Schroder Oriental Inc Fd

well good morning ladies and gentlemen and welcome to the Schroder oriental income fund plc annual results webinar coming to you today from the Schroder's headquarters in the heart of the city of London I'm Roland Jones I'm responsible for the investment trust sales here at Schroder's and I'm pleased to be your host over the next 35 minutes or so I'm also very pleased to be joined by your portfolio manager Richard Sennett. Good morning, Richard.

Morning, Roland. Good morning, everyone.

Richard has got over 35 years' experience and has recently returned from a trip. Not quite, Roland. OK. Over 30. Just returned from a... trip to Australia. And over the next 35 minutes or so, we're going to talk about the performance of the trust over the results period, the positioning, a little bit of outlook on our views for the region, but also, very importantly, the importance of generating a dividend from a portfolio of Asian equity stocks. So we're going to spend a little bit of time on that topic over the next 35 minutes. Now, you will have plenty of time to ask questions ask questions I have my iPad please fill them in send them send them to me you've also got the opportunity to download the annual results and today's presentation so it's all there there's also a survey at the end we'll be very grateful if you could fill that in because that's really useful for us so we can make sure that these presentations are sort of meeting your requirements in the future so that's the the agenda for today Richard, tell us a little bit about the team that we have in Asia, because that's very important, isn't it? Let's cover that.

