Name: CAN 25008 CG Canada Preparing For TCR How SMAs And Practice Management Can Support You 251112 Webinar REPLAY V2 HQHD MED
Uploaded: 2025-11-21T00:07:48.461Z
Duration: 58 min 37 s
Description: CAN 25008 CG Canada Preparing For TCR How SMAs And Practice Management Can Support You 251112 Webinar REPLAY V2 HQHD MED

Transcript for "CAN 25008 CG Canada Preparing For TCR How SMAs And Practice Management Can Support You 251112 Webinar REPLAY V2 HQHD MED": Hello and welcome. My name is Sri Vemuri, and I'm the national sales manager for Capital Group's business in Canada. On behalf of all my colleagues, thank you so much for joining our webinar today, preparing for total cost reporting, how how separately managed accounts and practice management can support you. Not only thank you for being here today, but thank you more importantly for your business and support of Capital Group. You know, number of you have heard me say this in the past, and if you've joined other Capital Group meetings, you've heard this. You know, we exist because of what you do. Our organization's been around for over ninety years and in that entire ninety year time, we work with financial professionals such as yourselves. We know you change people's lives and you improve outcomes. But that being said, we also know that your life has never been more complex. And and I'm not just talking about the obvious things, market volatility, geopolitical concerns that that seem to be changing on a twenty four hour basis. You know, you're dealing with those things and having those conversations with your clients. But, also, what's become complex for you is the value, you provide beyond investing. The entire ecosystem of your business and your practice and all the things that you do for your clients. And those are some of the things we're gonna talk about today. We're we're gonna touch on on the environment. We're also gonna talk about simplifying your life or hopefully simplifying your life. You know, first, we are gonna talk about the regulatory environment with total cost reporting, the third phase of, the client relationship model, and and Michael Boyd is gonna help with that conversation. And then we're gonna we're gonna jump into a deep dive on SMAs, and Noriko, Mark, and Michael Ingles will help us with that. So with that as a backdrop, let's jump into the first part and and I'd really like to to highlight what I mentioned on the front end. The complexity of what each and every one of you are doing beyond the obvious, which is a value beyond investing. And what you can see on the slide here on the left hand side are two, areas. First, our mission. Capital Group's overall mission is to improve people's lives through successful investing, but then our vision. And our vision is what we'd really like to focus on today, which is being the partner of choice for our clients and the investors we collectively serve. That that is a big burden, and it is something that we we take very, very seriously. And we know in order to be able to do that, we need to be able to deliver on all four areas that you see there on the screen, thought leadership and investment insights, practice management, portfolio consulting, stability and scale in terms of how we manage money. And we're gonna touch on all those areas a little bit here today, and we'll provide more tools and resources on how we can help you in all these areas. But for the first part of this today, I'd like to to bring up, my colleague, Mike Boyd, where we're gonna tackle TCR as well as practice management. And and Mike's gonna take a look at it from a vantage point that might be a little bit different, which is thinking about how you should and can quantify the value of your advice in the regulatory environment that we are moving into moving forward. And so with that, Mike Boyd is let me give him a formal intro. He's a senior adviser practice management consultant and senior vice president of Capital Group, here in Canada. He's been in the industry for thirty years. He's been part of Capital Group for twenty two years. And, ultimately, what he helps advisers do all throughout Canada is in in, you know, elevate their business practice and and you'll hear a lot of the ways that he does that too today. And, in addition to that, you know, prior to this role, he really focused in Southwest Ontario on helping, you know, top teams, high net worth teams do just that. So with that, Mike, I'm gonna turn it over to you. Appreciate it, Sri. Thanks for that, introduction. Let me, let me join Sri in thanking everyone on the webinar today. For those of you working with Capital Group, I wanna thank you for your business. And those of you who are here doing some due diligence on Capital Group, thank you for your interest. My role today is really twofold to talk about, total cost reporting, CRM three, and then talk a little bit about some insights around practice management. So with any further ado, let's jump into it. CRM three is is clearly a journey that we're all going on in as an industry. This journey started back in 2009 with phase one of CRM three, which really focused on suitability and conflicts of interest. Fast forward to 2016, phase two, CRM two came into light, really focusing on performance and advisor compensation, which brings us here to today, phase three, CRM three, which is all about showing transparency around investment management costs. There's a lot to CRM three, but we're gonna focus our time together today on just a few aspects of CRM three, including the annual cost and compensation report. So as many of you will know, this is a report that will be sent to clients in January 2027. There's a few elements to this report we wanted to shine a light on. So we'll start with, perhaps the most important part, which is the table on your screen, which really, for the first time, aggregates the cost of investment management that your clients are paying and expresses that in dollar terms. So we're breaking down new ground as an industry now, shining a very bright light on the cost of investment management in dollar terms. The next aspect of the report is showing within the account, line items that are held in the portfolio and showing each of those investments in the fund expense ratio, that each of those investments charge, and that's expressed in percentage terms. And then the final part of this cost and compensation report, which we think is sort of interesting and somewhat provocative by the regulators, is this call out box which talks about what investors can do with this information. So just to read this to you, on the report, it'll say take action by contacting your adviser to discuss the fees you pay, the impact they have on the long term performance of your portfolio, and the value you receive in return. So fairly provocative comment that will be on this report, and I think we're all wise to anticipate this leading to some conversations with clients about these