Speaker 0:
join me here in the studio. We have Stuart Dunbar, partner Baillie Gifford. Stuart. Thanks very much for being here. It's great to be here.

Speaker 1:
Thank you.

Speaker 0:
Stuart. How do you see the world right now? What's really peaking your interest? And does anything worry you at the moment about the asset management industry as it is today?

Speaker 1:
Gosh, well, big question to serve with Yes and no, I mean, I really We tried to think about things that really gifted. I try and think about. It is we're in a cyclical industry.

Speaker 1:
It is a pretty good starting point is to accept you're in a cyclical industry and don't try too hard to react to short term events. So you know what worries me at the moment? Well, you know, it's a It's a tricky investment environment. We've had this exceptional period of pandemic followed by war, huge amounts of money printing for growth managers such as us. It's been a roller coaster todo say the least

Speaker 1:
on. I think a lot of the challenge that we have, certainly, and I guess the industry has more generally is one of maintaining the confidence of clients trying to remind people to take the longer view. Don't panic when investment environment is difficult. Focus on focus on clients first and foremost, try and make sure that everybody's staying calm and thoughtful. So you know, that's that's what we're spending a lot of time on in terms of the industry. More generally,

Speaker 1:
you know, we have our challenges that I think it another child perhaps will come onto. This is Maura and Mawr obligations being placed upon us. You know, the investment job doesn't get easier. It gets more and more complicated at the same time as we're seeing.

Speaker 1:
You know, I said, it's going to passive pressure on fees, so you know, we're having to build resource At the same time, Aziz businesses like ours are coming under a bit more free pressure, and I'd be the first to say that

Speaker 1:
you know, the asset management has been a successful business for many farmers for many years, but that dynamic changing a little bit and you know we could still, it's still a wonderful industry to be in, but we're having. I think everyone's having to think about were carefully now about how do we meet those increasing client challenges at the you know at the at the same time is revenues are down, the market difficult

Speaker 0:
on you. Touched on a few crisis is that we've had throughout the year there. I guess that lends itself to quite a lot short term thinking.

Speaker 0:
But it's yes, it management industry a bit too short. Some focus too much on trade in touch on earnings per

Speaker 1:
share. Yeah, I I love to say to people that I'd love it if stock markets were only open for two hours a month. You know, I think I think we've got quite far as, ah industry from the underlying really important business of capital deployment risk capital deployment for wealth creation. And

Speaker 1:
if you use that as your starting point, then yes, I think it's fair to say that much of the investment industry is very short term. And whether that's you know primarily, you know about this asset managers like ours, there is individual participants in the markets. Yes, I think it comes back to This is a difficult environment, but the most important thing that anyone can do just now, try and look through it. Try and look and see what companies are doing what fundamental progress is being made in the world is tough for a lot of companies, the funding environments much harder than it has been for many years.

Speaker 1:
But try and stay focused on underlying progress in long termism in the industry. It's hard to do that. I don't think it's fair to just say the industry is short term. It's such a challenge. Getting clients to come along with us on the long term view on guy sometimes think that the industry doesn't try hard enough to explain that. You know, we

Speaker 1:
we react. Tiu requests to comment on quarterly performance, and it's hard not to. In reality, quarterly performance is just noise, and we need to sort of try and remind people over that

Speaker 0:
I want to pick up on a quite the sudden interview before it was steady. Earnings progression doesn't work in an asset management company. Do you think that's still rings true even today?

Speaker 1:
Yeah, So I

Speaker 1:
I think we're in our firm. We're incredibly fortunate to know of any outside shareholders to partnership. We're not the only ones, of course, that have that structure, but the benefit of it is really important. But quite subtle, I think. Which is

Speaker 1:
when we have this roller coaster of, certainly for growth, assets, huge growth and then quite significant falls. Our revenues essentially follow that pattern. If we had outside shareholders, they be, it would be it would be shouting out as just night and say, You know, you have to cut costs. We have to maintain profitability. That sort of behaviour

Speaker 1:
doesn't lend itself to doing a good job, for clients were right now we're investing heavily, as we have done countersign quickly into our investment teams were still growing. We're still adding people where we think we can augment our expertise.