Yeah, no, you're absolutely right. It is a key part of our investment process. And I think it's probably worth just touching on how we do manage the portfolio and the way that we approach investment in Asia, because I think it is a really important part of the the ability to deliver success over the long term. First of all, we think that markets are inefficient in Asia, which won't surprise you, and that the best way to extract those inefficiencies is very much through a bottom-up fundamental process. And to that end, as Rhoda mentioned, we have a very extensive team based out in the region. Although I'm based here in London, you can see that we have a team based through six offices in Asia and 47 analysts. They're going out visiting companies, writing reports, making recommendations and I'm drawing on their best ideas from an income perspective to create a portfolio of roughly about sort of 60 names. I think it's probably what's worth highlighting is that what we don't do is screen the universe for the highest yielding stocks and backfill the portfolio with those names. What we're looking to do is to buying to companies where there is most certainly an income rationale to go in the portfolio, but there is also hopefully upside to fair value as well. And that does mean that there are some areas of the market where we're probably going to have a little bit less exposure or not get exposure to. One of the most obvious areas that we are quite underweight in would be, for instance, the Chinese internet platform companies would be an example of that. and this does mean that I guess stylistically for the fund there is given the characteristics of an income and so on doesn't tend to mean that we overall we have a sort of a bit of a value bias to the portfolio So that's really on the sort of the team and high level process. And perhaps if I sort of give a bit of recap about what's been going on in the markets, because I guess this year has been a year when actually Asia has been pretty good performer versus world markets. It's up over 20 percent year to date. And I suppose if you rewind 12 months ago, you know, that may have been a bit of a surprise to Asia. to people, because if you think about it, we just were in that period when we're having Trump coming into being elected in the US, and he obviously had very clear views around tariffs, which obviously was going to have a big impact on Asia. And also there was concern around, you know, the outlook for the Chinese economy. So looking at whether there was risk around a hard landing there. And I guess what we've seen since then has been that markets have got a bit more comfort around those things. So around enough has been done to sort of stabilize the Chinese economy. And I think also that some of the sort of initial talk around tariffs, I think people got more comfortable with some of the deals that are starting to come through on there. And that's allowed markets to do a bit better there. The other thing of course which has been a real driver for markets globally has been around what's been going on with AI and obviously Asia is very much an enabler for AI with its extensive sort of semiconductor companies and world-class names like GSMC, Samsung Electronics, these sorts of names and they're obviously a part of that whole ecosystem and that has been helpful for the markets. And then I'd say the final piece which has sort of driven markets a bit higher has been a weaker U.S. dollar, which tends to be helpful for liquidity in the region and good for stock markets, at least historically. And with that, just looking at the chart that we've got here, you can just see that – what each of the individual markets have done. And the reason that I put this chart up here is just to sort of show that actually most of the rise in markets is being driven by or has been driven by a re-rating rather than earnings growth necessarily being revised up or coming through. So this just breaks down the returns for each market and it says, you know, what proportion came from a re-rating, what came from earnings, and the earnings being the green, the dark blue being the sort of re-rating. And you can see in most markets it's been about a re-rating. And that's because the markets have been quite liquidity driven. They've been quite narrow. They've been quite thematic. And as we go through time, I'd expect to see a bit more of a broadening out from the sort of re-rating phase more to sort of earnings growth coming through. And this just sort of paints that picture in a slightly different way. The chart on the left is just looking at the sort of the weight of the largest five stocks in the benchmark. And you can see that That on the left-hand side, it's now over 25% of the market. So it's been quite a concentrated market rally. And that's been sort of a bit similar to, you know, what we've obviously seen in markets like the U.S. And the number of stocks that have been outperforming has come right down, which is the right-hand chart. So it's been quite narrow, and that's around that sort of thematic piece, which I was sort of talking to. And that's generally been not a great backdrop for income, I'd say, because it has been quite a bit more of a growth-focused rally and with growth outperforming value. So if we look at the performance of the Trust over the financial year, you can see that here we've got... So I think the first thing to point out is obviously that absolute returns have been pretty good over the year. And actually, if you look back through time, they've been relatively consistent. You can see they've generated roughly 10% per annum over the longer term. Against the index, the strategy has lagged the benchmark and that has really been around a couple of things. Firstly, about the point about, you know, value has been a bit of a headwind in the markets because growth has done better in what's been quite a liquidity-driven market. And some of the names which have done very well have been some of those Chinese internet platform companies, so the likes of Tencent, which is hard to sort of own from a sort of, you know, with an income – justified from an income rationale perspective. So – so that's been one of the sort of headwinds that's partly offset by an overweight and stock selection