fees within their accounts. Now just to be clear, what will be captured within those fees is the combination of the MER, which we're all very familiar with, the TER, which might be less familiar to some that captures the trading expense ratio. Now in some strategies with high turnover, that trading expense ratio can match, in some cases, the same cost as the MER. But the MER and the TER combine to create the fund expense ratio. So the fund expense ratio is what's gonna be captured on this annual report, which will be sent to clients starting in January 2027. So just to be clear, January 26, the data collection starts the the clock starts on the data collection with the ultimate, inflection point, if you will, January 27 when the report hits client statements. So, as I said, it's been a journey. It it's, it's certainly something we're all contending with. I think for many of us, we see it as an opportunity more than a risk, but it does speak to sort of a broader narrative we think that's going on in the industry, and that is additional complexity in your business. Sri sort of alluded to this at the top end. We sort of documented and took some time on thinking about how different aspects of your business have changed and evolved over the last fifteen or twenty years. And compliance is yet just one of many factors that you have to contend with. Compliance for sure has been an evolution. You might say the regulators have been in a bull market for the last fifteen or twenty years, creating additional friction points and complexity for your business, making sure you're compliant and staying current with the regulatory environment requires your full attention. But there's other aspects of your business that demand your attention as well. Tax and estate planning is simply a placeholder for all the value added services you deliver. Think about how much the business has changed over the last fifteen or twenty years. Where today, not only it's tax planning, it's estate planning, it's retirement income planning, It's intergenerational wealth transfers. You getting involved in the complexities of family unit, issue spotting. Think about financial literacy. I mean, these are all aspects of the value that you deliver on the regular to the families you serve and are very labor intensive for you and your teams. Business development has gotten more complex. You think that's sort of the wealth spectrums that you compete in now, high net worth, ultra high net worth, family office. Some of you are dealing with pensions, endowments, foundations. The sales cycle around business development of these types of clients is nuanced, it's complex, requires you full attention. Managing portfolios, again, Sri alluded to this at the top. The geopolitical environment, the tail risks, you need to account for the idiosyncratic concentrations in the markets these days. The way you think about fee budgeting and risk budgeting. There's a lot of nuance in the managing of portfolios. And finally, linking your teams. I mean, fifteen or twenty years ago, a team of three or four was considered to be a a scale up team these days. It's not uncommon to see teams of seven, ten, 15 people. In some circles, people are hiring full time chief operating officers of their teams. But, again, just the complexities that have evolved over the last fifteen or twenty years have become fairly profound, which does beg the question, how does one find capacity to sort of drive productivity within one's business? And to that, I'm happy to share out some of the insights that we've compiled over what's been a journey of actually now six years, including 2025, of arguably the most exhaustive adviser benchmarking study in the history of this industry. Capital Group, like most things, starts with research. Over now six years, we've interviewed and surveyed close to 8,000 advisers. We've asked them 53 questions. We've got 400,000 data points and really trying to identify what great looks like. What what are the high performing teams? What are the mega teams doing in The US to drive productivity and efficiency? And how is that different from the average adviser? And the way we frame this study is really around three, call it, pathways to growth. Each of these in isolation will drive growth and success for one's business. But these are the three that we wanna focus on today. And just, you know, there's more, here than we have time for today. So let's just consider this as starting start of a conversation versus the full and complete, menu of insights. But simply put, client acquisition, relationship alpha, which is code for the client experience, and finally strategic scale are three of the pathways that we've examined with this benchmarking study. Let me just share a few of the high level insights that high performing teams are doing differently from their peers. So when it comes to client acquisition, what's perfectly clear to us from the research is that high growth teams have an always on client acquisition mindset. They don't rely on the bull market or client referrals to win the day to drive asset growth. They're very intentional about client acquisition. They're far more inclined to have a marketing budget. They're far more inclined to be tight on a brand story that's differentiated from their peers in the industry. They think about prospecting with a lot of intention. They use digital media extensively within their business. All of this is a lot of calories spent on the pursuit of client acquisition. When it comes to relationship alpha or the client experience, high performing teams exhibit a much deeper and broader value proposition to their clients. And, of course, they satisfy the core aspects of what one would expect investment management, financial planning, estate planning, but they go far beyond that. As I sort of alluded to earlier, going deep into the family dynamic, the family unit, acting as a facilitator of sorts, conducting family wealth briefings, we see across high performing teams. Think about, you know, philanthropic pursuits, charitable giving, that's a topic of discussion that high performing teams lead the clients they serve in. These are very labor intensive, time intensive services that high performing teams deliver. The final piece, strategic scale or call it operational excellence, is another area where high performing teams distinguish themselves from their peers in the industry. And I would sum it up that they've really made a mental shift from not so much thinking about their business as a practice, but thinking about it as an enterprise and really embracing the role of a CEO of a of a good sized business and all of that which entails the CEO mindset. So think about standard operating procedures, think about driving consistency and efficiency and productivity across their business, Think about leading their teams and the care and feeding of their staff, the attracting the talent, the retaining the