Transcript

Matt Heine: Hi, my name's Matt Heine and welcome to Between Meetings. Our guest today has had a very interesting, diverse and certainly impactful career. Over the last 20 years, he's held a variety of jobs and managed to navigate both the hallways and also the boardrooms of an institution in his role of general manager at Perpetual and also as the Chief Investment Officer at First State Super. Subsequent to that, in 2016, he was awarded the chief CIO Award by Conexus Media and currently holds the position of CEO of Pendal Australia. Welcome, Richard Brandweiner.

Richard Brandweiner: Thank you very much. Good to be here.

MH: Now, before we get onto some of the topics that I know you're absolutely passionate about, I'd be really interested just to understand your journey, how you got here, but more importantly, what was it that motivated you to get into money management?

RB: I think, like a lot of people, it's hard to know what you want to do when you're at university or at school. However, I'd always been interested in share trading, always been interested in investing. My father was a small businessman. Quite a canny man, came from a pretty humble background and built up a business of hairdressing salons, actually.

MH: In Melbourne?

RB: No, it was actually in Africa and Europe.

MH: Right.

RB: Yeah, so I only came to Australia when I was about four years old. But he was very sensible and made lots of good investments. And from an early age when I was at school, the '87 crash was happening, a lot of my friends and I were trading stocks with stockbrokers where you had to go into the meeting rooms, go into the offices in the city. We had to ring up, there were two numbers you could ring, one would do all the stocks from A to K, and one would do all the stocks from L to Z. And it would cost 20 cents, of course, to do it. So, an interest in investing from an early age.

But ultimately, I kind of fell into it in many respects. Started typing in unit prices at the old company, Assert, which doesn't exist anymore. And then very fortunate to get a job in the ratings team early on in my career, which often happens, which is a wonderful way to ... when you really don't know anything, spend a lot of time meeting with CIOs and heads of equities. And I like to think now that I knew I didn't know anything at the time. But I probably thought I did. But certainly, I learnt a massive amount.

 

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MH: As a general observation, what would you say the big difference is between the funds management industry now and what you were rating 20 plus years ago?

RB: It's extraordinarily different, much more professional. I mean, in the late '80s and the early '90s, I mean, the fees were extraordinary, 8% up front fees.

MH: Eye watering.

RB: So, see how far we've already come and let's see where it ends. But fees were extraordinary. It wasn't really investing, it was speculation. And the industry has really grown a lot. Of course, it was all before platforms, before the stuff that you guys do. So, it was a different industry. It was very, very ... a lot of street fighting, if you like. People were out on the road, very fragmented. And it's become much more professional, I think, over the last 20 years.

MH: And presumably that was just as superannuation was starting to gather pace?

RB: Yeah, that's right. And you know, you started ... during the '90s, you started to see the rise of platforms. Assert was owned by Asguard, which was Sealcorp at the time. And I remember when that bit a billion dollars, it was absolutely massive at the time.

MH: Well, my first job was going around trying to sell a you beaut online service to advisors that didn't have a computer in many cases.

RB: Is that right? Yeah, yeah, absolutely.

MH: And trying to convince them why retail funds weren't the future, and for half the price they could get a combined admin system.

RB: Yeah, isn't that right? Who was that with?

MH: That was with Netwealth when we first started.

RB: Yeah, there you go. But that's right, it was all retail. It was all retail. It was all PDSes and-

MH: Free entry funds.

RB: Yeah, that's exactly right.

MH: And so, from research you got the opportunity to then work with a fund manager? Or how did you end up actually managing money?

RB: Yeah, so in those days you used to do research very differently. We would do an entire fund manager. So, these days people have sector specialists. Back then when we would rate a fund manager, we would rate everything, every sector, every aspect of the fund manager, how they ... you know, their technology, their customer service, their risk and compliance, the whole sort of thing. And so, it's not the most effective way to do things, but it's a fantastic way to learn.

MH: They say Jack of all trades and master of none.

RB: That's exactly right. Yeah. So, I moved into funds management firstly at Advance, which was part of the Saint George Group at the time. And then spent many, many years at Perpetual working in a whole range of roles.

MH: And that was across all asset classes as well, wasn't it?

RB: Yeah, so Perpetual was a diversified fund manager. I was there for about 13 years. I came in, as often happens, people that are researchers come in to service the research community. I came in as that sort of role. But then I became the general manager of investments, looking over all asset classes. And I started running the multi-asset portfolios there for a while. Ended up, there was a bit of a restructure just before the GFC hit. And that's when I started running businesses, and that's when I took over all of the non-equities funds management businesses there, which were mortgage lending, something close to the Heine heart. But many other things as well, infrastructure, real-estate, multi asset, multi manager, and those sorts of things.

