Welcome to the Netwealth Portfolio Construction Podcast series. My name is Paul O'Connor and I'm the head of strategy and development for the investment options offered by Netwealth, which are essentially the investment menus and the products, Netwealth Investments, limited issues as a responsible entity. On today's podcast, we have Jay Sivapalan from Janus Henderson Investors, who's the head of Australian Fixed Interest and portfolio manager on a number of strategies offered by Janus Henderson. Jay, great to have you joining us on today's podcast to discuss geopolitics.

Thanks for the invitation, Paul, and welcome to all the listeners.

We've recorded many podcasts over the years, but have never dedicated one to discussing geopolitics, so I'm looking forward to the discussion and getting a better understanding on what you think, Jay, are the key geopolitical issues of relevance to investors. The Janus Henderson Group is a leading global active asset manager dedicated to helping clients define and achieve superior financial outcomes through differentiated insights, disciplined investments and world-class service. As of March 31, 2025, Janus had approximately $598 billion in assets under management, more than 2,000 employees and offices in 25 cities worldwide. The firm's aim is to help millions of people globally invest for a brighter future. Headquartered in London, Janus Henderson is listed on the New York Stock Exchange.

Jay is head of Australian fixed interest at Janus Henderson Investors. He manages the Australian fixed interest portfolios and is responsible for formulating interest rate and sector strategies employed within the portfolios, and working closely with key fixed interest clients. Jay joined Henderson in 2015 as part of the acquisition of Perennial Fixed Interest, where most recently he was a partner and senior portfolio manager. Jay came to Perennial in 2001, initially heading the quantitative area within the Perennial group, before transitioning to the Australian Fixed Interest team in 2004. Prior to this, he was employed at Mercer where he performed actuarial consulting work for superannuation clients. And before that worked at AXA in an actuarial role.

Jay earned a bachelor of commerce degree in actuarial and finance from the University of Melbourne and holds the chartered financial analyst designation with 27 years of industry experience. As of March 2024, Janus managed a total of 598 billion across a range of asset classes, including equities, fixed income, multi-asset, and alternative strategies. 20% of the total assets managed is in fixed income, so a key area of Jay's domain. There are nine Janus Henderson funds on the Netwealth Super and IDPS investment menus covering global equities, Australian and international fixed interest and alternative strategies. The menu includes three funds that Jay works on, being the Australian fixed interest fund, the tactical income fund, and diversified credit fund.

Geopolitics appears to be more front of mind today than I can ever recall over my 30 years plus in financial markets. Ongoing tensions between the US and China, Russia's invasion of Ukraine, President Trump's widespread use of tariffs, voter resentment in developed countries against globalization, energy security, long-term South China Sea tensions, and the Israel-Palestinian conflict are just a few that are grabbing mainstream media attention. The challenge, though, is that geopolitics can't really be measured or quantified in a way using traditional investment analytics. And the outcomes are typically unknown. The downside is that any of the issues I've mentioned could have a material impact on asset valuation and ultimately portfolio returns for investors. But trying to predict outcomes of any of these issues is to a degree a game of probabilities.

For example, President Trump's wide-ranging use of tariffs is a perfect case in point. His announcement of new tariffs is typically a surprise to the markets, but then react by a short-term sell-off in growth assets, that is then reversed when Trump announces a temporary halt or a reduction in the tariffs. My own view is that Trump uses tariffs as a negotiating tactic to reverse the impact of globalization on US manufacturing and ultimately employment. Whilst this is my view, I'm far from certain that I'm correct, and hence my own human nature kicks in and I tend to tread with caution i.e. I can become more defensive. The reality is that equity markets still generated sound positive returns over the last 12 months, and investors who became too bearish in the light of tariff announcements will have missed out on valuation gains from equities.