talent, the professional development of their staff. These are things that these high performing teams really stand out above the crowd. Again, labor intensive, time intensive, which sort of begs the question, how do these high performing teams find time for it all? And that brings me to the final insight from this research today, and that is how they spend their time. And what's been really interesting is how different high performing teams spend their time from their peers in the industry and directionally how that's changed and evolved over the last six years during the time in which we've been doing this benchmarking study. And one thing is perfectly clear, high growth teams, high revenue teams spend more time with their clients than their peers. They spend more time managing their business than their peers, and they spend less time on investment management than their peers, which doesn't imply that the investment piece isn't important to high performing teams. It's critical. It's table stakes. It's just that they've embraced an attitude of outsourcing. The mega teams in The US with very few exceptions, have embraced the notion of outsourcing. They've come to the realization that they can't outsource client acquisition, and they can't outsource serving their clients deeply, and they can't outsource leading their teams, but they can outsource the investment function. So that is one clear distinction with these high performing teams. They think deeply about risk budgets. They think deeply about fee budgets. But the notion of individual securities, that's very passe with the high performing teams that we've observed and studied for six years now. And that really is, the sort of the punchline to my part of the presentation. It really brings us to the main event today, which is to talk about how SMAs in general and Capital Group in particular can help you free up time, find capacity, drive efficiency, and drive productivity in your business. So, Sri, with that, let me turn things back to you. Thanks so much, Mike. Really, really appreciate that. And, a couple of things I took note of, you know, as you were as you were speaking, you know, I I think, you know, number one, right, these three pathways and I I would just ask the audience to think about that, you know, the three pathways Mike talked about. We could certainly also get you this information. How do you guys spend your time there? And to Mike's point here, in terms of the transition, especially in the environment we're in right now with total cost reporting, the ability to outsource to to asset managers who can spend time in the core where which affords you the ability to spend times on those other things that high performing teams spend their time on. And Mike Mike referenced, the study that we did is in The US, but what we're finding from an SMA perspective is we're finding high performing teams in Canada more and more starting to use capital groups SMAs. And, we'll we're gonna make a turn to that here in a moment. One other area I think it's really important to consider as Mike went through just what total cost reporting is and as we think about what, the the the client statements are gonna look like, he talked about the journey and the evolution of CRM one, two, and three. One of the things about separately managed accounts being a little bit more popular these days, you know, not only is it from from a core perspective, is that the the SMAs, and and the fees that you heard Mike talk about, they were already disclosed as part of CRM two. So that that is something important to consider moving forward. So with with that as a backdrop, let me pivot and position and, you know, while we are going to be talking about SMAs, we are vehicle agnostic. We we still offer mutual funds, ETFs, and SMAs. I do wanna introduce our speakers here today, that will walk us through the deep dive on separately managed accounts, and, hopefully, you guys can make the connection as to why they are so popular moving forward. So, first, we have Noriko Chen. Noriko is an equity portfolio manager at Capital Group. She also serves on our, Capital Group management committee. She has thirty five years of industry experience, twenty six years worth of experience at Capital Group. And Noriko, is based in San Francisco. Joining Noriko is Mark Seaman. Mark is an equity investment director at Capital Group. He has thirty one years of industry experience. He's been capital with for nineteen years. Mark is a great partner for for Canada and is based of our DC office. And then finally, moderating the discussion today is Michael Ingoldsby. Michael Ingoldsby is a wholesaler and senior vice president for Capital Group. Been in the industry for over twenty five years, the last twelve years with Capital Group, and, he is in Calgary. So with that, Michael, I'm gonna turn it over to you. This is the SMA Deep Dive, so we'll dive right in. Thank you, Mark and Noriko, for joining us, and Mike and Sri, thank you for kicking us off. Mark, if you don't mind, I'd like to start with you. Could you please walk us through the genesis of the SMA strategies? They have been deception dates dating back to the late eighties and early nineties, respectively, for international and global. But as I understand it, they've existed long before that. Could you walk us through a little bit how they were created? Sure, Michael. And, first, great to be with you today. The SMA vehicles themselves have been around for roughly ten years or so. But as you indicate, the strategies themselves have a much longer history than that. In the early nineteen seventies, Capital Group created, I think, what we would now call a family office. It it was a a group designed to manage the wealth of our executives and their families. And recognizing that those kind of individuals have some specific needs, we did create some strategies uniquely for that audience. In 1974, we created a US only strategy. In 1987, we created an exclusively non US strategy, part of what we'll talk about today. And then in 1992, we created the global strategy. So, again, just reinforcing, up to fifty years in the case of The US strategy, but more than thirty and almost forty years in the case of the global and the non US strategy is just how much history we have with these vehicles. Incredible, Mark. Thank you for kicking us off with that. If you don't mind, I'd like to follow-up a little bit and dive into, both the objectives and the, how that discipline is managed. So could you take us through the objectives of both the global and international SMA and how that discipline is managed in each of the strategies, and in a sense, what that's translated to in terms of long term results. Yeah. I I will. And, you and I talked about this previously. I think it was so important for us to talk about the history first, because I think it's a a great indication of what we're trying to accomplish and these strategies and the expectations that