MH: And then having worked across all asset classes, the diversified funds, you then moved across to the industry fund land where you were the CIO at First State Super. How did you find that transition? Was it a very different culture? What were some of the things that you found really apparent between the two cultures?

RB: Very, very different culture. Wonderful culture, I must say. Like, the not-for-profit mentality, being owned by members, always having the member interest at the heart was a wonderful environment to be. And I think good fund managers and good businesses like yours will always try and do the right thing by clients. But of course, there are multiple stakeholders that you have to balance. And I think we've reached a point now where we actually know that balancing all those stakeholders properly gives the best outcomes. In a not-for-profit world, it's very simple because there's only one stakeholder, which is the member.

Having said that, when I went over, there's still ... there's so many things in funds management that at the time hadn't made their way across to the not-for-profit world. So, coming from a big fund manager like Perpetual where we were in the market, we were understanding liquidity, we were understanding who's looking for capital and how markets were playing out, when I went to a not-for-profit industry fund or asset owner, they were very, very far removed from the day-to-day workings of the market. And that actually was a real challenge for asset owners and one of the reasons why they're starting to in-source now.

MH: And that was largely because they were outsourcing so much of that function?

RB: Yeah, if you think about it, the distance between the member and a company making widgets had about eight or nine layers of intermediation, whether it was an asset consultant, a fund manager, an asset owner, a board, a CIO. And the challenge for asset owners back then was that they were just too far away from what was actually really happening in the market, which meant that there was an information asymmetry. It also meant that they weren't leveraging their scale really effectively. And this is one of the reasons why having some exposure to internal capability actually makes a lot of sense.

MH: Speaking of scale, it's a topic that I'm really interested in at the moment, and we had a great chat to Jeremy Duffield on the last episode just about the growth of Vanguard. Well, certainly he established it, but the growth during his time. I think when you started at First State it was ... did you say three billion?

RB: No, no, it was about twenty billion.

MH: Twenty.

RB: Yeah.

MH: And then it went through a number of acquisitions and from a very small investment team to a very big investment team.

RB: That's right.

MH: How did you maintain the DNA of the fund and make sure that as you got bigger and brought in external or through mergers sort of maintain that culture and what was important?

RB: Yeah, very good question. So, the biggest merger of super funds that's ever happened was First State Super and Health Super, which was just wrapping up, actually, at the time I was coming on board. And that was relatively painless in the sense that these were two not-for-profit funds. They had similar membership bases in the health community, nurses and other healthcare workers. And so, that was relatively easy. We did acquire State Plus, which is a very large financial planning and pensions business. And you know, that was kind of the final thing I did there. And bringing that together, that was a for profit entity, but it still have a very clear focus on giving the right outcomes to members or clients.

Managing growth is always difficult, and the key there is about taking people on the journey. I think our team grew from about five. When I left, it was about 55, and I understand it's grown continually since then. So, I mean, what we tried to do was have a very clear mission, make sure everyone understood what we were there for. And as I said, in that environment, it's relatively easy to articulate that and understand it.

MH: When it's anchored on the client first.

RB: Yeah, that's right. I mean, we used to have little statuettes, actually, of the client that would sit in every meeting room. And it sounds a little bit cheesy, but in fact it worked because you would always ask yourself, "What's in the client's best interests?" But actually just managing growth and change is hard anyway. And you know, we didn't do everything right. We changed things. We had to be relatively nimble in the way we did things. But ultimately, change is about engaging everybody at all levels of the organisation, giving people a sense of empowerment and control, and of course, just communicating as much as possible.

MH: And did you lose a lot of people as you went through that growth? Because I think particularly with the Royal Commission now and the massive amount of change that needs to happen, change management is hard. And in many cases, it's actually easier just for people to move on if they're not going to be able to adapt and evolve with the business and where it needs to go.

RB: Yeah, I mean, I think that's right. It was a very warm environment. There were some people that felt that it wasn't for them, and they would generally self-select out. It's interesting because a lot of people talk about us being at peak employment in investment management globally. But if you look at the numbers of investment professionals in asset owners compared to the number of investment professionals in funds management, you know, funds management dwarfs it. And there are a lot of people that argue that we're at peak employment in funds management, but we've still got a long way to go in asset owners globally, sovereign funds, pension funds, and the likes. So, people will find their place.