So trying to manage a diversified portfolio incorporating geopolitics is fraught with risk, which is why many choose to ignore the risks at an individual level and typically more focus on overall market risk sentiment when considering allocations to growth and defensive assets. But of course, this won't stop me asking Jay how he views the current main geopolitical issues and what he thinks about, from a portfolio construction perspective, of the fixed interest funds he manages. Perhaps to begin with, Jay, can you share with the audience your career journey and how you ended up in your current role as the Janus Henderson head of Australian fixed interest?

I guess just before I answer that question, I also wanted to reinforce and reiterate the support that Netwealth and your clients have provided us over the last 20 plus years. Now, in terms of my own beginnings, I guess from a light-hearted perspective, when I was a kid, I used to play a lot of Monopoly with my family. And there was something about the game of Monopoly, which is going around the board and continuing to collect income along the way. And whether I realized it at the time or not, it must have destined me to a career in fixed income, where essentially much of what I do is build and run portfolios that generate income on a regular basis. So for my part, Paul, I went from school onto university to study actuarial studies, which then led me in the '90s to a career initially in the insurance market. So I started at National Mutual and then went on to defined benefit superannuation consulting, and then the last 24 plus years in investment management.

As you described somewhat of my background, I suppose, I fell straight into a quantitative type role in the early days, but certainly my investment interest and the interest in compounding returns, which started a very early stage, led me into the actual investment teams, which is effectively where I've been for over 20 years. These days I manage about $25 billion on behalf of clients across a range of public offer products as well as institutional mandates. And I guess that journey, you summarized it quite well. We built and ran a boutique for about 15 years under the brand of Perennial, so that was myself and three other partners. Which was then sold into Janus Henderson just over 10 years ago.

It makes me chuckle when you talk about monopoly there, Jay, because I too as a young fellow used to be a keen player of monopoly with a group of mates. And I think we took it to quite an extreme level with all sorts of sell and buyback contracts and all sorts of things outside the, I guess, spirit of the rules of the game. But that perked an interest in financial markets for myself. So we'll have to tee up a time when we can have a game of monopoly at some stage.

So moving on to the questions. As mentioned in my opening, trying to manage a portfolio incorporating geopolitical risk is a near impossible task. But from 30,000 feet, there does seem to be a tectonic shift in the way investors are reacting. Are markets getting this right or are markets overreacting to the usual fear and greed sentiment?

Yeah. I think this is a really important topic to unpack properly. So most investors, at least in our working careers in the last 30 or 40 years have been in a relatively steady state when you're thinking about global trade, when you're thinking about security, when you're thinking about defense, and indeed the way capitalism has been utilized for financial markets and investing. But the reality is if you go back many hundreds of years and indeed perhaps the environment that I believe we're going to be in for the next 30 or 40 years, it is going to be different to what we're used to. And this is where perhaps markets are not getting it quite right. We really need to understand what are the big geopolitical shifts that are unfolding as we speak. And these will take years to play out. These are not things that are going to be determined over days, weeks, or months.

Now, if I bring that back to investment markets. Investment markets have a habit of trying to pricing long-term trends as if it's definitely going to happen and it's all going to happen tomorrow. That's a challenge for markets from a pricing perspective. Let me just walk through some of these big long-term trends. The first one is the global trade practices that was really brought on. The original architect of those global trade practices and globalization was indeed the US. And that was all around this one-off 100 plus year industrialization lead that the US got, the prosperity that they got. Then of course contributing to and helping win the World Wars in particular World War II. And then being that global peacekeeper thereafter, being the superpower that they were, both from a military perspective as well as an economic perspective, allowed the American consumer to become quite affluent. And then this idea came about that if we wanted to, as an economy and as a globe, continue that affluency, what better way than to produce and focus on producing products and services that are the highest value, and then get others to produce goods or services that have a comparative advantage.