we have for ourselves. So knowing that they're coming it created out of this idea that we're investing our own money, so to speak, they're intended for individuals and families that have generated wealth already. And people like that have some pretty unique needs. The first is they wanna stay wealthy. I I kinda say that kiddingly, but job number one is don't lose the money. Let's not have to create wealth for a second time in our life. The second would be, even though we're trying to preserve capital does not mean that we don't want to participate in the growth of the equity markets, but we wanna do it in a measured way. And then third one is people like this are often in a high tax bracket. So we wanna make sure that we are maybe even more cognizant hypercognizant of the impact that we create on taxes. So we wanna minimize the tax burden in these accounts specifically. So the objectives that we have for for this international and global strategy are really born out of those needs. You'll see at the top of the the the the page here, let's go our lawyers call it prudent growth of capital and conservation of principle. And and, again, that matches the needs that I talked at the beginning. But if I say it a different way, it's protect impertinently grow. And if there's anything that I say today that I would want to, kind of highlight for you in terms of how you think about these strategies, it's those words, protect impertinently grow. So to do that, couple things again that that I would align you towards. The first is we're generally investing what I will call secular growers, things that we can hold for long periods of time where we don't need to create unnecessary turnover of moving from one stock to the next that creates a tax burden that tends to be higher. The second is we're looking often for high quality companies. They're often leaders in their industry, and and we feel like they can be resilient in challenging markets. So I I see we've got the results page. Let me talk about our results expectations, if I could. Our goal is to create a pattern of results that equals at least or modestly exceeds the return of a benchmark over a full market cycle. But we also wanna do that with a much smoother pattern of results. When markets are volatile, we want to hold up better when markets are volatile. And so, actually, if if you can, go to page maybe either 22 or 23 for me. What I wanna highlight from that page is the long term results for the these strategies, whether you're talking about the global strategy or the nine US strategy, have been excellent over long periods of time. You can see here that, for ten year periods, gross fees, we have exceeded the return to the benchmark 100% of the time. But the way that we do that, I think, is very important. And if, again, if you can do me a favor and go back to that page you were just showing, I think we can go to page 24 as an example. This shows the pattern of results over different, parts of the market cycle, if you will. It breaks it down to when market results are negative. That's the period where we generate the greatest excess return, more than 400 basis points on average of excess return created when markets are volatile. When markets are doing outstanding, we're keeping up. We're not generating, spectacular excess return. But, again, you can see that on the right. When markets are up more than 15% on average, we are generating a small amount of excess return. But you put those two things together when they're doing poorly and when they're doing exceptionally well. And that gets us to, again, that idea of of equaling with modelly modestly exceeding the returns of the benchmark over time. So, Michael, I'm gonna stop there. I know it went a long time, but I do think that connection between the history and where where these, strategies originated for for us, basically, and now bringing them to your clients, in in the pattern of returns that we expect out of that is really important. No. Thank you, Mark. That's that's extremely helpful, and it it sets the table in terms of what we're where we'll expand on these strategies over the course of this conversation. But, you know, the big takeaway for me is, and has been, as always, when positioning these portfolios is we started out with an objective in mind, protect and prudently grow, and we've delivered on that expectation decade in, decade out. So thank you for sharing that. Mark, it's very important. Noriko, I'd now like to bring you in, if that's okay, and talk about the importance of diversification in these strategies. Like all capital group portfolios, our SMAs are built from the bottom up, stock by stock. And yet, we get a lot of questions from our advisors about regional under and overweights. Could you share with us how you think about regional diversification when building your portfolio and the importance of following the money, not the mail or what we like to refer to as the new geography of investing? Sure. Thank you, Michael. And thank you all for, having us here today. We're really delighted to spend some time with you. You know, we leverage our capital system and our investment process. So we have a large group of analysts who are doing primary work to, you know, talking to companies and their suppliers and customers, and to experts. And as a portfolio manager, I meet with the analysts one on one and attend company meetings with them to understand their convictions, and then I will buy high conviction, ideas with them. As they get more portfolio managers to come along on a company investment, that's kind of how the high conviction ideas become larger in the fund over time. And so when you look at our top 20 holdings in global, for example, the larger positions got there because of a combination of capital appreciation, but also because most of the PMs in the fund also came along, with that analyst. And, that's how positions are built in the fund. And, for example, you know, you can see that some of our weightings, in, sectors like industrials, GE, GE, Granova, saffron rolls, Airpods, and why some of our weightings and financials, especially European and Asian financials have grown in the fund over the past few years. One of the things that we also do is that, through our capital system, we look at the strategies, holistically top down. So I just had a call this week with our risk management team to look at the active active risk for global. It's a way for us to integrate risk management into portfolio construction and our capital system. And, we look at what the beta is for the fund, but we also look at what the active risk is for the fund. And, historically, country weightings, which we just saw earlier, have been kind of the highest contributor to active risk. But one of the reasons why right now, you know, we have a a 51 holding in The US, and, you know, kind of equal outside of The US is because I think a lot of the investors and the analysts have