in sort of hong kong um and i say then from a sector perspective sort of financials have been good for us you know being overweight and stock selection within them um and um with which has been partly offset by stock selection within us within it The other thing I should point out here is obviously that subsequent to that year end, we have announced the full-year dividend, and it's shown another increase there, and I'll talk a bit more about that in a second. If I bring it sort of a bit more up to date to the end of October, you can see that the markets have sort of continued to rally, and that has been driven again by very much – continuation of sort of strength in some of those those AI names and you know since the month end there's been a bit of a sort of question mark around that but about the sort of sustainability of the rally but maybe we can talk about that a bit later but generally the market environment has obviously been positive for equities and I think it's probably worth pointing out how if you're looking at this trust, how you should think about how the trust performs in different types of markets. So here we've just got the annual returns going back over the last 10 years. And what I would tend to say is that You know, when markets are sort of quite liquidity driven or growth focused, that tends to be a bit of a headwind for relative performance. But you tend to do relatively well from an absolute sense. But when markets are falling or gently rising, there's a reasonable, hopefully, an opportunity to outperform versus the benchmark. And I think that's what you see over the sort of 10 calendar years that we've got here. The strategy is sort of underperformed in three of those years. It is 2017, 2019 and 2020. And they were years which were good from an absolute perspective. So you made good absolute returns, but lagged the benchmark. And that's partly because they were focused on growth. Those markets, they tend to be quite growth driven, quite liquidity driven. But in most other markets, you can see there, which are generally rising or falling, the trust has managed to outperform its benchmark. So that's the sort of the way that you should sort of, I guess, think about that relative performance piece. and just talking a bit more I suppose this is just putting that piece I mentioned that sort of higher yielding stocks have basically had a bit of a challenge on relative performance perspective so this just looks at the relative performance by quartile of yield and you can see so if you look at the right hand side the bars above the line as stops outperforming the benchmark And you can see that the lowest yield quintiles, so quintile 4 and quintile 3 have performed well, whereas the highest yielding quartile has been the sort of the weakest performing quartile. And that's coming back to what I was sort of describing earlier as to how you should expect. So higher yielding stocks have lagged the benchmark essentially. And then if we look at the sort of performance of the individual markets, and this is to the end of October, and it looks at the 12-month returns, I think it can almost be summed up in a relatively, I mean, it's a bit of a generalization, but the areas that have done best over the last 12 months or so have been in those areas of sort of North Asia and Asia. around as sort of more of an ai focus so if you look at sector returns the best performing sectors information technology um i guess not too much of a shock to many people and then on the left if you look at the country returns you know the north asian markets in particular korea taiwan china all outperformed and obviously particularly korea and taiwan have a you know that large semiconductor industry and that enabler of ai theme there And then on the flip side, you've got the sort of, if you like, from a market perspective, those markets which have got relatively less in some of those more direct technology, AI areas, and perhaps a bit more impacted by what's been going on from a tariff perspective in some ways. So you're looking down at the sort of some of the Southeast Asian markets, so like Thailand, Philippines. Indonesia, but also Australia, which, again, is another market where it hasn't got so much of that sort of IT exposure. And from a sector perspective, it's been the sectors that have lagged have been those which are sort of a bit more defensive. So utilities, consumer staples and health care and so on. And so if you look at the sort of performance of the trust over the longer term, and here we've got the sort of light blue line, which is the sort of FTSE, the green line, which is the regional benchmark and the dark blue line, which is the trust you can see. over the long term both the region and the trust have outperformed the UK market so it has sort of if you like fulfilled a sort of diversification way away from the UK if you like so for someone who's got a lot of UK income you know this is sort of potentially you could diversify through this and over the longer term you know the periods obviously when it doesn't outperform the UK but a long term it has has outperformed and I think the other thing to just sort of highlight is that you know the trust has outperformed the benchmark over the longer term and I think that's a sort of you know is an argument particularly when you're investing in Asia for sort of active fund management and I think you know those sort of inefficiencies within the market that you can hopefully over the long term exploit to an extent. So if we look at the dividend per share over time, as I mentioned, that's another increase this year in the dividend, and that's the latest in the line of increases which have been going on now consistently every year since launch. And I think it's probably worth saying that In a sense, the trust is a bit plain vanilla in the way that it generates its income. It's not obviously paying out of capital. It's paying out of the income that's come through from the companies that we've owned through time. And it's also not trying to generate income through writing options or additional strategies. So in that sense, it's quite sort of, I guess, simple in its approach to the underlying income. And that does mean that you get that sort of value to tilt to the portfolio.

