DIGIT Digest: Meet the Chairman

In the latest DIGIT Digest podcast, we hear directly from David Barron, Chairman of Dunedin Income Growth Investment Trust. David shares his first-hand experience of chairing a trust, talks about how the trust has evolved since he joined the board in 2016, and much more.

Transcript

00:00:00:00 - 00:00:09:22

Podcast from Aberdeen Investment Trusts.

00:00:09:24 - 00:00:50:13

Rebecca Maclean

Hello and welcome to DIGIT Digest, a podcast where Ben Richie and I discuss what's happening in UK and European markets, and what this means for Dunedin Income Growth Investment Trust. Today we're delighted to be joined by David Barron, the chair of Dunedin Income Growth. David's been chair since 2017. Now welcome, David. 

David Barron

Thank you very much. I'm delighted to be here and pleased to have this opportunity to talk to you today, to talk to the listeners, about what the board does and how it's beneficial to the shareholders of DIGIT and perhaps to be able to put a little bit more colour on how we work, what we do, and the sorts of things we talk about.

00:00:50:13 - 00:01:19:19

Ben Ritchie

That's great. David, maybe we could, kick off, with a little bit of your background, how you got into the investment industry, how your career has unfolded, and I guess ultimately how you ended up on a number of investment trust boards.

David Barron

Yeah, sure. I'll be delighted to. So, as you say, my background is principally in the asset management industry. First and mainly with Robert Fleming and then with JP Morgan Asset Management, which was the successor, and many investment trust investors will know

00:01:19:19 - 00:02:01:24

Robert Fleming is a name almost synonymous with investment trusts. And indeed, the original Robert Fleming has a connection with DIGIT and its foundation back in Dundee. So, most of my career with JP Morgan Asset Management and then subsequently as a director and then chief executive of a small, listed firm, Miton Asset Management. So those roles were largely involved in building businesses, working with clients, looking for new product opportunities and, you know, taking businesses forward, but with a heavy focus on investment trusts.

00:02:02:01 - 00:02:41:16

And I think I’ll draw out a couple of things I was sort of able to observe in that role, particularly at, JPM and Fleming, where we managed around 20 trusts, a lot of very good directors and chairs, and many were senior asset management personnel, senior people from other industries, diplomats, economists. And you could really see what worked well with boards, which boards were effective, how they were effective, how they got a constructive positive response from the manager when they exerted pressure.

00:02:41:16 - 00:03:15:02

It was a good learning from a group of, you know, 130 highly qualified individuals. And, you know, as the board of DIGIT, what we want to do is really get the best out of abrdn and the individuals who work with us, and we see a lot of abrdn people over the cycle of board meetings and really keeping striving to push and cajole and encourage these people to deliver really good outcomes for DIGIT shareholders.

00:03:15:04 - 00:03:38:23

So, I think I learned a lot from that experience with JPM. I also worked in a smaller firm, as I mentioned, Miton and I think that gives you a very different perspective on the asset management industry. Much of that focus was trying to develop the business either by acquisition or building out teams and strategies,

00:03:38:23 - 00:04:01:00

and I think the key takeaway as it relates to DIGIT and chairing an investment trust was that, to succeed as a firm like Miton, a smaller firm, perhaps a challenger firm - you have to set out very clearly how you're different and how your managers, how your investment approaches are different and what advantages you offer to shareholders.

00:04:01:00 - 00:04:32:15

Because as a smaller firm like Miton, you couldn't really succeed by running a low tracking error fund much closer to the benchmark and hoping to do better than BlackRock or JPM AM, and you have to be really different, and I think there are lessons there for investment trusts. So, you know, I stopped full time work about five years ago and joined a number of investment trust boards.

00:04:32:17 - 00:05:07:16

I'll make a point of defence here for investment trust boards. You know, it's quite often characterised as a small group of individuals with close connections to the industry. I mean, I think that's unfair, and I think, with any business, you need a core of people on the board who have an expertise in the key subject, the key offering of the company, and in DIGIT’s case, in investment trusts case, it's great investment management.