seen, more kind of attractive, investment opportunities, outside of The US than, in The US. Since last year, you know, we've talked to, spend a lot of time with our quantitative research team to kind of understand the concentration of The US market and how that might be changing over time. So last year, our analyst told us that the top 10 companies accounted for about, 30% of, the total market cap and 75% of earnings growth. This year, the top 10 account for 38% of the market and 50% of earnings growth. Next year, we would expect to see a little bit more of that diversification, as, the earnings base for the max seven or no, max well, 10 or higher. So you don't expect the companies to continue to kind of beat earnings estimates, all the time. And that's why, again, you know, we, when we look at opportunities, we've been seeing more kind of valuation opportunities, capital appreciation opportunities outside of The US. And you can see kind of the leaning by in the fund, by region here. So that's kind of how positions are built, Michael, in the fund. You know, it's really kind of starts bottom up, and then we have these discussions on how, you know, comfortable we are with those, with the weightings in the different regions. But I think right now, we feel pretty comfortable with where we are. Yeah. That's great, Noriko. Thank you very much, and thanks for doing a deeper dive on that. I'd now like to transition to a broader discussion on the state of the markets as it relates to both of these portfolio and, both both of these portfolios. Enrico, where you kicked us off there is is a great primer. Mark, transitioning back to you. Could you walk us through how the various regional markets have performed this year and versus what most market prognostications kind of expected. It really hasn't worked out the way that most people thought at the beginning of the year. And if you could walk us through that, I'd appreciate it. Yeah. I I think maybe we're we start with a slide that begins at the beginning of '25. Maybe we need to reflect at least for a minute on how good '23 and '24 were. Certainly concentrated results in a small collection of stocks in The United States. The US markets were stronger than the rest of the world. And so I think we would have said the chances of that dynamic continuing for an extended period of time were were small. You would expect some improving breadth, and greater potential for leadership in other parts of the market. But I don't necessarily know that anyone here would have drawn these lines that you see on the page as an example of predictions. And so, you know, we we've I'll throw out some broad numbers first. US markets as measured by, the S and P through the October, we're up 17%. Outside of The United States, but not including emerging markets is up 26 over that time frame, and emerging markets are up 33%. So, I I I think, importantly, we might have predicted subdued returns, but when we talk about the magnitude of returns like this, I I think that's pretty special and exceeding expectations, especially in light of all of the noise that I'll call it that could have changed the trajectory of equity markets around the one around the world. We certainly continue to have geopolitical conflict, whether you're talking about The Middle East or China, and, or, Russia and Ukraine as a couple of examples. Where I happen to sit closer to Washington DC, you've certainly had a number of policy decisions, particularly around tariffs that would have had the opportunity to derail equity returns along the way. But while we've seen some volatility, the fact that we've got these double digit returns that we have and just as importantly, breadth is coming from, different places than it was over the last couple of years, I think is, one, encouraging, and I think it's also very different than what would have been expected. Yeah. Very much so, Mark. Thank you. Thank you for highlighting that for our audience. And it's sort of I'm I'm meeting the witness a little bit with Mark, Noriko, with this next question for you. I think if we pulled most advisers and investors on which regional market the top 50 stocks per year for the last ten years were domiciled in, most would answer The US. However, that just isn't the case. So if you wouldn't mind, could you walk us through, why it's important to invest globally or internationally? And perhaps, if you're comfortable, highlight some of the opportunities you're finding outside of The US. Yeah. Great question, you know. I think it's really because, when you look at companies, it's where earnings growth is coming from. You know? And sometimes it could be, from your own, domestic market. But if you look, over the past kind of ten years, a lot of the earnings growth has actually been from, emerging markets including in China. And the companies that have benefited from from that growth has been, basically all over, you know, global companies, including companies in The United States. So many companies in The US, have, you know, over 30% of their, earnings growth coming outside of The United States. So for us, the focus is really just not on, their domicile, but it's really on where are the companies growing. Where are, you know, where are they finding opportunities? Where are, we seeing earnings growth? It had been kind of in, emerging markets for a lot of developed, companies. You know, where is that going to be over the next, you know, next several several years? As we see kind of, China reaccelerating, I think, you know, we'll expect to see, China's been a little bit of a difficult market over the past year and a half, but, you know, we do see improvement there. We're also seeing a number of companies, restructure, especially, globally. You know, there's a focus on restructuring operations, being a little bit more operationally efficient, focusing on markets, core markets where you can drive growth. And, and so we're seeing, you know, capital appreciation opportunities in a lot of different sectors, but particularly outside The United States. That's great, Noriko. Thank you very much for sharing that. Sri, I'm gonna pause for a second and just see if there's any questions that have come in, either through the chat or, online, from any of our audience. Just wanted to check to make sure that we're temperature checking for questions. Yeah. There's a question. And and just as a reminder to to the audience, if if you would like to ask questions of of any of the panelists, there it's the q and a tab on the player page. Please feel free to, to put your questions in there. It's actually just a it's building on what Noriko was just talking about, but specific to Europe. I think everyone talks about it. I think the questions around the ilk of do do we still feel like there's room to run? And are there any particular areas in Europe that that excite that excite New Rico? Yeah. You know, so, Europe has been a great market this year, and I