So Richard, does that mean that every stock that you own in the portfolio is a yielding stock? And are you drawn towards those high yielders?

There has to be an income rationale for the stock to go into the portfolio, but it doesn't necessarily have to have a high yield today, or it could indeed even not be paying a dividend today. But I have to see a clear progression to a decent dividend being paid out in the sort of forecastable future if you like rather than necessarily say so you know 10 20 years down the line so it there is definitely an income rationale but there is the ability to buy into companies where I think there's going to be an increase in dividend which is material coming through over the forecastable forecastable future so yeah it's so so that you don't have to have a dividend but in general the very large majority do.

And are you naturally wary of those stocks paying a high dividend because that may not be sustainable? I presume the sustainability of dividend is an important factor as well.

Yeah, sustainability is important and we obviously consider that when we're looking at when we're looking at individual stocks and I think it goes back to that point I made at the beginning where you know we don't just scream for the highest yielding stocks because often some of those stocks can be ones where you do see dividend cuts because perhaps they're paying out more than they should and we also want to buy into companies where you know there is potentially hopefully some sort of growth in a medium to long term and that potentially is a bit of upside to capital. So, yeah, we do focus on that point. It doesn't mean that we can always avoid dividend cuts, but, you know, it's obviously a consideration when we put stocks into the portfolio. That's good. Thank you for clarifying that. And I suppose this, just to give a bit of context around where yields in the region are today, if you look at the left-hand chart, this just shows the dividend yield for the different regions, and then you can see the yield of Asia and the yield of the trust. And I guess if you look at the region, the yield is higher than the U.S., it's a bit higher than Japan, not as much as in the U.K., but if you look on the right hand side there you see that the trust does yield a premium obviously to the region as you'd expect and at the moment is a little bit above that what the yield of the UK market and then the chart on the right I guess is instructive of sort of where relative yields are versus history versus the sort of different regions. So this just looks at the, if you like, the dividend yield premium of Asia versus the rest of the world. And you see it's relatively high at the moment versus its long-term history. So in that sense, you know, relative to other markets, it doesn't look particularly extended at the moment. And then I guess just to finish off really on some of the drivers of income at the moment, on the left is just sort of consensus numbers for... For dividend growth at the moment, which coming through, sorry, a lot of sort of small bars there, probably not very clear. But I guess the bottom line is that we're sort of, we are getting dividend growth forecast to come through this year, sort of that mid single digit range of growth. It does vary between sectors. And then on the right, the other sort of influence of dividends is, obviously around currency, so particularly the strength of sterling versus the regional markets. And obviously, if sterling is strong, that turns out to be a bit of a headwind for the translation of dividends back into sterling and vice versa. And over the last few years, actually, it's been a bit of a headwind at work. Very recently, it's sort of just started to come off a little bit from currencies so if we see that continue that would be favourable but it has been a headwind broadly speaking over the last couple of years. And then to your point about sort of resilience of dividends, and I think, you know, one of the reasons that sort of Asia is sort of interesting or is, in my view, a relatively reliable source of income is that it's not particularly extended from a sort of payout perspective. So the proportion of companies' earnings that are being paid out is not that high. So if you look at the left-hand chart, you can see that green line, which is the payout ratio for the region, and that sort of 30, it sort of goes in that sort of 30% to 40% range. So quite a big cushion if sort of earnings could come under pressure and then on the right you know gearing also for the region and this just looks at the listed sectors gearing versus other regions and you can see that you know the Asian region which is that light blue line is relatively low versus the other regions so again another sort of you know reason why you might get some sort of resilience there. if things did slow down um so if i talk a bit more now about sort of um i guess outlook and positioning and and where we sort of have exposure within in the fund and the outlook I guess, first of all here, you know, what do we like in the region? I guess this slide is a reminder of some of the key themes as stocks that investors in the Trust can get exposure to. We've got obviously some of the global leaders in tech, so things that we mentioned, sort of TSMC and Samsung Electronics, but also, and obviously benefiting from that structural AI growth theme. But we've also got some of the world's, you know, Best manufacturers in Asia, unsurprisingly. So you've got things like Shenzhou, which is focused largely around sports apparel, that sort of thing. Honhai, which obviously does a lot of the manufacturing of increasingly high-end servers for AI, but also people probably know it for a lot of the Apple product that it does. And then, you know, a good exposure elsewhere to some of the sort of domestic growth trends as well. You know, we look through sort of financials, so banks, insurance companies and some of the other names there. And if you look at the trust sort of positioning that we stand at the moment, I think the thing, we haven't made any big shifts over the recent period, but I suppose the thing that stands out and continues to stand out would be that we remain very underweight China. That's partly offset by the overweight to Hong Kong that we have. And part of that is around this point around some of the internet platform companies. that don't really pay much in the way of dividends. But – and I'll talk a bit more about China and the outlook in a second. But we continue to like Singapore, although that size and that overweight we have sort of brought down a little bit. And the other area I'd say we have taken money out of over the course of the last – 12 months or so or whatever has been in career where we're now underweight and that's partly a reflection of the market's done really well it's re-rated up and part of that re-rating up has been on this sort of value up program which you've probably heard people talking about which is sort of trying to focus a bit more on shareholder returns and improving sort of generally sort of improving corporate governance in different areas. Are we seeing evidence of that working? We're starting to see some of that coming through, but I wouldn't say it's by any means universal at the moment, and that's hence why one of the areas I've been taking a bit of money out of, because stocks have moved up in anticipation of this happening. And yes, we have seen some things, particularly in some of the financial sector, we've seen improvement in dividend payouts and such like, so that has been coming through. But we're now in a phase where a bit more of the sort of things that need to happen are a bit more tied into sort of changes in legislation and so on that need to come through which take time and you know hopefully over the longer term will do but you know there is some expectation that they will in prices at the moment in my view and then I guess on sectors again you know we remain I guess overweight in sort of real estate and financials and IT and But I would say that we have taken down the weight over the course of the last 12 months in financials and IT. IT has obviously done pretty well as an area, as we've described. So there it's been a bit about, you know, relative value and taking money out for that reason. And financials, again, it's been a good performing area of the market. And we still like financials, but just some of the things which have done well, we've sort of taken money out of that. And then I suppose on the underweights, consumer discretionary remains a big underweight. Partly again, you know, that's partly around sort of Chinese e-commerce companies and so on. And, you know, I guess we've been adding to some of the sort of sectors such as, you know, utilities and some of the sectors that have lagged a bit into staples as well.

So that's where the proceeds from some of the gains we made on the IT, financials and real estate are going into those particular sectors? Yes.