But one point I was going to say before, which I missed was you were asking about the cultural differences and the differences between going from a fund manager to an asset owner, one of the big things that struck me was ... and again, now as a fund manager, I know that we have a culture that support money management. We've got remuneration practises that support that as well. We've got technology, we've got talent development. We've got a whole range of things that go towards trying to get the best outcome for our clients. Now, asset owners have a long journey to go to actually sort of create that world. And they're on that journey and they're doing the right things.

One of the things that always struck me was there were so many things we had in funds management that we could share with the asset owner community that they could leverage as they go on that journey. And you're starting to see that play out now as more and more asset owners are looking for strategic partnership with fund managers and other organisations to actually leverage things more broadly than just deliver me that return.

MH: Yeah, and just collaboration across the industry, regardless of which side.

RB: Yeah, that's exactly right. Yeah.

MH: Fantastic. Now, you mentioned before the word mission. I know one of your real passions and your mission is around ESG investing and impact investing. There's a lot of different terminology. I've been to a lot of conferences where even people in the industry can't agree on what the terminology is or the definitions. Do you want to have a go at maybe talking about deep green, light green investing, ESG, and impact investing?

RB: Yeah, okay. Why don't I ... If you don't mind, can I just step back a bit here-

MH: Go for it.

RB: And get to why it matters, and then it will help, I think. So, this is important because our system controls so much of the world's capital now. And it's in a relatively few set of hands. And that's a phenomenon that wasn't the case 20 years ago. So, there's about 140 trillion dollars now in asset owners globally. So, sovereign funds, insurance companies and the like. That's about twice global GDP. So, that's just a massive amount of money in the context of a relatively small system. And the way that money gets invested will have second and third order impacts that will flow back into the system. And in many respects, the way that money gets invested will inform the world into which we retire.

So, what that means is there's a few things that we need to be mindful of when we think about making an investment decision in that context. So, one is that there are second and third order impacts of the investment. There are what we think of as externalities. So, if a company pollutes a river back in the day, they weren't bearing the cost of that, but society was bearing that cost. They were getting effectively a free ride, if you like. So, their cost to manufacture was lower than it should otherwise be. And there was an external cost to society. Now, as we're becoming, I guess, more civilised and we're recognising the impact of those externalities, they're increasingly going to be priced into the earnings of companies over time as regulation and things change.

So, the journey of ESG, to get to your specific question, started with ethical investing, which was I personally have some values that I don't believe in, whether it's tobacco or coal or gaming or cluster munitions, and so I don't want to own that. So, it's got nothing to do with investing, it's got to do with personal values, and that's where this began. And in fact, Pendal launched the first ethical trust in Australia back in 1984, which was built around that.

But then the increasing recognition that these externalities are going to start being priced into future earnings was where the idea of ESG was born. And ESG at its core when it began was really just a recognition that there are risks attached to investing in companies ... excuse me, where there's the potential for these externalities to actually start getting priced into the future earnings stream. And those risks are often non-financial risks. And usually they've been bucketed into environmental ones, social ones, or governance ones. So, poor governance, eventually you'll pay the price for that at some point. And the market's started to recognise that if you don't take those factors into account, perhaps you're not actually fulfilling your fiduciary duty of trying to deliver the best long-term outcomes for people because they will hit performance at some stage.

Then the market evolved to actually think, "Well, actually, back to that point about recognising that capital has power and recognising that these externalities represent risks, perhaps if we biassed our portfolio to companies or bonds or whatever where those externalities were going to be positive." So, for example, companies with better labour standards than other companies might end up winning more market share over time or managing their business more effectively. And so, ESG evolved from being about long-term risk management to being about, to what extent can we be more proactive and bias our portfolio towards businesses that are more sustainable in nature?

MH: So, just to recap there. So, ethical has obviously been around for a long time.

RB: Yep.

MH: And ESG is a relatively new investment philosophy. So, the two happened in parallel? Or was there still crossover? Did one grow out of the other? Or was it just that people came at them from very, very different angles?

RB: No, no, I definitely think one grew out of the other. So, you can see this as a bit of a pyramid, if you like. So, we started with my values. Then we moved towards thinking about, "Well, hang on a second, there are risks associated with things that are aligned with my values." Then, "Well, actually, I do believe these things, so perhaps I could get a portfolio that makes me feel really good at night." And then the apex of all of this, the natural conclusion of this is impact investing, which is saying, "Well, if I know that capital has power and there are flow on effects, perhaps I could bias my portfolio or invest in things that are specifically targeting positive social outcomes or environmental outcomes alongside financial returns." And that's a very, very deliberate thing. It's not just about being in more sustainable companies, it's about using capital to create change.