And it was really the US architecture that brought on countries like China into the global trade and the free trade arrangements back in the early '80s. And we've had about 40 years of that. The second piece in all of these geopolitical shifts is the fact that the US has been the global peacekeeper, and economies and countries and nations like Europe, and indeed here in Australia also, been able to rely on that fact, that they haven't necessarily needed to spend as much on their own on defense spending. Today, the US is starting to be a lot more focused on only ensuring and securing their own supply chains, and that includes raw mineral supplies and that includes trade supplies, and the routes that they use for those supply chains. And so then that leaves the other global protection or global peace to be undertaken by other countries. And hence why we are seeing examples of significant lift in defense spending in Europe. Of course here in Australia, we've been encouraged to spend at least 3% of GDP on defense over the next decade, and so on. So we're going to see a pretty big shift in that aspect.

The third one is around productivity. As you know, productivity has been pretty soft across most of the developed market, certainly here in Australia, US and Europe. And the one big lever that can really shift the dial on productivity is technology and technological advancements. And we use the term pretty loosely and flippantly, but AI is a big part of it. The race to that technology, whether it's from US or China or other competing, will cause some pretty big changes from a geopolitical perspective. So if you think about those three aspects that I just touched on, that is going to drive the future investment spending and consumption across the world. And there will be some pretty significant winners in terms of industries, in terms of companies, and in terms of countries. And there are also going to be those that are going to be laggards. And from an investment perspective, markets will initially need to take a bit of a backseat, assess properly these tectonic shifts, and then invest in the areas that are going to be quite successful.

So you've covered some very big areas there in your opening comments there, Jay. Do you think globalization then is dead or are the current inward looking policies, of not only the US but many developed world countries, simply short-term, and over the longer term it's inevitable that globalization will continue?

The word globalization is being used these days predominantly around trade, but I want to take a bit of a step back and talk about it in the context of capital flows. I want to speak about it in the context of technology and sharing of technology. I want to talk about it in the context of global travel and freedom of travel, and then in the context of trade. I think if you look at it in that broader lens, globalization is certainly not dead and highly unlikely to be dead. We've progressed too far in all those areas to go backwards. That said, if we look at the way we travel, trade, share technology, share information, share security, we are starting to move to a world where it is going to be much more of a multipolar world, where you might have these trading blocks, groups of countries that happen to trade with each other, rather than necessarily a blank piece of paper and everyone can trade very freely with everyone.

And the idea of that comparative advantage of if you can produce goods or services cheaper to another country, that is going to be nuanced by the national resilience, national security, security or supply chains, energy needs and so on. So we're going to get a different type of globalization. I certainly don't think it's dead, but it may not be as free flowing as what we're used to in the last 30 or 40 years.

And I guess we're seeing the early signs of that with China and Russia, for example, trying to overcome some of their long-term differences, and seemingly as a Westerner opening their dialogue a lot broader about how those two countries could come together. So I guess that's an example of what you are getting at in that multipolar world there of trade, I think.

Absolutely.

And is global growth doomed without globalization? Do we need globalization to continue global GDP growth? And I note inflation's moderated recently, but do you think that's also here to stay and potentially could stay, inflation become a scenario where we have high inflation and rising unemployment?

Yeah. So going back to the definition of globalization and taking a much bigger lens to globalization above and beyond trade, certainly don't believe global growth is doomed. In fact, if we get the big technological advancements that AI and alike are really starting to unlock, we may actually get a reasonably long period of higher than average growth. The question will become, is that necessarily shared globally or is it going to be towards the winners and the winning countries and their trading partners who are really going to benefit? And AI is not just purely about technology, but it's about advancements in health, it's advancements in care, advancements in defense, advancements in transport, and of course advancements in our everyday industries that we already know and invest in, like banks and telecommunications and so on. So certainly I see a good global growth backdrop if we can pull that off. And I'm a glass half full person, so I do believe AI and many of the other technology advancements are going to be really good.

