GQG Partners Stock

Thank you for standing by, and welcome to the GQG Partners Inc. 2026 Half Year Earnings Release Conference Call.

[Operator Instructions]

This call will contain forward-looking statements, including statements of current intention, opinion and predictions regarding the company's present and future operations, possible future events and future financial prospects. While these statements reflect expectations at the date of this call, they are, by their nature, not certain and are susceptible to change. The company makes no representation, assurance, or guarantee as to the accuracy of, or the likelihood of fulfilling any such forward-looking statements, whether express or implied, and except as required by applicable law or the ASX Listing Rules, disclaims any obligation or undertaking to publicly update such forward-looking statements. Participants recording this call may use such recordings for their internal business purposes only and are prohibited from making any part of such recordings available to the public without the prior written permission of the company.

I would now like to hand the conference over to Mr. Tim Carver, CEO. Please go ahead.

Thank you, and thank you everyone for joining us for our half-yearly results. We are joined here by my partner and our Chairman, Rajiv Jain; our CFO, Charles Falck; and our Head of Distribution, Steve Ford. Let's dive right in, and if we can go to Slide 3, please. Provide the financial highlights for the period. We ended the period with funds under management of USD 156 billion. We had net outflows of the period of $15.1 billion. That was offset by about $7.2 billion in returns on our portfolios. We had net revenue of $397.2 million for the period, and net operating income of $301.8 million, each roughly 1.5% lower than the same period in the prior year.

Our board has declared a second quarter dividend of $0.0362 per share, a 90% payout ratio of our distributable earnings, and a slight increase over our Q1 dividend. If we go to Slide 4, for anyone on this call who doesn't know who we are, we're a global equity boutique. We've been around for about 10 years, and we've raised about $150 billion in that period. We tend to run concentrated, highly active portfolios. Our business is defined by a well-diversified distribution capability, well-diversified client assets by geography, client type, vehicle type, and strategy. And if you look at the pie chart on the right-hand side here, you can see that we have a highly diversified book of business across 4 core strategies, where our international equity strategy represents just under 50% of the business, or of our assets, I should say.

Our emerging markets and global equity strategies, each just under 25%, and our US equity strategy just under 10%. Our investment approach is to target high single digit to low double digit rates of return over a full market cycle, with significant downside protection and lower volatility. We have historically been successful in delivering against this, and this is what our clients expect of us. For those of you who have been on calls with me before, you know that I say that this business begins and ends with performance. If we go to Slide 5, I think it is no surprise to anyone that in the short term, our 1-year performance has lagged the index. That is in a market where we have seen sort of historically extreme market returns. That is not atypical for the way we manage money.

In other words, when markets run like this, we oftentimes will underperform on a relative basis. I think that, that also defines the primary driver of why we have had net outflows for the period, because we have had clearly some investors who have chased performance coming in and now are reversing that as our relative performance has lagged over the 1-year basis. I think it is very important to understand this contextually. If we go to Slide 6, what you see is that our 3-year returns across all strategies have compounded at double-digit rates of return. So right in line with what clients would expect of us, and frankly, maybe slightly better than we would expect of ourselves. We have done this with substantially lower volatility.

If you go to the next slide, you will see that our downside capture ratio is significantly better than our peer group, and we have lower volatility than the market. And so, what this means is that for our core client base, over the past 3 years, they are experiencing exactly what we have set out to do, what our goals are, and what they would expect of us. That does not mean that we will not continue to have outflows by more short-term oriented investors. It does mean, I believe, that our core client base, our core consultants that support us, our core institutional clients, our core platforms, all recognize what we set out to do over the long run and are satisfied that we are accomplishing that goal.

If we go to the next slide, you can see what this means to the business over the past 3 years. What we have tried to do here is show a bridge from where our assets were 3 years ago, adding or subtracting net flows, and then adding the total returns from our various portfolios. As you can see, that has led to a very robust, very resilient, very stable business.

We will get into a little bit more details on this throughout the presentation, but before we go into any more depth on this, I want to hand over to Charles and ask him to go into detail on the financial result.