And actually we did put some money into consumer discretion. So we were more underweight there, but there have been some opportunities in places like China to increase our exposure. That's a bit of active management. Yes. And then just the top 10 holdings, and I guess I'm not going to go through these names, but just in the sense of reasonably diversified both by country and by sector. And I think it is worth just sort of you know from an overall standpoint just commenting on how the sector or the region you know is you know quite heterogeneous it's not just about China or any exports whatever you know that you within the trust you do get exposure to a broad set of drivers and so you know obviously we get the exposure that I sort of described in North Asia to some of these exporters and tech companies. So that's Korea, Taiwan, and that makes up just over a third of the portfolio. That's, I guess, driven more by what's going on globally in the export cycle, as well as obviously structurally in AI. And then obviously we got sort of about 30% of the portfolio in China and Hong Kong, where we'd say that still has some of the challenges which we know about around demographics, overinvestment and so on. And so as we sort of mentioned earlier, we are quite underweight versus the reference benchmark. But as an active manager, we can still find things that we want to buy in there. And then I guess the other two chunks are sort of ASEAN, which has got a large portion of which I guess all the bigger overweight comes from our position in Singapore, which has increasingly benefited from its increased importance as a financial centre within the region. and also, you know, acting as a sort of, you know, increasingly into the region outside of it, into its hinterland, etc. So some of the smaller ASEAN markets, you know, Indonesia, Philippines, Thailand, Vietnam, all those markets which are to an extent benefiting in a sense from the sort of supply chain diversification which we've seen coming out of Asia. from corporates that have been very focused on producing in China and they want to have alternative sources of production. So that's sort of whole China plus one theme. And then Australia, which... Again, you don't think of necessarily as the highest growth market, but is a market where shareholder returns have generally been pretty reasonable through time and, again, acts as a good sort of diversifier there.

And you've just come back from Australia, haven't you? Any particular insights that are worth sharing at this point, or will you... Will you come to those?

Well, I'll come to those. I mean, you know, yeah, because I guess Australia is a market, as I was sort of saying. You don't think of it as a sort of high-growth Asian market in the sort of traditional sense. So you sort of perhaps think, you know, how does that fit within a sort of an Asia-packed portfolio or whatever. But, you know, it obviously benefits from growth that is going on across Asia as a whole from an economic standpoint. So what's going on, you know, obviously with this large commodity sector and so on. And also the other point is that actually, you know, You think of the sort of demographics, you don't necessarily think of Australia as being at the forefront of that, but actually because they're growing their population pretty rapidly, the demographic profile is also pretty good for Australia as well.

not the same for other Asian countries.

Yeah, for some of the other Asian countries it's working the opposite way, where the populations are obviously getting older and the sort of fertility rate has dropped a bit, so in some of those North Asian markets. Interesting, okay. I guess you know quickly on time because I realize I've been talking quite a long time but I'll swiftly move through these last slides I mean on China our sort of general position in the sense of the way that we're viewing the market hasn't really shifted that much and this is a slide I would have used last year obviously updated but I think it does tell you what's generally been going on which you look at consumer confidence at the moment in China it still remains pretty low hasn't improved much so the domestic economy in China despite the sort of stimulus measures that have come through have not actually seen the economy pick up particularly strongly from a domestic standpoint exports has been pretty good that's helped that helped the economy overall and instead people instead of choosing to sort of invest in property which obviously been a pretty weak area they've been saving and increasing their savings which is that middle chart and and that has seen sort of you know that's a plus and a negative I guess in the sense that obviously if they're saving more they're not spending but I guess it if they can sort of get things right and people spending there's an obviously an opportunity for consumers to draw down on those savings to spend more when confidence improves And on the right hand side, it just shows how, you know, interest rates haven't actually started to see a pickup in household borrowing. So that mechanism hasn't yet sort of flown into the economy. And then the other, so we remain underweight in China, but the other area, of course, where, you know, is sort of an area of debate, is obviously within IT and AI in particular. And I think we're all sort of familiar with the chart on the left, which is sort of, U.S. hyperscaler CapEx, it's obviously been exceptionally strong, and, you know, as a proportion of sales, it's sort of up there now at sort of around 20%. So that's grown very rapidly, and that's sort of been, you know, driving, obviously, related names in semiconductors and so on both in Asia and elsewhere which is the right hand part of the chart and near-tober growth continues to look very good the question mark is more about are we nearing that peak now and the real question mark is all this investment is, you know, how much return are we going to generate on that investment? And that's where the sort of the big question still remains. So, you know, we are less overweight in IT than we would have been sort of 12 months ago. So we've been gradually bringing our exposure down just really to reflect that sort of, you know, how well these things have done over the course of the last 12 months. And the other area which I mentioned which we continue to like is sort of financials. We're a bit less overweight than we were. Again, it's sort of not just banks. It's also insurance companies, exchange companies. Penetration of insurance products, which is on the left, is still very low versus sort of developed markets. And so there's an opportunity longer term for that to grow through time. So we quite like that. And then on the right-hand side, you know, you just look at sort of Some of the returns coming out of banks, the ROEs are reasonably good in these markets and the yields are good as well. And although rates have come down or come down a bit and that will have an impact on margins, as rates come down, it has a flow through to obviously credit costs, but also on just demand for loans as well. So you hopefully get some offset coming through from that. And then I mentioned the point about the US dollar earlier, and that's this central chart here, or this chart here. And you can just see the green line, which is the US dollar index. So as it goes up, the US dollar is strengthening. As it comes down, it's weakening. And you can see that it moves sort of inversely to the index, which is the dark blue line. And you can see that particularly clearly in the sort of 90s and early 2000s. And more recently, you can see, obviously, the market's gone up and the US dollar has weakened. So there is a correlation there. If we continue to see US dollar weakness, that could act as a bit of a tailwind if history is a guide.