In terms of the pure trading front, let's just unpack that a little bit further. The current trading challenges is largely a US issue, and it's around the twin deficits. Essentially, Americans en masse are consuming too many goods produced outside of the US, predominantly by China. And the Chinese in return are predominantly saving most of those earnings and putting it back into US through capital markets. That's the twin deficit issue. So the solution to that, at least in the US's eyes, is to suppress goods consumption by those that are produced outside of the US, and increase goods production internally and focus more on services, both internal consumption of services and export of services. And that's the part that they are going down.

Now, if you look at it elsewhere, those challenges are not necessarily as prevalent. Certainly it is not an immediate issue for countries like China, perhaps not necessarily so for Europe, certainly not so for Australia. So all these other countries and other nations are in a very different place. And so, this is why the comparative advantage, if you look at it simplistically from a US lens, yes, you could come to the conclusion that global growth is doomed because we're going to be trading less. But if you look at it in a multipolar world, you certainly can continue, perhaps even enhance, growth through different trade arrangements. Now, what does that different trade arrangement mean? And I'll just speak about China, but the story is certainly not limited to China, it's much broader than that. But China's really about finding other markets. Now they are and have become the fast leader in renewable energy, in solar, in battery, and also in electric vehicles and broader automotive industries as well. They're also pushing into, very gradually, heavy industries like shipbuilding.

It's a little fun fact, but there are more ships being produced out of one particular shipbuilding yard in China than the whole of North America. So that's an example of something that the US wants to correct. So when we get all of these dynamics occurring, we are likely to find that we actually get disinflation outside of the US, where China and other countries who can produce much cheaper, much faster, are actually supplying into the world. Here in Australia, inside the next six to 12 months, we are going to be flooded with electric vehicles and other items much cheaper than what we've ever been able to access previously. So we're going to get a goods disinflation that's going to come through. So coming back to the idea of stagflation, high inflation, and rising unemployment. Near term, that's certainly a risk for the US as they are transitioning their economy. Medium term, if they can pull it off and they can actually rebuild parts of heavy industry in the US, that solves itself over. And the tariffs are more like when we went through the GST, it's an initial hit. Yes, it's a spike in inflation, but it does moderate.

Where the second round effects might come through on the tariff side is if over the next five to 10 years, very gradually US keeps bringing more on shoring, which costs much more than what they're getting and accessing today. So the short answer, Paul, is, it's very different for each country. For a country like Australia, small open economy, very much free flowing from a trade perspective, we're likely to see disinflation.

Well, I guess we've seen disinflation for the last 30 odd years when I think about the cost of a television or of a washing machine or any of those white goods courtesy of China. So I understand your comments there, how that will continue. But obviously the announcement of tariffs in the US, they'll get passed onto the consumer at the end of the day in the US. So I can appreciate how your view is that there could be some inflationary effect as the US economy readjusts.

What about closer to home and our ties with China, given they're our largest trading partner?

Yeah. So the interesting thing for Australia is what we do from here. Now, as you and all of our audience know, we've been very fortunate in that we've participated in a substantial and close way in the rise of China. And if I reflect back on the last 30 years, the Chinese story has been to move roughly about 900 million people from their farms to their cities. And, of course, in that process of moving them to cities, to be able to work in the manufacturing plants and factories and to be able to export those goods that we've just discussed, they needed homes, property, property development, construction. They needed infrastructure. They needed hospitals. They needed schools. And all of these things that needed to be built. Some 50 plus cities that have just popped up out of nowhere. And, of course, for Australia's part, for the most part, we've supplied them with iron ore, coal and a whole range of other minerals and commodities that were required.

Going forward, though, first of all, the manufacturing expansion in China may not be at the pace that they've been doing all this time. That's number one. Second, they certainly don't need to move any more people from farms to the cities, so that story is over. And so, we need to migrate in terms of our export basket, both in terms of what we export to countries like China, but also to other economies. Now the good news is, and I guess I did say I'm more glass half full than empty, the good news is Australia is used to very gradually shifting its export basket. And we saw this when China itself put those tariffs on some of our goods during the COVID years. We did find some other export markets. However, we weren't impacted as we are potentially going to be on the commodity side.