Thanks, Tim. I'll start on page 10 with the highlights. As Tim mentioned, we closed the half year at $156 billion. Average FUM actually increased a little bit for the first half over last year and was at $164.5 billion. I'll touch on how that drives management fees and overall revenues on the next page as we get into a little bit more of the details. $397.2 million in net revenue resulted in net operating income of $301.8 million. And you see the strong operating margin in the chart on the bottom left, the line indicating 76% profit margin for the first half. This resulted in $228.4 million net income to shareholders. We adjust net income for non-cash items when determining the dividend, and you'll see at the top right, distributable earnings was $234.9 million, resulting in a dividend declared for the first half of $211.8 million.

On a per share basis, that equates to $0.0716 per share or $0.08 of earnings per share. With that, I'll move on to the next page to comment on a little bit more detail on what's driving the income statement. As mentioned, the increase in average FUM resulted in higher management fees. Additionally, we were also able to increase the fee realization to, excuse me, 48.6 basis points for the first half. Those improvements were, as Tim mentioned, offset by a reduction in performance-based fees, which was lower this year, resulting in $397.2 million in net revenues for the first half, a reduction of about $5.8 million in revenues or 1.4%. Drilling down on the expenses, there's offsetting trends there. Compensation and benefits, as well as IT and services increased.

The former is a result of merit increases awarded to the staff and the latter of price increases from some of our data providers, as well as the applications and services that we consume. Those increases in expenses were more than offset by a reduction in third-party distribution fees, as well as a reduction in general and administrative, resulting in total operating expenses of $95.4 million, $400,000 lower or 0.5% lower than they were for the same period last year. If we go down to the provision for income taxes, you see that, that also improved, both on an absolute as well as a relative basis, and that is due to the apportionment methodologies in some of the state and local taxes that we're subject to in the United States. So a positive development there that resulted in $228.4 million of net income to shareholders for the first half.

With that, I'll move on to the next page. Balance sheet. We continue to have a strong balance sheet, high liquidity with $168.9 million cash as of mid-year, and no debt outstanding. Moving on to the cash flow statement on page 13. We continue to have strong cash flow as a result of operations, and the predominant use for that cash is dividends paid out as well as working capital. You'll note on the bottom right, the board, and Tim mentioned this as well, the board declared a second quarter dividend of $0.0362 per share or $107.1 million in aggregate. That continues to represent a 90% payout ratio. And the dates on that will be ex and record date at the end of August, on August 26 and 27. And then a payment date of September 25.

Before I hand it over to Steve, I wanted to just take a minute to zoom out, and if you look at page 14, you see our history. This chart illustrates in the blue charts, excuse me, in the blue bars, what our funds under management was starting at the end of 2020 prior to us going public and ending with the June 30 number that we just reported of $156 billion. I think this, further to the point that Tim made on our growth and our compound growth, I think this illustrates how much we've grown over this period of 6 years and how the flows and market performance have contributed to that growth and how they also compare in relative size to our overall asset size. At $156 billion, we are within 10% of our maximum FUM over the course of our history.

With that, I'll hand it over to Steve Ford for comments on our distribution.

Thanks, Charles. Appreciate it and good to reconnect with everyone again. I want to spend just a few minutes thinking about our client base and what I believe is part of the underlying resiliency that exists, while fully acknowledging that we've had a challenging short-term period in terms of net flows. Our team has been very busy being very proactive in engaging our clients all around the world, across all channels. You'll see that if you follow our written strategies and communications at all. I'd have you think about the core client here, which I think is probably more durable than the market appreciates through the lens of that, a long-term core client. You have to think about a client that's been with us, say, 4 or 5 years. If you move to Slide 16, I think it's a very interesting way to look at it.

We talk about this usually as basic pure performance, but this is actually client experience because this is rolling 5-year periods in all of our strategies. Look at the percentage of those experiences that are above the line or below the line. There's always going to be variations in performance. As you start to zoom out and think about what's the long-term experience of the core client here, it's actually still quite positive overall. Also, if you move to Slide 17, you'll see that we continue to live up to our focus on downside protection, which is a huge element of how we think about compounding capital over time. Tim alluded to it in the downside, or more than alluded to it, showed it in his downside protection numbers and as part of that overall 3-year compounded return stream that you see.

And then if you move to Slide 18, the long-term risk-adjusted return picture remains quite positive. You combine that with, also I think, an underappreciated element is that call it 2/3 of our assets come through the wholesale channel. That is through our own efforts and through sub-advised partnership efforts. And within that, there is a large percentage that is actually taxable. So when you zoom out and you think about the long-term experience still being generally quite positive, combined with very strong absolute returns, many of those investors also have created a taxable situation. That does not mean that we are immune to performance variation. But I think it does create an additional stickiness in that part of the client base that is probably underappreciated. So if we move to the next Slide 19.