00:05:07:16 - 00:05:49:08

So, you need people who understand that, and if they understand it better, they can hopefully exert pressure more effectively, be more constructive, get better outcomes for shareholders. And the DIGIT board is a great mix of, individuals. We've got two very senior investors who have led big investment teams in serious organisations. We've got somebody with a strong background in finance, risk, overseeing all that side, which is an important part of our work,

00:05:49:10 - 00:06:18:05

and then we've got someone with very strong background in communications. So, you know, I think we do have a good mix of skills, but for me, it was very much, it's an industry I'm passionate about, so staying involved was really something that I felt was quite natural. 

Ben Ritchie

And David, when you think about some of the other Trust’s where you are on the board today or you've been in the past, how would you maybe contrast the sort of different dynamics?

00:06:18:05 - 00:06:57:22

Maybe different houses have different approaches to how they handle these things? Or the different groups that you’ve worked with?

David Barron 

Yeah, I think every investment management house I've worked with has different cultures, different philosophies, certainly different investment approaches, and there's no universal answer to what is the best approach. So, I think, abrdn very much has a long heritage in investment trusts, one of the largest managers in the UK.

00:06:57:24 - 00:07:27:16

And has a deep understanding throughout the organisation of how investment trusts work, of all the components, the three key legs to the stool, as I call it. Investment management support - so company secretarial, finance, administration and distribution, and they're really strong in all those bits. Other firms have greater strengths in one of those bits, 

00:07:27:18 - 00:07:55:14

and I think that tempers your approach. I don't particularly want to call out different firms for having different strengths in those fields but abrdn is a very rounded firm in that respect, in having good strength and knowledge in-depth across the board. And I think, you know, that's important, as an independent director with a fiduciary role to look after shareholders, on those funds.

00:07:55:14 - 00:08:30:13

So, I think with abrdn, it's a much bigger part I would think, of their overall business, the investment trust side, it’s good focus. I'm not saying it doesn't at other houses. But yeah, I think each is subtly different, but I think as a board member, you have to adapt around that.

00:08:30:15 - 00:08:53:08

Rebecca Maclean

Yeah. Great. So maybe if we focus a bit more on DIGIT then, I mean, it's the second oldest investment trust. The objective is to deliver growth and income and capital by investing in high quality companies, also companies which meet the sustainable investing approach, which has been set by the board. The focus of the trust is at the moment on UK and European companies.

00:08:53:10 - 00:09:20:15

One thing that I find remarkable about the investment trust sector is its longevity, so over 150 years old and, you know, one of the reasons why it's endured is because of the flexibility and the resilience of the structure of investment companies. And, and we've seen that in the case of DIGIT evolving with the times and changing the mandate in order to suit what is relevant for that day.

00:09:20:17 - 00:09:41:12

David, you joined the board in 2016 and you became the chair in 2017, and there have been a number of changes to Dunedin during that time. So maybe, I'd be interested in your reflections of those changes and why they came about.

David Barron 

Yeah, I think that's a great question,

00:09:41:14 - 00:10:11:08

and I think it also gives us a chance to talk about how boards can make a difference as well, which is, you know, again, I come back to this point, it's often cited that it's one of the advantages of an investment trust to have an independent board. But unless there's very high profile events like changing managers, for example, it's often perceived that the boards really aren’t doing that very much,

00:10:11:08 - 00:10:40:00

and maybe just going through some of DIGIT’s history, we can point out how that did work. So when I joined in 2016 I think it was, I would describe DIGIT as a much more conventional UK equity income portfolio. So, amongst the top ten were HSBC, Shell, Vodafone, as now, Unilever and Astra were there,

00:10:40:02 - 00:11:10:18

but also, there were what I would call income trust favourites; Provident Financial, some of these higher yielding UK names. And it was much more like the benchmark. Now I think our active share is 70 plus percent, so we’re 70% different. It was significantly lower then. The shareholders were different then - we had a major UK life company, in the top three shareholders.