Now, just to walk through the implications for Australia and Australians. So today about a third of all of our exports go to China and its predominantly commodity based. Now, who are the parties and/or individuals or companies and sources of income that's going to be impacted? It's clearly the mining industry. Today, more than 50% of the ownership of our mines i.e. the shareholders, actually reside outside of Australia. The remaining are largely super funds and so on, so we will see some impact through that channel. From an employment perspective, we did employ a lot of people when we were building the mines and the infrastructure. Today, we don't employ that many people. So very little impact.

The biggest impact will actually come through government tax revenue and royalties. As you know, we typically have, as a government, about a $60 a ton iron ore price baked in, and the government's been enjoying above $100 a ton. And so that extra surplus they've been able to use for tax cuts for infrastructure spending and alike. If we don't have that in the coming years, we need to be able to replace that from elsewhere. Now, what does that elsewhere look like? How will China, broader Asia, Japan, Korea evolve? This is where we need to watch very closely how the different trade arrangements globally settle. And also what does Australia do? Do we go and continue with the sole security pact that we have with the US? Do we have that but also go and have trade arrangements with UK, Europe, Japan, Korea, and other parts of Asia? And what about India? And if we can pull these off, and this is where we need really strong strategic political leadership, we can be exporting other things. And other things include services, it includes agriculture products, it includes our wine industry and a whole range of other things, tourism and so on.

We've done the education sector well in the past. We've done tourism well in the past. And I certainly think we can do other things. Now, a little bit closer to our industry, Paul, we have built a fantastic saving system in Australia that is exportable, not just in terms of investing our superannuation savings and other savings in other markets, but can we actually sell this as a service to broader Asia or other countries who are perhaps not as well-developed? And certainly that's another industry worth talking about.

Are all markets, equities, property bonds too complacent about the outlook, or is it just too hard to manage geopolitical risk and does it play out over such a long term, given the comments that you've made so far about the way you see geopolitical risk and issues playing out?

So the challenge always for markets is twofold. Firstly, markets want to know everything as if it's definitely going to happen in the future. And the reality is it's very hard to know that. And you can think back to even many of our famous crises, the tech bubble, the GFC, the European sovereign debt crisis and so on. Markets are very quick to reprice as if those crises are going to be around forever. Now, you and I and all of our audience know that those crises don't last, and progress is made, and they're very good for capital providers and markets, and those asset classes that you mentioned. The second thing is that markets sometimes don't look through to those big-picture thematic themes that, yes, they do take a while to play out, but if you are, for example, a company today who is largely about selling goods to an American consumer where the goods are sourced from outside, I think it's fair to say it's going to be a tough time and you're going to be swimming against the tide over the next 10 years.

Whereas if you are a company that is number 1, 2, 3, or four in your industry in defense, in renewable energy, or some of these big-picture areas, or a big supplier that's hard to shake with a big motor around your company in the technology world as a facilitator to AI, or what I call the enabler and the enabled, so you're an industry like banking, for example, which is just rich and ripe for technological advancement, they're probably going to be swimming with the tide over the next decade. So certainly it's an environment where active management really thinking through these issues and selecting the industries and securities is really important for success in terms of investments.

Paul O'Connor:

There appears to be rising tensions in some countries between the government in power and their central banks. What are your views on the support mechanisms from governments, central banks and regulators?

Jay Sivapalan:

So if you think about it from a pure society, national interest, security and outcome perspective, if you think about it in those terms, a regulator or central bank are all different parts of a government. They belong to the society of that country. There's a lot of blurring of the lines between those institutions. And they are important in terms of achieving an outcome for a country and the independence, or otherwise can be compromised to get the outcome. So that's a general overarching statement. However, for capital markets and for investors, the independence of those three are really critical and important. And I guess what we are seeing in certain countries, and US is one of them, are attempts to influence a central bank or a regulator to be able to get a government outcome.

