You know we see a lot of talk around interest
rates and of course you know it's,
it's really interesting, but we think it's time to start
looking through that and start facing on where are those
growth opportunities that we can back today with that return
potential coming super, that's great.
So you're sticking to your guns on that would you?
But let me say that some sustainable investing
has been challenged by the higher rate environment.
Some of the the business cases that were there have
been more challenged as we've had higher rates
around the globe as well.
So back at you a little bit maybe in lower
interest rates will perhaps reinvigorate some of those business cases.
Sure maybe. And I think it's important to differentiate between
you know the different types of sustainable growth here.
So you have that back end dated climate opportunity that
needs to come through those decarbonise,
decarbonisation names where we'll see those technology changes,
those those shifts towards renewable et cetera,
which are longer term duration in nature,
but there are really compelling opportunities within sustainability today.
So think of names like Schneider Electric with their data
center business and the decarbonisation opportunity that comes alongside that
AI shift,
that digitalisation that's become so attractive to investors in the
US Well,
there's other ways to play it.
You can play it elsewhere on the value chain and
think about decarbonising that process.
In doing so, great AI does have a lot of
different ramifications,
doesn't it? And that was the one take away message
for me at this gigantic technology event I was out
the other week,
that a lot of CE OS are looking at how
they deploy it.
All the use cases are saying they're cost efficient
and without very much investment to be able to see
visible cost efficiencies or to speed up certain targets towards
decarbonization. That is significant, isn't it?
Yeah, I mean, we see AI ramifications across the market,
but I think you've touched on a really compelling point
there,
which is we do not know the monetization route for
for many AI applications.
So we've seen, you know,
some of the very first derivative names within the US
really see that growth come through in their share price
reaction. But there's other opportunities to think about AI.
We can think about names like Intuit rolling out Intuit
Assist,
which is an AI enabled software package.
You know, we can think about drug discovery.
So within healthcare, you know some of the really compelling
life sciences names can use AI to speed up that
drug discovery process,
take costs out of the system.
And bear in mind that's been a real focus for
society,
thinking about how expensive drug discoveries become,
how can we make it more efficient and come to
the market more quickly.
There's a timing issue here though,
right? We don't know how AI gets deployed at scale
and one that has companies specific
reaction. So how do you place bet?
Is it too early at this stage when we've still
got huge market moves taking place in a handful of
stocks?
Yeah, sure. So I think there's different scenarios that can
play out.
You can have a really aggressive kind of 800 billion
market sort of opportunity where the adoption of AI in
a monetary kind of model comes through as quickly as
the Internet did from 1999.
Or you know, you can have a very different scenario
at the other end of the equation where companies really
do struggle to find that profitable way to back AI.
So I would say, you know,
we don't know for sure where we're going to go.
What we can do is try and invest behind some
of those picks and shovels and think about you know
where we can back the trend rather than the specific
mechanisms. So based on what you're saying,
this isn't just AUS story.
It's not just concentrate around top stocks on the
S&P 500 and the NASDAQ that it is worth spreading
your bets across other jurisdictions.
Sure. I mean the US names you know we we
talked about the Fab Four.
I think it is now really capturing that alpha narrative.
Yeah, very quickly we we didn't even bother with five
and six.
We just went from 7:00 to 4:00.
But it's just shows the importance of looking beyond the
Monaco and thinking about,
you know, what are these businesses doing?
What is their free cash flow profile,
their return opportunity? Yeah, you know,
you're not looking at their AE Bitars
EBITDAR. Yeah. No. So we,
you know, think about Buffett,
what's he always said, you know,
think about the cash, think about the returns.
Where are those businesses with sustainable returns that can lean
into growth,
right. I don't think Warren Buffett knows what an A
EBITDAR is.
Does he wouldn't even bother would he
You'd move on. Yeah. I think you moved on the
sorry, please carry on beyond the US is what you
you.
Yeah. Beyond the US there's lots of ways to think
about AI
and you know I think it talks to how the
market is captured by alpha narratives
you know like AI. And we see it also in
GLP ones.
You've you've covered the story about Novo taking we go
V into into China and they are exciting,
they are innovations but they're not the be all and
end all and we need to look in the market
beyond this.
You know the area that's in tech,
that's in GLP ones and say well actually healthcare,
there's plenty more opportunities that are are mispriced that give
that compelling answer to some of the healthcare problems that
society has today.