00:11:10:20 - 00:11:46:24

We had a large national wealth management chain; I think as the second largest. So, we had a different portfolio, different investors. But what we were doing, we weren't doing particularly well, if we're totally honest about it. We suffered quite a number of dividend cuts. I remember Provident Financial, Tesco's. So, you know for an income fund that's not a great outcome

00:11:47:01 - 00:12:20:05

And I think this points to the time when boards have to sort of take a view, and there are times when the board role is very much managing business as usual. However, there are times when boards have to be bold and have to work with the manager, maybe not with the manager, but to instigate significant change. And I think this time when, Ben and the team became much more closely involved, it was one of those.

00:12:20:07 - 00:12:52:23

So, the first move away was from the more traditional approach, buying high yielding UK equities, to the current approach, much more focus on total return, sustainability of the income, the quality of the balance sheet and the more concentrated portfolio. And, in getting to that change, we were able to utilise one of the key features of investment trusts, which is they are structured as companies, and they have reserves.

00:12:53:00 - 00:13:21:19

And we signalled a willingness to use the reserves, of the company, the revenue reserves to maintain the income payment while we transitioned the portfolio through to where we are now. And I think the second bold move we made collectively was to formalise the sustainable overlay, I think that was in 2020. So, DIGIT today from nine years ago: shareholders are different, the portfolio is different,

00:13:21:21 - 00:14:01:08

the focus, as you mentioned, income growth, total return is different. And the results of that were good in the first instance, and I think it's a real example of how a board can actually grip a situation, work with the abrdn team and come up with something that hopefully offers significantly better outcomes for shareholders, makes DIGIT a differentiated proposition, and trades closer to asset value, which is where we want it to be.

00:14:01:08 - 00:14:38:19

Now, we can talk a little bit more recently about why that performance trend has not continued, and why the discount is now in a place where I don't think we want it to be, we certainly don't want it to be - it's too wide, but I think it's a good example, and I've heard a number of institutional shareholders praise it as, sort of, an example of how boards can make a difference to, you know, the five of us working together to collectively, improve things.

00:14:38:21 - 00:15:04:18

Ben Ritchie 

Thanks, David. I think if I sort of think back - it's quite a long time ago now, back to that time it was, I think it was very much a case of different people on the board bringing different things to that conversation, wasn't it? So, you had you have the likes of, John Carson, who was I guess the sort of temporary chair at the time, bringing his experience maybe of Baillie Gifford, of being a bit more of a growth orientated organisation,

00:15:04:20 - 00:15:29:19

and his perspective on that. And, you know, Rory, who had been the chair before had sort of kicked that process off. And then there were a number of others, sort of coming to the board; Elizabeth Scott, yourself. And you know, from memories of that time there were, you know, robust discussions, but I think centred around, you know, coming up with a proposition that would put DIGIT into a different place.

00:15:29:21 - 00:15:57:07

And I think, I mean, it would be interesting to get your take, David, on, you know, when you think about an investment trust or investment company, what do you sort of think defines sort of success for that? Would be an interesting question.

David Barron 

Yeah, it is. So, success starts with having a number of clear building blocks in place,

00:15:57:09 - 00:16:34:07

and I would say a clear approach, that is offering something that investors clearly value. I think you have to execute it really well. So, you have to deliver good performance over the long term, and investment trusts should be long term investment vehicles. I think also, you have to set out very clearly the investment trust proposition, if I can put it like that, without sounding too grandiose.

00:16:34:07 - 00:17:04:05

But what I mean by that is; in buying an investment trust, investing, putting their savings into an investment trust relative to other forms of collective investment – investment trust holders are, to my mind, taking on two potential different types of risk. One is illiquidity risk. So, if they're large investors they may not be able to sell their holdings at

00:17:04:05 - 00:17:51:14

once. The second is discount risk. Now, those are manageable for many investors. But you have to set out on the other side what the clear benefit of that is. And that could be for example, in DIGIT’s case - using gearing, using the balance sheet structure to smooth, the revenue account. So, using all the enhancements of the investment trust structure, holding less liquid securities, having, in the jargon, no flows alpha - so not having to deal with too many inflows and outflows at a time that may not be appropriate.