So let me give you a few examples. To fund a lot of the programs that the US wants to achieve under the Trump administration, that requires significant funding, it requires a lower cost of funding, and it potentially requires changes in regulatory guidelines. For example, deregulating the banking system. For example, potentially requiring insurance companies, pension funds and banks to hold more US treasuries. Potentially setting up a sovereign wealth fund that then buys US assets, think of Amtrak and a lot of the property assets, to be able to create the cash to fund many of the projects that they want to achieve. So they are very much intermingled, but from a capital market and investor perspective and the confidence of the system, the independence of those are really important. And I'd like to think that for the most part, the independence of governments, central banks and regulators are maintained. And in fact, over the last 50 odd years that independence has served the economy, economic growth, and society as a whole well.

Independent, the importance of the independence, I fully agree with you. But at times I scratch my head even in Australia where we've seen examples in recent years of a federal government running significant budget deficits, but a central bank trying to tone inflation. So you've got fiscal policy that's expansionary and you've got monetary policy at the same time trying to be contractionary. So I guess we even see that close to home here in Australia, some of that dysfunction between a government and a central bank. But the independence, I'm fully with you, Jay, that must be protected.

COVID was a good example. So our governments needed to support the economy through JobKeeper, JobSeeker, and all of these furlough programs and significant spending. And that required issuing a lot of bonds, to your point, and fiscal deficits to fund those bonds. The initial reaction by markets is bonds and yields have to go up. Now, the reverse of that is a central bank, including the RBA, had to get involved and undertake their quantitative easing program by buying those bonds to depress the cost of borrowing. So yeah, certainly there is an interaction between these different groups to try to achieve the same outcome.

So given Australia has had now, what, 35 years of positive economic growth, is our time in the sun potentially coming to an end, or will China come to our aid as they did in 2009 when they materially increased their demand for our commodities?

Certainly China's ability to move hundreds of millions of people from farms to cities and to build those cities is no longer the case, nor is their desire or part of their plan. So we are not going to see a 2009 to 2012 type demand for our commodities like we did. That time is certainly over. The question is more, we've built the infrastructure, we've built some of the lowest cost producers in the world for key commodities. Can we keep producing the same level of commodities and have an end buyer or buyers for our commodities? And I think that's where we are reasonably well-placed, because we have been diversifying, we do sell to Japanese markets, we do sell to Korean markets. And we are also re-looking at our mix of commodities. So traditional coal, iron ore, you would've seen in the past week or two some announcements around our LNG exports and extending our LNG contracts and licenses for 70 years. And this gives a lot of confidence for investors to invest in those industries.

And that's because effectively the government and policy makers are recognizing that the traditional commodities may not be the ones in as high demand. But the world is significantly short energy and the transition to renewables will take time. And the transition story needs something to plug the gap. And that plug the gap is gas or LNG. So that's why we're doing things like that as an economy. So coming back to your question about, is our time in the sun coming to an end? Certainly there's some risks that we shouldn't ignore. Absolutely. And certainly we're probably going to have in the next five years a tougher time than we've had any time in the last 35 years to think through it. The answer though and the solutions to these challenges are stepping up to the plate in terms of what else could we export? What do we do with this fantastic savings war chest that we've got 4 trillion plus just in superannuation, let alone all the other savings in non superannuation assets, both financial assets and non-financial assets, and this vibrant, diverse economy that we have today in Australia? And can we make more of it?

So we certainly would be of the view that we can transition our economy, albeit it's not without its risks.

So how can investors navigate the macroeconomic and geopolitical environment that we expect over the next five to 10 years, Jay?