MH: Impact investing would be quite a new concept to a lot of people. Have you got some examples of investments that you've made personally that have had an impact?

RB: Well, I mean, there's a lot of impact investing that's not called impact investing. So, a lot of renewable energy, for example, would probably fall into that bucket. You know, in my career and life, I've had a big interest in impact investing in the emerging markets because you have this crossover between four billion people who earn less than $10 a day and represent an underserved community who also represent an amazing commercial opportunity because they're willing and able to actually pay for essential services that they've been previously denied.

So, I'll give you a good example. There's a hospital chain, which is a listed company in India. It's called Naranyaya Health. And it was a visionary doctor that worked out ... he was a thoracic surgeon, and he worked out a way to reduce the cost of an operation by two thirds to 80%. And effectively, what's he's done, he's opened up a lot of surgery and a lot of healthcare to many, many levels of the wealth pyramid below what would otherwise have happened. Now, this is a fantastic business. It's growing at 40% per annum. It's very profitable. It was owned by private equity, it's now a listed company. And it's now expanding into Africa as well. So, this is a company that is doing something that is profoundly important from a social perspective, but it's sustainable because it is generating a return for the providers of capital.

MH: Now, Pendal's been quite clear in their sort of direction in wanting to really drive ESG investing in the Australian market. Certainly from my own experience, more and more fund managers are looking at ESG as an important part of their process, but not necessarily promoting it. Where do you see the Australian market going over the next five to 10 years in this regard? Does ESG just become part of every fund management process? Or is it going to still be a very specialised area?

RB: So, I think there's two elements to that. Firstly, let's ... two elements. Before I get to them, let me just say, I think we are at a tipping point. You know, I don't know if you've ever drunk out of a metal straw?

MH: I have.

RB: It's a horrendous experience.

MH: It is. And hard to clean.

RB: They're very hard to clean. But this is ... that would not have happened five years ago.

MH: I had an argument with the local café because they were suggesting that paper straws were just as bad as plastic straws.

RB: Yeah, exactly.

MH: So, who knows what the right answer is?

RB: But look at that dialogue, right? That would not have happened. Look at-

MH: And plastic bags in supermarkets.

RB: Plastic bags. What about Harvey Weinstein? There was no new information in the whole Harvey Weinstein incident, you know? A lot of those allegations had been made before. But from one day to the next, society said, "That's not okay and we're not going to accept that anymore." So, I really do believe we are at a tipping point. And that's going to flow back into lots of parts of this eco-system. It'll flow back into consumer behaviour, which will impact earnings. It's also ... obviously a lot of it's being driven by asset owners globally. You're starting to see, for example, in Europe there is legislation that's currently being drafted in the EU to change the definition of fiduciary to incorporate consideration of ESG factors. So, these are genies that are not going to get put back into the box.

So, the two things that I think will happen, firstly integrating the proper consideration of ESG risks into an investment process will become absolutely mandatory and a ticket to play. And you know, we're a long way there, but it's still ... there's still a long way to go. More than that, I think strategies that specifically emphasise sustainability, whether they be ESG related, whether they be impact, will become more and more in demand. And I think the obvious things people point to is the growth of millennials. But one of the things I like to talk about is, if you look at Australian Ethical, they're the fastest growing superannuation fund in the country.

MH: And still consider themselves, I think, a deep green investor?

RB: Yeah, so we didn't get to that. But yeah, they are deeper. And so, just to touch on that, obviously there's a spectrum everywhere. And you know, light green to deep green is one of those. But they're authentic in what they do. But the interesting thing about a lot of their growth is, a lot of it is coming from baby boomers at the point of retirement, not just millennials because millennials, of course, there's lots of them, but they don't have large balances, necessarily. What's happening in many cases if you've got people nearing the end of their working lives who have had 27 years now of uninterrupted economic growth, maybe they own their property in Sydney and Melbourne, they had free university education growing up, and now they see how hard it's going to be for their kids with property prices where they are, with the economy always uncertain. And they're mindful about the world they want to leave. And they know that one of the big assets they have is their wealth. And they want to invest that wealth in a way that's powerfully positive for the world. Now, they don't want to give up returns for that.

MH: I was going to say, because there's now also, I think, a recognition that for all the factors that you've talked about, that returns should be as good, if not better than their counterparts.