00:17:51:19 - 00:18:21:16

So, you've got to take advantage of those. There are other things. DIGIT doesn't necessarily use. It could be buying less liquid investments, but you've got to set out very clearly the advantages of the structure. If you do those then a successful investment trust will deliver good performance, have a reasonable prospect of trading at or around asset value

00:18:21:18 - 00:19:03:10

and will deliver something that hopefully cannot be delivered in different forms of collective. And to me, that amalgam of those, makes a successful investment trust. And then, of course, you have to communicate very clearly to your current shareholders and people who may be interested - what you're doing, what the advantages are, and why.

Ben Ritchie 

I think it's also one of the things that, and having worked, with a number of investment trusts over the years, some very closely, others coming in, my, I guess role as heading up the team here.

00:19:03:12 - 00:19:25:08

One of the things that always strikes me from the Dunedin board is that everybody has quite a clearly defined role, as you set out. So, you know, with Jasper on the sort of finance side bringing his sort of corporate finance background to that. I think Howard has brought a lot of rigor from the investment side, with his, CIO hat from JP Morgan.

00:19:25:10 - 00:19:44:14

I think, again, with Christine bringing expertise in a different form of the investment world, particularly on the sustainability side. And then I think the thing that's also been, you know, very different, perhaps to some of the other trusts is Gay Collins on the board bringing that kind of marketing and PR and branding expertise, which isn't something you always find on the board.

00:19:44:18 - 00:19:58:05

David Barron

Yeah. 

Ben Ritchie 

And certainly in my experience of many conversations over the years of annual marketing budgets that's normally seen as an opportunity to cut costs and in the conversations, quite often it's a combination of how can we spend more money and how might you be able to do more for the trust.

00:19:58:05 - 00:20:19:20

So, I think it is it is quite an interesting way that everyone's evolved their roles in that. And I think thats what's worked really well. It's one of those things as well, David. I mean, clearly there's a lot of headlines about change in the investment trust industry, as we currently sit. And in fact, there's probably been headlines about change in the, in the investment trust industry for many years

00:20:19:22 - 00:20:41:14

But it would be very interesting to get your take on some of the sort of big trends that we, that we see at the moment. 

David Barron 

Yeah, I mean, I think change has always been a feature of the investment trust industry. I mean, as I outlined over the past nine years, DIGIT itself has gone through a lot of change.

00:20:41:16 - 00:21:14:24

Markets have gone through a lot of change. When, you know, when I joined the board, the UK market was, I think 8% of world markets, okay, currency and things. I think it's now 4%. So, there’s change at the macro level, there’s change at the regulatory level and there’s change through technology, and all those impact investment trusts. So, I think, you know, it is a feature of investing, of markets, that there will be constant change.

00:21:14:24 - 00:21:51:12

And I think trusts have to adapt. You know, when I first got involved, trust couldn't buy back their own shares. So, there was no real mechanism to manage mismatches - short term mismatches, longer term mismatches between supply and demand. So, you have to adapt to this. And I think, the current changes I think are really driven, I suppose in my mind, by two big things.

00:21:51:12 - 00:22:25:03

One is technology and the availability of other types of collective. So that could be, certainly we've seen the rapid growth in passive investing over 15, 20 years. We're now seeing ETFs, ETFs with an active bias coming in. So, technology drives product innovation. And I think trusts, and I'll talk a little bit about how they have to respond to that.

00:22:25:05 - 00:23:04:09

Regulation drives different consumer and buyer activity. So the consolidation amongst what was once the core audience of wealth managers is very much, to my mind, a factor of regulation. Looking for efficiencies. Running portfolios in a similar way. But equally, again, I don't want to sound too old,

00:23:04:09 - 00:23:33:09

but, you know, when I started going around talking to investment trust shareholders, I was going to see big institutional life companies. So, changing shareholder groups is not a new thing. It's something the industry has to adapt to, and there may be periods of shrinkage. But I think this is probably a period of quite acute and rapid change, perhaps more so than in the past.