think that, you know, we've talked a lot about, in the past about European banks, financials, but we're also seeing, you know, attractive opportunities in European utilities. And I think, you know, again, these are sectors where our analysts identified, several years ago that there were going to be growth opportunities, earnings growth opportunities in these sectors because of restructuring businesses, new management teams who had come in, kind of shrinking footprint to grow profitability. And with the financials, what's happened is, you know, they've you've seen a rerating from, a price to book of about point four times price to book to about now point eight to one times price to book. And you've been putting that into context of, you know, comparing to, like, a JPMorgan, which is probably one of the best banks globally, that's, you know, JPMorgan trades at about 2.3 times price to book. So valuations have come up, Shari, but not to levels where we think they're super demanding. And, same with utilities. You know, we're also seeing, European utilities are starting to invest in CapEx. And when you see that, because they're investing in renewables and they're investing in other, growth opportunities, and when you see that while they're also being much more operationally efficient using AI to leverage data, And, as as you do that, you know, you're also, again, seeing, earnings, you know, kind of come back to these companies. And, so, again, one of the reasons why these sectors have both done well this year is that, they have both beaten their earnings estimates by between eight to 10% this year. So the market hadn't been expecting them to do so well, but we expect, again, because valuations are not demanding, and we continue to see, some growth in, total returns for the companies over the next several years that they can, continue to be, good investments and holdings for us. Thank you. Thank you, Noriko. Very helpful. Thanks, Sri, for the question. I'm gonna ask a couple of more, but if there's more questions coming in, please reach out, on the chat. Sri will be be sure to field them and share them, in our conversation here. Obviously, very important to hear from you in the field, and, we'll go from there. Transitioning, sort of building on actually a little bit, Noriko. A question for you, Mark. Dividends play a very important role in both of these SMA strategies. Can you talk about the impact of dividend payers in the SMA's and how they may have a dual purpose in these uncertain times? Yeah. I think it's a wonderful question in terms of portfolio construction given around what our objectives are in the portfolio and then maybe opportunistically where you could see some greater returns, over the next three to five years. So let me start with the portfolio construction part of that first is that history shows that dividend payers tend to hold up better in challenging markets than non dividend payers. So when we have that protect and prudently grow set of objectives that I I shared earlier, being able to find securities that hold up better when markets are challenging is particularly important to us. So that leads us to dividend payers. We look for them. But, what I would also share is that what is not important to us is the amount of dividend. It is the existence of a dividend. And so let me explain that a little bit further. We're not looking to find, companies that pay an above average dividend per se. We're not trying to produce income in this portfolio. That's not the objective. The the benefit of the dividend payer in the portfolio really is about its resilience in down markets. So the portfolio construction aspect of dividend payers in the portfolio, again, is about the existence of the dividend. While a greater percentage of this portfolio than the benchmark pays a dividend, as far as the dividend yield itself, it's actually less than the benchmark for both the global and the non US or the international portfolio. So we have lots of dividend payers, but they're not necessarily high dividend payers. Again, on average, they tend to be just a bit a little bit less than the market as a whole. The second part of this is about the the the concept of the opportunity for the dividends. And dividends have clearly been out of favor for a long period of time. We've been in a market for fifteen years, basically, that was driven by growth stocks, if you will. Those that either did not pay a dividend at all or paid a very, very small one. And valuations for those stocks was, kind of progressively increasing, relative to the market's long term average, where the companies that have been more consistently paying a dividend, their valuations have stayed relatively the same. And so if we look in terms of the opportunity and where we can find the greatest attractive valuations, more often than more often than not right now, we're finding that in companies that are those dividend payers. Noriko mentioned the example of the utilities. They tend to be above average dividend payers. But it's a I I think it's a great example of places that we're finding attractive opportunities for appreciation, not just the ability for them to pay a dividend that's greater than normal. That's great, Mark. Thank you very much. And, obviously, reinforcing the protect and prudently grow expectation of these portfolios, playing a major role in that and, obviously, what makes them, core solutions and active at the core in in that regard. Noriko, I was gonna ask you a question about European banks, but we our one of our audience members sort of already beat us to it. Could you, if you wouldn't mind, maybe going off piece here a little bit, how do you think about dividends? Are they important part of consideration in terms of your sleeve of the portfolio? How you're investing within these strategies? If you just you know, shed some light on how you think about that when when allocating capital within your sleeve. Sure. You know, I love dividends. And the reason why I love dividends is because I like companies that are generating free cash flow. Right? And so, basically, the companies that can tend to, have good dividend policies are ones where the businesses generate free cash flow. The free cash flow is then used to, from a capital allocation perspective, you know you know, either they invested back in the business, or they do some m and a and they also pay out dividends to shareholders. And, you know, we typically, I typically gravitate to management teams that can do a combination of all of that. And, and so dividends really, provide an, you know, additional boost to total returns. So when we talk to our analysts about, returns for companies, we're just we're not talking just about earnings returns. We're talking about total earnings returns. So it's EPS plus dividend per share. And, so that's really how I think about total returns for companies. And, you know, my goal is to, co invest with management teams