RB: Well, certainly I think if you look at an organisation like Pendal, we are about delivering returns to investors. We're a ... let's call it a hardcore traditional fund manager. So, what we really like is the idea of bringing that mentality and that experience together with authentic and credible ESG research. And actually, it's the and. It's the profit and purpose. It's the returns and sustainability over the long-term.

MH: Which was going to be one of my questions. And there's a clear distinction obviously, but I guess the worlds of philanthropy and impact investing are starting to merge, where people involved in philanthropy historically are now seeing that they can have as much impact, but also generate an income as a result of it. And it seems to be a really good marriage of the two industries where you've got a lot of smart people working a lot of varied projects that ultimately become self-fulfilling.

RB: Absolutely. I mean, the problem with philanthropy is it's just not big enough, you know? There's just not enough, especially in a country like Australia. But even globally, to change and impact the social challenges and the environmental challenges that we face, philanthropy is not going to do it. So, if you think about, let's say a large philanthropic foundation that makes lots of grants ever year, those are fantastic and they're hugely important for our community, but there's a huge corpus that's sitting there that if that was invested in a way that continued to deliver the growth ahead of inflation that that corpus needs, but is actually working powerfully to create positive change, that's the marriage that is so interesting. And actually, there's another dimension to that which is even more interesting. And this is where impact investing can get quite exciting where it's actually the combination of different types of capital together that can unlock even more capital.

So, if you combine, say some philanthropic capital to, for argument's sake, take a first loss piece in a transaction, that might be able to unlock more sort of market rate of return driven capital, which would otherwise not be commercial. And so, actually, it's the combination of the two, not just in our minds, but actually in transactions that could be super powerful.

MH: Have you seen that actively start to happen in the market? And who's driving it and how is it coming about?

RB: So, look, the New South Wales Government was a big leader in trying to grow the impact investment market in Australia. But you've seen-

MH: Are the governments the right people to be driving it?

RB: Well, that's a great question. But you know, we're still a long way from it working properly. And one of the gaps ... there's three gaps, actually. One is most of what is impact investing is still subscale and very illiquid. And so, those are two things. And secondly, there's not a lot of the same infrastructure that exists, say in our industry. So, there's not a lot of intermediaries, there's no research, for example, or very little. There's no platforms or marketplace. And so, the infrastructure actually needs to develop in order for it to grow more significantly. So, we've kind of got a market gap at the moment, and perhaps there's a role for government there.

Look, one of the reasons why governments are involved, and I should say Queensland, Victoria, and South Australia have all been very active in this space as well, is that they're actually looking for innovative solutions to a lot of the problems that they face through their social family and community services work, for example.

MH: That they may not be able to fund themselves and are looking for broader involvement.

RB: Yeah, that's right. So, by actually sort of putting outcomes at risk, which is the way they do it, they can actually sponsor a lot of social entrepreneurs who have better ideas and different ideas about how to solve social problems. And perhaps government hasn't been the best at doing that.

MH: Is there other countries that are doing it very well that, for those that are interested, they could have a look at?

RB: Absolutely. So, the UK has a thing called Big Society Capital. So, the UK was a real Vanguard here, actually. And there's a man there called Sir Ronald Cohen who chairs a thing called The Global Steering Group on Impact Investing, which brings together ...i think there's about 19 countries around the world, and Australia's one of them. And I sit on the local board that feeds into this. But Sir Ronald founded ... he was previously a venture capitalist, and started a very big private equity firm. And then David Cameron, the British Prime Minister asked him to take over this role. But he founded a thing called Big Society Capital, effectively a social investment bank.

So, to your question about how do you blend capital in different ways to deliver outcomes, that's exactly the sort of thing that Big Society Capital does. And look, he's a great man. He was knighted for a lot of his philanthropic and other work. And he's trying globally to build that infrastructure up that we need to make it a reality.

 

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MH: Fantastic. I'll definitely have a look at that. Just before we go, is there anything at Pendal that you're working on that you're really excited about and can tell us about?

RB: Yes, there is. So, I said before we're ... Well, there's always lots of interesting things. And you know, we did take a new brand this year, so that was very important.

MH: As an outsider, it seems to have gone incredibly seamlessly.

RB: Well, thank you. You know ... So, Pendal, by the way, was the name of our first client, was the first client we tried to get, the Dalgety Pension Fund. But you know, we were sold by Westpac, 40% sold 10 years ago. Westpac only owned 9% and it was definitely time for us to remember where BT began back in the early '70s, but also look to the future. So, there'll be a lot of work we're doing to represent what we do to people through that brand. And of course, brand is much more than just a name. And you know, we're very keen to make sure that our value proposition resonates through advisors to end consumers.