00:23:33:11 - 00:23:59:07

And, you know, I would come back to those core building blocks as to how trusts respond, you know - what are you trying to do? Why is it justified in an investment trust? Are you doing it well? And are you communicating clearly with an audience who values that? Now, if you come back to those, I think you have got a decent chance of success

00:23:59:09 - 00:24:29:04

You probably have to recognise as well that the investment trust is not necessarily the right collective for all investors. There will be some for whom you know, where immediate liquidity, the discount risk is just unacceptable, or reasonable discount risk is unacceptable. And they may not be the audience for trusts. But I do think, I think it's that focus on those core messages, those core building blocks

00:24:29:10 - 00:25:01:12

that is key. Back to your point, Rebecca, I'm not complacent. You know, investment trusts have endured for a long time, but they have to keep reinventing, refreshing and being relevant, and consumers now have much more choice, many more consumers, many more savers - I should use the word savers, perhaps investors.

00:25:01:14 - 00:25:28:01

There's a democratisation, if you like, of the savings industry are going without an advisor, your own firm, and one of the larger platforms. So, accessibility, it’s much easier for people. So I think - are we doing something relevant? Are we doing it well? Are we communicating it clearly? And are we attacking an audience that values what we're doing?

00:25:28:07 - 00:25:55:14

That's how I would look to respond.

Ben Ritchie 

Because it certainly seems as though, well, there's a lot of angst in industry currently. If I go back 3 or 4 years, who would have thought about the transition from sort of wealth managers being our primary investor base to individual shareholders, primarily through the likes of interactive investor, AJ Bell, Hargreaves, through these platforms.

00:25:55:16 - 00:26:23:03

And then actually there's a big new audience that's sitting there, which has been somewhat disrupted, perhaps by some of these other changes, rising rates, some of the discounts that have widened. But actually, in the medium to long term, there's probably really quite an attractive demand pool sitting there. 

David Barron

Yeah. 

Ben Ritchie

But it does require the trust to sort of pivot to focus their efforts in terms of products and communication into that marketplace.

00:26:23:03 - 00:26:53:20

It's a little bit frustrating perhaps, that in the current environment, there's a lot of, I guess, nervousness around the industry, but actually perhaps not that far away, there's also, you know, really quite an attractive dynamic that could sit out there. 

David Barron 

Yeah, I would, I would agree with that. I think there's clearly you know, yeah there is a higher level of negativity or angst at the moment.

00:26:53:22 - 00:27:26:05

But again, you know, I would say you're right. The addressable market for investment trust probably is increasing over the medium term, and so that that ought to be a matter of some encouragement actually. 

Ben Ritchie 

I think you've got that dynamic. I was seeing, AJ Bell yesterday with our investor hat on, and they're talking about in the UK, you've got 1 trillion at a 3.5 trillion of assets are now on savings platforms,

00:27:26:07 - 00:27:53:10

and you've got a world, which is perhaps creating flow of investment trusts through the consolidation of large wealth managers. But that's also creating lots of small boutique wealth managers who are probably the perfect buyers focusing on specific investors with investment trusts. And then as people start to manage their own finances, the attraction of investment trusts, the independent board, the relatively cheap level of fees, etc. start to become quite appealing.

00:27:53:12 - 00:28:12:12

And it's that sort of sense of transition, which is created, perhaps helped exacerbate some of the discount issues in the industry, but that not too far away perhaps, is a situation which might look a little bit rosier if one can put, as you've been talking about David, the right proposition on the table for those investors.

00:28:12:15 - 00:28:36:24

Maybe it would be interesting if we maybe just sort of touch on the, the sustainability mandate for the trust. Because that's something which it would be fair to say we've had some degree of criticism about, perhaps if one was being unfair with the rearview mirror firmly being attached, but it would be interesting to get your sort of take on that, maybe the thinking behind it and then how you see that evolving going forward.