that kind of think that way as well. That's great, Noriko. Very much appreciated. Thank you for, thank you for sharing that. Shree, I'm just gonna pause quickly. Have there any more questions come in, from from our audience across the country? Just just one additional question, Michael. This will end up being for you. It's just, you know, I guess, the the makeup of the holdings, we've gotten this before and we are a vehicle agnostic organization. But between the fund, SMA, ETF, you wanna wanna just, you know, quickly just, touch on that. In terms of the the number of holdings in each? Yeah. Just the differences between the vehicles. So well, so because the SMA portfolio is a beneficial ownership security portfolio where the adviser, when placing the, allocating to the portfolio, the client actually owns the stocks. And because of ADR interlisted considerations in that regard, it tends to be a more concentrated portfolio, much more, less than the portfolios themselves. So amongst the, the portfolio management team, and it is distinct a distinct team from the Global Equity Fund consideration, it tends to be between 60 to 80 securities. And as I understand it, most SMA platforms around the world will not support a security level greater than 80 securities. So the portfolio will be built with high conviction ideas amongst the managers themselves. And then there's a if there's a very small tail, it will keep it under 80 secondurities. But the average tends to be between 60 to 75 secondurities in total. When it comes to Global Equity Fund and its cousin strategy, the ETF, that portfolio is built, first off, in terms of high conviction ideas, very similarly. It's long term total return, however, not prudent growth of capital and capital preservation, if you will, or protect and prudently grow as Mark mentioned earlier. That portfolio can be anywhere from 180 to 220 secondurities. And And the reason why is the research portfolio, which is 25% of that fund on top of the five or six portfolio managers on global equity portfolio fund, they will build their high conviction ideas and get into a very high, high level. But the way we put it is there's no one person on that portfolio that manages more than, say, 45 to 40 securities, and a high number of the analysts running where from zero to four. So there's high conviction across each individual. It's just that there's many individuals on those portfolios themselves. When it comes to the ETF, just very briefly, because we run a liquidity overlay relative to the fund itself, it will have typically less than a 100 securities. Now it's not one to a 100 within the fund. It's the most liquid securities across, let's say, hypothetically, a 180 names currently in the global equity portfolio. Because you have that intraday liquidity within the ETF, It's based on the liquidity provision, not a size provision, if you will. So hopefully, that helps clarify it a little bit, Sri. I can drill a little bit deeper at the end, but, hopefully, that's helpful. We talked about, obviously, portfolio construction active at the core, protect, improve, and we grow. You know, the in the benefits of the core nature of this strategy. Now and not to sort of get into prognostication here a little bit, but we were recently in our London UK office with advisers from across Canada. Several of the portfolio managers at that conference suggested that although economies are slowing down, recession risk appears to be low. Rates are coming down in The US, they come down in Canada, and they're coming around down around the world. Noriko, if you don't mind, I'll come back to you. How are you assessing market risk and opportunities as you look out over the next twelve to eighteen months? And are you positioning for one or the other as a result? Yeah. Yeah. So I think that there's, long term, you know, medium and short term changes and then longer term, you know, changes. And, I I do believe that we're in the middle of a fundamental restructuring, of geopolitics on politics, military, and also trade. And we we will continue to see kind of the transition of complex supply chains, that have dominated global trade to date. You know? And this didn't just start this year. It started during the first trade policy the policy shifts in, what was it, 2018 or so? And then it was accelerated during COVID. I don't think it means less trade. I just think it means that we're seeing a shift in trading partners and more, regionalization. So our investment teams have been focused on identifying, like, what is short term, what will have a longer term impact, and which companies and countries will be negatively and positively impacted. Just in terms of short term risk, like, it is hard to see expanding valuations in The US from here. I think, you know, despite signs of, kind of rising inflation with the latest '25, you know, basis point cut in rates. I think the Fed is signaling that the labor market is, you know, is a little bit more of a concern. The unemployment rate has been increasing very slowly since 2023 from about 3.4% to about, slightly over 4.4% now. So but because of the unprecedented level of market volatility and lack of clarity, you know, companies just haven't been investing as much this year. And we're also seeing a lot of companies holding back on hiring, which is also impacting younger, employees. And I think that one risk is that US consumption gets weaker during you know, due to the tariffs and in and inflation while employment weakens. And I agree with my colleagues. I don't think that we will end up in a recession, but it could mean a slowdown in The US economy. And and I think the market is really not, you know, priced for that. So what I have been doing is, kind of stress testing my portfolio, making sure that, I have more. I continue to kind of, have exposure to companies that I think are a little bit more defensive, and, and, you know, when we will test the portfolio when we have down days to see, like, what holds up and what doesn't. But we are using, some of the volatility to continue to build positions and companies that we really like that have been expensive in the past and maybe slightly less expensive than today. That's great, Noriko. Mark, anything you'd like to add to that in terms of some color as to how the SMA strategies are balancing opportunities and risks over the next year and a half? Yeah. I one one of the great things about my job is I get to observe all of our portfolio managers and listen to their various viewpoints, and try and identify if there's a common theme around them. I guess what I would start with is we need to remind the audience that we are a bottom up organization where we build our portfolio by identifying attractive opportunities at the stock level. It doesn't start with the top down view. And so I I would I would add to that by saying the general view that I hear is of being constructive. And I think Noriko shared that, yet you