And Richard, actually, we've had a question on... on the dollar weakness. And obviously you've very well, you've sort of explained the relationship between the dollar and Asian equities. But the question actually relates to, does a weaker dollar, is there any evidence to suggest that either an income strategy or a more value-orientated strategy benefits more from a weaker dollar? Is there any evidence that... to support that fact?

Yeah, I'm not sure that there's necessarily evidence to support that direct link, I guess. You know, the way that the sort of transmission mechanism works, I think, you know, if you look at it, as the US dollar weakens, it tends to ease liquidity in the region itself, and that allows interest rates in Asia, the central banks can start to sort of ease rates, and that helps from a sort of economic standpoint to generate growth. So you could argue, I guess, that it should be better for the domestic economy in a relative sense, perhaps vis-a-vis to some of the more export-orientated areas, just because rates cuts should benefit domestic growth to an extent. and obviously some of the sectors which have got good yield or attractive at the moment, things like financials, which I mentioned, obviously are driven by the strength of the domestic sector. So there's a sort of a bit of a link there. Good. Okay. Thank you. And then just the final piece is just quickly on valuations. And I should say, given the rallies that we've seen in the market and, you know, what I was saying about it's been more about re-rating up than sort of earnings necessarily coming through strongly at this stage, the chart on the left just shows the sort of PE of the region versus its history, and you can see that it's now above the long-term average. So not particularly cheap markets versus the longer term averages, but versus developed markets, which is on the right, which just shows the sort of ratio of P for the region versus developed markets. You can still see that on that basis, Asia still looks relatively attractive versus history. and then when you sort of dive down and get a bit more granular looking at the different markets you can see that here which is the sort of just looks the little blue diamond light blue diamond is the is the valuation current valuation of the market against its range and you can see that for most markets they're sort of above their longer term averages And, you know, you can also see that there's a big spread across markets. So, again, I think, you know, one of the key things to take away is that, you know, again, from a sort of an active strategy, you know, you can take advantage of those relative differences in valuation which are there from a market level but also when you look and drill down at the individual stocks in those markets there's a you know they're not all at the same price so you can find yeah again you can find good opportunities and then to that to that point there's sort of again that the left-hand chart is just that repeat of that sort of stocks outperforming the index come down so it's been a narrow rally that means outside of that there's you know stocks that potentially you can find And if you look at income stocks, which is the right hand chart here, so this just looks at the top two quintiles of yield. So the top 40% of stocks by dividend yield and how they're valued relative to the market. And you can see that that discount that's there, you know, so it's around about sort of a 25% discount at the moment, roughly speaking from the chart. is not extended versus history. So from a sort of, again, you know, dividend names don't look particularly extended versus the market in my view. And that won't take you through all the slides there, but that's the conclusion of the presentation.

