective that it’s not a big tactical asset allocation tool, how do you feel in terms of confidence that your weighting, as you say it’s 23%, it’s quite high relative to where you’d normally expect to be. Is that something you expect to maintain or do you see that as the year progresses and as we see some of the policy actions of the central banks coming through, do you see that reducing?
JAMIE HOOPER: I think we’re quite confident with where we are. Again, relative to the peer group, we still have a very full equity weighting. In an absolute sense it’s still a very full equity weighting. But we have to acknowledge we’re at a fairly mature stage of this market’s cycle. We’re only a 100 days away for the longest bull market in history. So we have to be sensible. We have to think about options and we’ve got to think about potential market outcomes. We can talk in a moment about the market outlook and it certainly isn’t our central case that there are a world full of excesses and markets are about to correct. But nonetheless we just have to position the portfolio in line with being a global equity fund for conservative investor.
ROB BAILEY: And so as a positioning relative to just pure equity market, you’re capturing about 80% of the upside of the equity market?
JAMIE HOOPER: Yes so statistically over the 25 years our observation is that we typically capture just over 80% of the upside and, conversely, capture just about 60-65% of that downside. Which one would expect because we do have a structural hedge in place. And again this is part of the simplicity of the approach and the consistency also.
ROB BAILEY: OK. Now I want to come back and just have a look at this slide here, and I know we’ve used this slide before but I think it’s quite interesting, in terms of formulating that view of how much you have in bonds, this is your bear market checklist. Talk us through what the red boxes mean and where you see us today.
JAMIE HOOPER: I mean to put it in context for some people the fact we’re getting more bullish in the real world makes you actually bearish of markets because people fear a policy response or a policy error that could destabilise things. This has been very helpful. So we have warning signs - 15-20 variables - that were indicative of problems ahead of the previous two bear markets in 2000 and in 2007. Now of course there are the unknown unknowns and it might be something different this time around. But they’re quite a good barometer, a measure of excess. And they move from valuations, through sentiment, through corporate behaviour, profitability, balance sheets. So you could see the red and the amber warnings previously compared with where we are today. It is true compared with 12 months ago there are a few more things flashing than before.
To sort of categorise those, absolute valuation, investor optimism and corporate debt levels have started to flash; conversely, relative valuations still compared with bonds and/or corporate excess are not yet flagging. Again, it’ll take your view as to when all of this comes to an end. In our experience, it’s typically a credit bubble or an inflation bubble. I would perhaps suggest we’re kind of in the foothills of that rather than at the peak.
ROB BAILEY: So, moving into the foothills here, they’re talking about the markets today and I guess the things that keep you occupied in your thought process.
JAMIE HOOPER: Yes. There’s many points I could’ve added to this. I’ve tried to simplify as you see the climber, that proverbial wall of worry. Risk assets have significantly outperformed the real world since the financial crisis. The bullet points in white are trying to summarise and articulate that. So we’ve had the global economic recovery. We’ve had many Trump reforms, tax being the biggest one so far. Inflation has remained subdued and therefore the taps have remained on around the world. This has translated to corporate earnings upgrades, Europe’s improved as the political environment has stabilised, particularly as I said the election of Macron and his reforms. And then the emerging markets are typically a beneficiary of the pickup in global trade and lower US interest rates. For some this has led to this Goldilocks scenario and hence why we’ve seen this return in equities.
To my point though, there are always a number of concerns and therefore you could say markets are finally balanced. The biggest one though is more confidence, more consumption, more capex, leads to inflationary pressures. That typically would lead to higher rates, perhaps more volatility and a more challenging environment for markets. What we would say though is firstly we’re not about calling markets, which is the very point I’ve mentioned about market timing. This informs our discussion with the corporates that we meet. But the world that we see is, it’s almost like a post-World War Two world where the financial crises were so severe, the hits to capex was so large that actually we’re still in this rehabilitation mode. And we’re seeing how US corporates particularly are behaving subsequent to this tax reform. Both the industrials and the technology companies are showing far more confidence in terms of updating legacy systems that they wouldn’t have otherwise done. But I will come back to the point, 25 years of approach to this fund is all about buying good stocks, trying to find ones that are robust and sticking with them, and then augment that with the structural hedge. Our approach hasn’t been and won’t be about calling market movements.
ROB BAILEY: Great well Jamie Hooper, that’s a great way to finish so thank you very much for your time, and Nick Hayes thank you for your time. And thank you for joining us. I hope you’ve found that useful. As I say, any questions we didn’t answer during the course of the webcast, we’ll get back to you but thank you very much for watching.