Yeah. So I guess understanding the winners and losers both from a country, industry, company perspective is really important. And this is where active managers and the time spent on researching and understanding these nuance is really important. But the second is, having that margin of safety when investing and really thinking about the things that could evolve or change and not be as prosperous as it was in the last 40 to 50 years, and where the new opportunities are, and really identifying those new opportunities. And that applies to all asset classes. But certainly there will be absolutely winners. There will be countries that are winners. There'll be industries that are winners. And there are these geopolitical important areas, such as defense, healthcare, technology, national resilience, supply chains, and so on, which are very investable, worth investing in. And capital providers and investors will get good returns over the coming decade.

Your fixed interest funds have developed really strong returns in recent years. So what opportunities are you now seeing in the fixed interest market and how are you thinking about investing?

To think about all asset classes and then to hone in on fixed interest, especially for Australians, we've been largely, in the last 30 or so years, in the accumulation phase as investors collectively. So we've got a very strong bias towards growth assets like shares and property and so on. That's clearly worked really well for investors. But in today's environment where there are likely to be a lot more volatility from these geopolitical policies that our governments are releasing, and also the fact that the winners and losers are going to be a lot more haphazard, and thinking about retirees and decumulation and so on, fixed interest as an asset class really comes to the fore. In particular when you're thinking about the types of yields that you can get in fixed interest as an asset class, when you go from government debt to state government debt to moving through to corporate credit, so many investment grade companies and lots of brands that we all know and love and shop at or consume from, they're all investable.

The other thing about fixed interest as an asset class is there are many unlisted entities that are investable through bonds. So think about university debt, think about our ports, think about our toll roads, think about our airports. So all of these are investable, and they all have yields today in the range of five through to 9%. So quite attractive yields when you're thinking about it. And really providing a compelling competitive alternative to pure growth assets or equities. So when we think about investing in fixed interest today, what are we trying to do and what are we trying to achieve? First and foremost, it's capital preservation. It's a defensive asset class, and we're trying to preserve our clients' monies. The second one is to generate portfolios that have good levels of income and distributable income and coupon incomes. And then the third one is to deliver total returns from attractive areas of the fixed interest market.

Just post-liberation day and really right for active managers, were some great opportunities to buy inflation link bonds, buying Queensland Government at very close to 6% yields. And then as you know, Paul, over the last two or three years, REITs globally have been a little bit on the nose, partly because of work from home for office towers, e-commerce for shopping centers, and so on. But our REITs incidentally, especially the top end of town, the better quality prime REITs have been performing really well. They've held up really well. And when you are lending money as a investor in the bond market, that's essentially what we do, and you are lending where there is gearing of 20%, so that means there's 80% shareholders underneath a fixed interest investor, that is a relatively low risk investment and you're getting fantastic total returns. And so we've been able to, as active managers, both buy in secondary markets, as well as Cornerstone and reach out and lend money directly to many of those REITs and generating 10 to 12% total returns per annum in that sector. So lots of great opportunities for active managers in fixed interest at the moment.

Jay, well, we could go on, I suspect, all afternoon on this discussion. We've only just scratched the surface over numerous key issues, but thank you very much for joining the podcast today. I've certainly had a very educative and enjoyable discussion with you, and I certainly hope the listeners have shared it too. So thank you very much, Jay, for your time and your insights.

Likewise, Paul. It's been an absolute pleasure and thank you for the questions and a great discussion. And really hope it's a value to all of the audience.

Well, I know from my own perspective, the trends and the themes that have driven global GDP growth over the last 30 years plus are going through some period of change. And how that then impacts on our portfolios, we really need to think about it. And think about potentially what has been our ways we have managed money over the last three decades, may need some recalibration and thinking again going forward. But certainly the virtues and the benefits of active management, I think certainly come through in the comments you've made today. So thank you very much, Jay. Again, very enjoyable discussion. To the listeners, thank you again for joining us on another installment of the Portfolio Construction Podcast series. I hope you've enjoyed the discussion today, and I look forward to you joining us on the next installment.