Well, that's great, because it's actually very comprehensive. We've got a little bit of time left for a few of the questions that come through. We have some really good questions, actually. Interesting. One of our listeners has asked about, is it now time to consider inviting Japan back into the fold, into an Asian, a Pan-Asian trust, particularly one where one is generating a dividend and the valuations for, say, the Japanese market are looking a little bit more palatable compared to where they were 20 years ago.

Any thoughts on that? Yeah, and I think that certainly has merit. I mean, we have historically invested in Japan to a lesser or a greater degree for the trust. I mean, it's never been a significant weighting, but... The trust is allowed to...

Get Japanese exposure.

So we have one main at the moment in Japan. It's only a small exposure. So there is opportunities over time. But, yeah, at the moment it's relatively small. Okay.

That's good, okay. And we've had quite a few questions about valuations, particularly related to the AI bubble in Asia, and I think we've sort of covered quite a bit of that. But I'm just interested here, how has the trust performed in the very short term? I know we don't focus on the short term, it's the medium-long term that's important, but has there been a degree of resilience with the trust, given some of the profit-taking you took out of the... the technology stocks recently?

Yeah, I mean... Great timing, by the way. Well, yeah, I mean, obviously, there have been those markets, those stocks have done well. And... There has been definitely over the last few weeks, there's definitely been an increase in volatility around those names. I guess people have become a bit more nervous about valuations and I think the whole idea of what is the return of all this investment going to be? Where are we going to get those use cases? And that has seen a bit more volatility. And, you know, from a relative perspective, you know, I think since the end, I mean, in the very short term, since the end of the month, I think the trust is up in a relative sense against the benchmark about 2% or so, you know, and so it's broadly flat against the market, which is sort of a little bit down to a couple of percent or so.

And we've almost positioned the trust not only as being able to generate interest, a very decent income from Asian portfolios but also quite a good way of getting a lower risk slightly more conservative way to approach the Asian market.

Yeah I mean you know the set of stocks generally tends to have a you know if you took those stocks and looked at them individually against the market as a whole they tend to be lower volatility in aggregate. And that, through time, is a bit why you get the sort of, you know, when the market's rallying hard, it tends to lag a bit. So it's a bit low beta and vice versa.

Understood. Okay. We just have time for perhaps one more question. We've got a question relating to the comments you may have made on the ASEAN region and talking about the very diverse nature of the Asian market, but specifically... about the Philippines, where we've got a little bit of an overweight. What's the rationale there? What do you particularly like about the Philippines? I presume it's a stock more than a country related, but please tell us.

Yeah, I mean, there is a holding which we've had for a while, which has done reasonably well, which is actually ICTSI, which is a port operator. And it's not just a sort of a domestic... Filipino story, although that's actually an important segment of its earnings. It's also a sort of an emerging growth proxy in the sense of it has a lot of exposure to emerging market ports globally. And so as trade flows within. that emerging market piece grow over time and hopefully you know the company should benefit from that um the philippines is an interesting market because at the moment it's one of the markets that's really sort of i guess lagged uh to put it nicely i suppose lagged um lagged the region and the region uh and um and and he's one of the markets which is trading at a significant at a discount to its sort of historic longer-term range. So it's definitely becoming more interesting. I guess, you know, interest rates clearly – an easing of interest rates clearly globally helped the Philippines perhaps more than some of the other markets given the external finances and so on. But – But, you know, I should say that, you know, as that potentially becomes a bit more attractive, it's also not the most liquid market in the world. And, you know, it's quite volatile. So it's never going to be a really huge portion of the portfolio from that perspective. Well, thank you.

Well, ladies and gentlemen, we're sort of fast approaching quarter to 10. Thank you all very much for listening in today and for all of your questions. Richard, very comprehensive overview of the region, which Look at your summary slides. I mean, despite having some concerns about China and some of the technology stocks, there is a lot more to Asia than just those two sectors, a very diverse area. We talked about the interesting opportunities in Australia, in ASEAN, in Korea. the trust after 20 years still remains a great way of generating a growing dividend from a basket of Asian portfolios and we're on track to I hope attain the dividend here estate and showing a 20-year unbroken rise of dividend over the next over the last 20 years so one more year to go but ladies and gentlemen thanks once again for your questions please do Do the survey. The feedback form is really important for us. It just helps us tailor these types of presentations for the future to make sure that we continue to hit the mark. Please send that in to us. Have a great rest of the day. Thanks very much. Good morning.