Speaker 1:
The outcome of that is that our profitability is is pretty volatile. You know, you don't need to be a genius. I'm not telling you a secret when I say our profitability will be lower next year than it was last year, given that we're a growth manager and at its have come down. But that's okay on Bink. I guess that's where I was coming from with that comment is I am so pleased. I am not trying to run an asset management company in which

Speaker 1:
people want us to have a steady pattern of 10% per annum, areas goes. I just don't think you could do that in an asset measure business, at least not without

Speaker 1:
adopting the same cycle in terms of your resources. You know, not without damaging your long term client outcomes. Well,

Speaker 0:
big if it was UK century for quite a long time. But you've been around the world with the company, sort of spreading the message, how people responded when you've gone around and talking about what you do

Speaker 1:
well, pretty well. Obviously way. We've had a lot of success in expanding the firm beyond the UK, so it's now I don't know what the number is, but we're probably 36% UK clients.

Speaker 1:
Ah, big chunk of the rest of North America. But I think we have clients in 26 countries now or thereabouts.

Speaker 1:
I think our message of it's all about cos it's favourite plus time orations,

Speaker 1:
slightly tongue and sheep. But not really. We don't care that much about stock markets. I think is quite a welcome message. People take a little while to understand. I think it's a different storey. Most asset managers don't turn up and say we're not very interested in stock markets, but when we go on and explain that we don't control that, we can't do anything about that. We have no idea where the stock market is going to do next. What we can focus on is

Speaker 1:
which companies have got really interesting prospects and opportunities and technologies, and I think so. We say to people

Speaker 1:
is much easier to predict how the world is going to change in the next 10 years than how the stock market is going to behave in the next six months. But within that you have to accept the whole lot of uncertainty about the path in which some of these companies were going to get there. So that message is the one that we take around the world. I mean, we we try and just be very clear about what it is that we do on the resulting

Speaker 1:
that what comes out of that process of that thought process is not for everyone. We are frequently very far away from benchmarks and indices and you know, if people are worried about that, then we say to them, you're probably know you probably not for us if you are. If you've got a five year plus horizon and your yardsticks of success are based on how well the companies

Speaker 1:
doing operationally then you know, people were I think I've been quite open to that message. I'd

Speaker 0:
like to come back to cos of what you look for in a second, but go back to the growth angle. So very gift has been big beneficiaries of, ah, low interest rate. So the ultra least monetary policy environment How do you know? Reposition yourself in a world of high rate is higher inflation.

Speaker 1:
Yes, I guess I had. I'd almost recast your question, which is the butt in a genuinely, hopefully helpful way.

Speaker 1:
I don't think we have. I think

Speaker 1:
growth managers generally have benefited from a very friendly environment for growth for a long time. If you look at the statistics until about two years ago, there was about 13 or 14 years of prolonged that performance of what MSC I would call growth.

Speaker 1:
I think you have to drill a bit deeper into what's actually going on. So an environment of cheap money on decent economic growth is conducive to all growth.

Speaker 1:
But even when circumstances get more difficult as they are now. There are still companies who are going to be on the right side of change on disruption and new business models, and they're not dependent on economic growth there. No, always dependent on cheap money. Tiu invest in their own businesses. So I think

Speaker 1:
so. I guess what I'm trying to say is that the growth environment has been helpful, but I don't think it's been more than just about helpful for us. I think it was much more a determinant of what how we invest and should be changed. Harry Invest is

Speaker 1:
the rate of change in the real world. What disruptions are happening, how his technology happening, how consumer behaviour is changing and we might come onto it. But things like health care in payment systems. There's a huge amount of changing the world

Speaker 1:
that may or may know lead tiu rapid economic growth. But it certainly creates growth for the companies that are in the right place to benefit from that change. But I don't think that's ah that's a constant state. So whether or no it's a growth environment or value environment, if you're trying to find those cup, there are always companies like that. Good

Speaker 0:
companies will grow in any environment. Yeah,