But as we've been talking about a lot today, we do believe that it's very important for us to integrate consideration of ESG factors into our traditional decision making really authentically, but also to broaden our strategies that are specifically designed to incorporate sustainability and impact. And so, we've recently, just as of today, yesterday, we're internalising a group called Regnan, which is one of the leading ESG research and engagement organisations in the market. We helped set it up many, many years ago, and it dates back to 1996 and Monash University down here in Melbourne who were some of the real Vanguards in thinking about environmental risk and how that dovetails into earnings. It's broadened out much more now to be across ESG risk factors more broadly. So, we'll be ... we've fully acquired that. We'll be bringing that in-house to be closer to our investment capability.

MH: Congratulations.

RB: Yeah, look, I am really excited about that because I think bringing together our deep fundamental understanding of businesses and corporate strategy and valuation together with an understanding of these non-financial externalities could be very powerful in generating better and more sustainable returns.

MH: And will that be exclusively for the Pendal investment teams? Or will you retain the external clients that presumably were using it historically?

RB: Look, we have a lot of asset owner clients that use it. And we'll be definitely looking to support them any way we can.

MH: Very exciting.

RB: Yeah. I mean, look, we want this eco-system to grow. And these guys were some of the founders of it in Australia. And I think what we'll be able to do is they'll be able to leverage off many more resources, people, data, brokers, all these sorts of things that can make a difference.

MH: One last question, obviously now in a post-Royal Commission world, there's a lot of focus on fees across the industry, platform fees, advice fees, and obviously funds management fees with indexed funds unfortunately being the new benchmark. Where do you see this heading? Are we going to see an industry sort of half over the next couple of years? Or is there great opportunities? But I think probably the real question is, for advisors positioning active management with their clients, what are some of the key things that they need to be really clear on as far as the value proposition goes?

RB: Yeah, definitely. So, a couple of thoughts on that. Interestingly enough, many, many years ago, I got approached by a big pension fund overseas that had a team called Alpha Hunters, which I thought was-

MH: That was the team everyone wanted to be part of, was it?

RB: That was a recipe for disaster. But anyway, what they did was they went around the world looking for pockets of markets where there was a lot of alpha evident. And they were based in New York, they came to Australia because they found that Australia, and interestingly enough South Africa and Canada were markets that were very rich in the ability for institutional investors to generate alpha. Now, the reason for that, and I've done lots of thinking of this and research over the years, I believe, is because we have a small and globally relevant market, because institutional investors only represent a relatively small part of our equity market compared to other countries, say in the US.

MH: Do you know what the rough split would be?

RB: I think it's about a third.

MH: A third institutional, and-

RB: Yeah, yeah. And then you've got ... I think it's basically about a third institutional, a third insurance and those sorts of people, and then a third retail.

MH: Amazing.

RB: But you've also got ... I think you've got about 15% offshore ownership as well, again because we're globally relevant because of resources. And so, what that means is there is actually scope for a talented fund manager to add value because remember the market is a zero sum game, so for someone to add value, someone else has to underperform. And often offshore managers come here at the wrong time or insurance might have a different time horizon or a different return objective. And so, there is some capacity there, and I think that's very important.

But to be honest with you, the whole active, passive thing which we've been talking about for 20 years, the way I actually look about it is it ties back into a lot of our conversation today, and it comes to stewardship. So, what active management promises, and what I believe it delivers in many cases, certainly in our case, is we are stewards of our clients' capital, of our advisers who use us and obviously of their end clients. And that means it's the onus on us is to invest that capital thoughtfully in a way that is going to generate the best long-term outcomes. And so, an algorithm, for example, or a passive mandate cannot look across the table at the managing director of a company that's just made a foolish acquisition and hold them to account. It doesn't vote properly on the quality of the directors coming in. It doesn't ... You know, it is not deeply mindful of externalities flowing back into earnings as they relate to the company's strategy. So, my view is I think about our investment team, our domestic equities team led by Crispin Murray. He is holding management and boards to account on the way they behave and the way they're going to grow. I don't know if you've ever had to front off against him. And the way they're-

MH: Not yet. I hope not to.

RB: The way they're going to have to build wealth for ultimately the investors. And that's where I see the very, very important place that active management holds.

MH: Richard, fascinating chat. Really enjoyed it, and thank you so much for your time.

RB: Thanks so much, Matt. All the best.