also heard her say there are some reasons to be cautious. So I find a steady flow of ideas from our investment analysts, that are attractive ideas to invest in, and we feel like the long term direction should be positive. But in the short term, there could be some potential bumps along the way that we need to be aware of the possibility for that. Specifically in the global portfolio, bring a couple of things to mind that might bring that to life a little bit. There are three sectors that stand out to me in that portfolio that we have less representation in than our benchmark does. And it's maybe what I would call the three growthiest sectors in the market that would be technology, communication services, and consumer discretionary. And so I think that's a reflective of where valuations are within those sectors. We're finding less ideas there and more ideas in the other places where, again, Noriko gave some great, great examples for. The other, and I'll be more specific, is the Magnificent Seven. Saying again, they did so well in 2023 and 2024. Many investors, I I think, came to a conclusion, well, that's all I need to hold. In the global portfolio, they are, weighted about half what the benchmark weight is. One of them, we don't hold at all. So six out of the seven we hold, but our our weight collectively is meaningfully less. And, again, I think that is a reflection of valuation, relative to the opportunities we see and the potential cautions that we should take in investing in those companies with a protect and prudently grow kind of mindset. That's very helpful, Mark. And, you know, thank you for sharing that. And I just and it actually builds on what I wanted to ask Noriko next. One, both at a high level and at a granular level, you know, we get questions about AI and specifically valuations quite literally every hour, every day in the field and, you know, how how Capital Group is both feeling and managing about that. There is no house view, obviously. Right? Individual reviews are reflected in all of our portfolios, especially these or not particular to these, but, including these. How do you think about AI broadly, Noriko? And how are you positioning both in that space and maybe away from that space? Yeah. We we also get that question almost every day. And, ironically, we just had hosted an AI summit, that Capital, put together, in San Francisco last Friday. It was with all four of our investment teams and, included, Sam Altman from OpenAI, Dario Amade from Anthropic, a number of VCs, Microsoft's CTO, and, Meta's infrastructure, lead and, the CEO of Arista. And the reason why we did that is because we, I think, generally well, I believe that AI and Gen AI is the next mega cycle for technology, and I think most of my colleagues also believe the same. You know, we're seeing this massive ramp up in in, AI and Gen AI spending. You know, tech spending as a percent of GDP is now kind of at an all time high. You know, we're seeing massive CapEx numbers from a lot of the Mag seven. And I think, you know, the big picture, like, why why is this happening? So if you think about the fact that global GDP is about a $100,000,000,000,000 and the labor portion of that is about, 55,000,000,000,000. Maybe knowledge is probably or it gets about, you know, 45,000,000,000,000 or so. So you can see that the ultimate market of AI is huge and that, you know, alone should justify, you know, at least, some of this CapEx spending. Now a lot of this is happening really fast, and, and I think it dovetails with a lot of the, you know, feedback that we've been you know, the takeaways that we had from the summit. But if you think about, and which is that, you know, the productivity of these tools is, growing kind of exponentially, and the scaling laws for AI are exponential. So, you know, what the tools can do today is, you know, several times, you know, more powerful than what they can do, you know, in the past. But, when you talk to the model, you know, the companies that run the models, they will say that in one year, their models will be, you know, about two x more productive. You know? And, again, we're already seeing, just how much these models can do. And now it's not just about crunching, information and crunching the data, but it's about coming up with new information, like new, you know, even new science, new for biotech. So it's, you know, it's kind of a, you know, a big change in potential business models, for some companies, and that's that's kind of why we're seeing this massive investment. Now, you know, just in terms of, why, you know, is this the right time to be investing in the companies? I think it's really a company by company, you know, very specific. Again, you know, as Mark was alluding to, you know, we look at companies bottom up. We see whether or not this makes sense. I think for some of the companies, we see kind of a maybe a little bit of a headwind on returns over the next couple of years based on, you know, the amount of CapEx that they're spending. For others, you know, it actually makes a lot of sense because, you know, the CapEx that they're spending, actually, they can they can use all of the, the work that they're generating just internally for their own, company, and don't have to actually commercialize it, although they plan to. So it's, again, you know, we think this is going to be significant. It's just the beginning. As a company, from a management committee perspective, what we are trying to what we are focused on is, you know, how how do we, get all of our associates to, you know, participate in AI, adopt AI, become more fluent, so that, so that and more agile so that, again, we can, you know, leverage this technology over time. That's great, Noriko. Thank you. Mark, Noriko, thank you very much. Appreciate you highlighting both the structure, the history, the quality, and the complexion of, the portfolios along with your outlook and the nuance around how the portfolios are positioned and what to expect going forward. With that, Sri, I'll turn it back to you. Thank you. Thank you, Noriko. Thank you, Mark. Thank you, Michael Englesby. And thank you, Mike Boyd. And thanks thanks so much to our audience for taking the time. I know we're up against it, so I'll make this really quick. Really hope today from an audience perspective that that all of you really see the connection point between, our practice management capabilities in terms of helping you articulate the value of of your proposition statement and what you offer and your clients in this total cost reporting CRM three environment that we're in. You heard Mike Boyd talk about the high net worth teams really focusing on outsourcing. And what we're seeing here in Canada is what we heard on the part two of the presentation, which is on our estimates. And we are really seeing folks lean into what you heard multiple times from the panel, protect, prudently grow. That is what we're striving to do at the.