00:28:37:01 - 00:29:07:12

David Barron

Yeah. I mean, I think the thinking behind that was, you know, going back to the whole length of the changes, the whole timeline of the changes that DIGIT went through, it was very much an evolution. You know, it was, analysis of sustainable issues in companies was very much part of the abrdn process,

00:29:07:14 - 00:29:55:12

and I think as an income mandate, it fitted very naturally. You know, having, companies with strong balance sheets, less exposure to, you know, poor sustainability scores. It was a natural evolution, and I think we very much saw the benefits of that or the realisation of that during the, Covid years when I think I’m right in saying the income in the UK market overall fell by, say, 20%, the revenue account for DIGIT went down by 10%.

00:29:55:12 - 00:30:37:08

So, I think that lack of exposure to those types of companies, chimed and sat very naturally with, what DIGIT had been trying to do. So, you know, so I would look at it as having a number of benefits. One is, it very much sits with the mandate, naturally, with the mandate of a long-term income vehicle, where shareholders want to have confidence that the dividend is, you know, a different use of the sustainable word, but ‘sustainable’.

00:30:37:10 - 00:31:06:01

And I think there's also, a core of investors, or a group of investors who don't want to have their savings exposed to some of these companies. And I think the third thing is, I think it brings a different level of analysis to the way we look at companies, which can be helpful in terms of, overall performance.

00:31:06:03 - 00:31:33:03

So, I know it's not necessarily, fashionable anymore. It's, it's gone through, but I think it is a longer-term trend. You know, some of these businesses that have poor sustainable scores are exposed to industries that are in structural decline. When that structural decline really starts to bite, it's a difficult thing to do, 

00:31:33:07 - 00:31:57:05

difficult thing to judge rather. So, in many ways, avoiding them altogether is a sensible thing to do. So, you know, this is what makes DIGIT different, helps the investment approach. And I think it's an additional lens through which to look at companies. So, I would, I would continue to think that it was a good move for DIGIT.

00:31:57:07 - 00:32:14:05

Ben Ritchie

And certainly when we look at the rest of the market, I mean, there are many other trusts that don't have a sustainability focus that you can choose if that's what you are focused on. Perhaps we could maybe sort of just circle back onto the onto the board itself. David, how does it work?

00:32:14:05 - 00:32:50:08

What are the things that you're focused on? What are the sort of pressing topics?

David Barron 

Yeah. So, I would say there are there are a number of broad areas we talk about, and discuss and challenge, and push on and, you know, have a good debate on at each board meeting. The first I would broadly call and hopefully, you know, there is a lot of, other stuff, if I can call it, that comes across boards, but we focus on investment, you know, good investment performance is what we need.

00:32:50:10 - 00:33:28:21

So that's the first chunk of time, and what we tend to look at there is, how the portfolio is positioned, what changes have been made in the last quarter and drilling down sometimes into some of those changes, and that, you know, this is an important point to make. That's not to second guess what you guys are doing, in picking stocks, but it's to use those stock changes, those company changes in the portfolio to test, to examine, you know, is this consistent with the approach?

00:33:28:23 - 00:33:54:04

What's the thinking behind that? And then also to probe where things perhaps haven't gone as well, are there areas where, we can be suggesting that more thought is needed, a different approach. So, it's very much to illustrate rather than to, so we're looking looking at that, we talk about the outlook.

00:33:54:06 - 00:34:28:09

Then we spend a big chunk of time, looking at, distribution - what we've been doing in terms of talking to shareholders, marketing, what's happening on the share register, who's buying, who's selling. And then we have quite a lot of time to spend on, risk - twice a year we have a good, run through of the risk matrix, looking at what risks the company is exposed to, how we managing those?

00:34:28:09 - 00:35:04:14

Are we managing those systematically and in a robust way? So those, I would say are the three big chunks. And then, we also step back and continually test whether, to those earlier points we talk about, is what we're doing relevant and valuable to shareholders. I would say at the moment the biggest, you know, clearly performance in over this past year has not, not been where any of us want it to be.

00:35:04:20 - 00:35:28:22

So that clearly is going to be an area of focus and discussion. And I think what we're looking at there is what are the reasons for that? Is it explainable? Is it expected? Is it something that we need to go back and have another look at in terms of particular areas that aren't working. So that's clearly something.

00:35:28:22 - 00:36:15:07

We’ll be reporting our results to the year ended 31st of January. Last year when we reported we were, I think, top of the peer group. Things do change, but it's not where we want it to be. And I think we all have to acknowledge that. And I think, the other area is the rating of the shares, that again, is, after the changes we made, close to parity, we’re now sort of double-digit discount, which is, again, not where it should be.

00:36:15:07 - 00:36:38:24

There are some specific factors - there's been some retail selling from the reorganisation of the savings schemes here at abrdn, which I think has put more stock on the market. But I think that is something that the board is spending quite a lot of time on. So those, those would be current things.

00:36:38:24 - 00:37:02:19

I mean, obviously the dividend is a key part of our return to shareholders. So, I should mention we look at the revenue accounts specifically when we are going through the investment, how much is coming in. Are there any of the, you know, your assessment of where the dividend might be

00:37:02:19 - 00:37:32:13

at risk, higher risk. But clearly, we want it to be in the ‘green column’ if I can put it like that. And then obviously at the year end, you know, working out what the final dividend should be.

Ben Ritchie

David, in your role as chairman on the board, and as director of other trusts, and I guess in general industry experience. How have you sort of handled, periods when you've had tougher performance in trusts and perhaps also when you've been, managing managers in the past?

00:37:32:15 - 00:38:03:11

David Barron

Yeah, I think it's, not to over use the word - it's one of the most challenging situations for a board because I think, as I said at the beginning our concern is the shareholders of the trust. And we are also long term, and we recognise that active management is a long term, proposition.

00:38:03:13 - 00:38:45:03

And therefore, we have to avoid being over exuberant when performance is good, and be measured and rational when performance is poor. And I think the key is to understand why the performance is poor - is it consistent with the managers, or what we sort of sometimes rather grandiosely call - process. So, have there been deviations from the process, or is it what we would expect if there's been errors in stock selection –

00:38:45:05 - 00:39:19:07

are they explainable and consistent with the process? And ultimately you have to take a view whether you continue to have confidence in the process to deliver and so, you know, you've got to take all those factors into account. It is a challenging thing for those charged with, you know, fiduciary roles.

00:39:19:09 - 00:39:42:05

So, ultimately you have to be very rigorous about it. Use your judgment, and keep a long term mindset, is my view about that. 

Ben Ritchie 

Thanks, David, that’s great. Maybe Rebecca, perhaps we could turn to you maybe in terms of the outlook, your sort of thoughts on things from here, both that the market

00:39:42:07 - 00:40:04:11

and DIGIT.

Rebecca Maclean 

Yes. It's been a turbulent start to the year, and, you know, it does feel like the market is very short term and it's thinking and, and view of how it's addressing businesses.

We're actually both optimistic in terms of the, of the UK and in terms of the portfolio as well, because, you know, we've had a challenging year,

00:40:04:11 - 00:40:20:24

but the valuations of some of these businesses are compelling. 

Ben Ritchie 

Thanks very much, Rebecca. Well, David it just leaves me to thank you very much for your for your time today, and it's been great to sort of roam over your career, your experience on Dunedin. Certainly, from a personal perspective

00:40:20:24 - 00:40:41:11

It's been fantastic working with you over the last ten years on, on Dunedin, and the evolution of the trust. So thank you very much. Hugely. Appreciate it. And if you would like to find out more about Dunedin income growth, then you can visit our website on www.dunedinincomegrowth.co.uk  And please don't forget to subscribe to the show on your podcast platform of choice.

00:40:41:13 - 00:40:52:22

David Barron

Thank you. Thank you for having me on today.

RISK WARNING

00:40:52:24 - 00:41:19:24

This podcast is provided for general information only and assumes a certain level of knowledge of financial markets. It is provided for informational purposes only and should not be considered as an offer, investment, recommendation or solicitation to deal in any of the investments or products mentioned herein and does not constitute investment. Research. The views in this podcast are those of the contributors at the time of publication, and do not necessarily reflect those of Aberdeen.

00:41:20:01 - 00:41:46:18

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