We have covered this before many times if you have been on with us, but all of what I just said is in fact then bolstered by the fact that we have a very diverse business for a manager of our type by strategy, by geography, by client type. There is no meaningful institutional investor concentration to speak of, and there are literally thousands and thousands of clients that make up this overall diversity. Slide 20. If you follow along with our monthly numbers, there are no surprises here. The new data is just how it breaks down by channel. And what you see is actually a relatively consistent behavior this year across channel, which I think speaks overall to the type of investors that we approach regardless of channel.

And then finally, Slide 21, I want to spend just a little bit of time actually forward-looking where I think there are perhaps some green shoots, especially as we expect our performance hopefully to mean revert. This is a view of our growth that we have experienced in retail managed accounts, and also active ETFs. And in particular, I want to spend a little bit of time on the active ETF. We launched our first fund in this category in the U.S. roughly a year ago. And despite having the most challenging 1-year performance of our firm's history, we have seen this vehicle grow considerably. And so what we have done here is, I think, proved our operational capability, which requires an additional level of technical expertise to implement these vehicles in a tax-efficient way.

But in the U.S. market in particular, there is a strong tailwind for platforms to add these vehicles. And I think now that we have built a solid operational base to move forward from, I think there is significant opportunity for product development that exists in active ETFs, and we are hopeful to see that as a future growth engine. With that, I am going to pause there.

I am going to turn it over to Rajiv Jain, our Chairman and Chief Investment Officer, and let him give you an update on current market outlook and portfolio positioning.

Thanks, Steve, and thanks, everybody, for joining. As you know, we've had challenging performance over the last 18-odd months. I think some of the things we do need to keep in context is that the 2 types of market conditions that we generally don't tend to do well, one is when markets are very cyclically oriented or very frothy and are coming out from a bear market. This is not atypical. However, I think there have been some things that we have grossly, we've clearly underestimated. One is obviously demand for compute, and the broadening out of industrial growth in almost all the larger countries in the world, maybe to the exception of China. As the earnings estimates continue to come through very robustly, in fact, if you look at last summer, NVIDIA was 35x earnings, now it's 16x, 17x earnings.

I mean, I can go through a list of names which actually are selling at lower multiples today than they were last summer, when we had sort of cut our exposure to these areas in a meaningful manner. As you know, we do not have any philosophical issue owning these. We have owned some of these in a big way before. Including deep cyclicals, whether it's coming from energy, as you know, in '21, '22. We exited tech in '21, bought back in '23. So, we have owned all of these historically. As we reassess our exposure and looking at the demand, some of the data points that began to shift in February, March or thereabouts in terms of GPU rentals, in terms of the pricing for compute in general, and some of the other demand indicators that we're looking at.

It turned in February, March, and as a consequence of that, we began to sort of change some of the names that we owned, and where we are seeing fairly strong outlook on a go-forward basis. As we speak today, we are actually overweight technology. We are overweight semiconductors. The only portfolio that we are not overweight tech and semiconductors is actually emerging markets, where it is essentially South Korea and Taiwan, which is almost 40% of the index combined in tech. So we are slightly underweight, but all of the other ones we are actually overweight. We cut back quite aggressively utilities, healthcare, staples. Some of them did not do as well as we had thought. All the earnings picture have been okay in utilities, et cetera, but clearly could not keep up with the significant increase in estimates you've seen.

In fact, it's quite unprecedented the estimates revisions you've seen in some of these areas. Our view is that the valuations today, if you believe these companies have slightly longer duration, I think they could be reasonably attractive. So I think the portfolio looks meaningfully different to it. I think that's not atypical of what we have done. This is not the first time I've underperformed this much. In fact, unfortunately or fortunately, I've been here before. I've underperformed far more than this, and we recovered. That is part of active management. Our core proposition is being adaptable. We talk about it all the time, but it does mean that from time to time, we will miss some of the trends. But the question is, does the fundamentals want to come back in those areas or new areas?

I think we feel quite excited in terms of how the portfolio's positioned, and what the demand drivers are. And we remain optimistic about our longer-term performance outlook.

Tim?

Thanks, Rajiv, and thanks everyone. I think we can open it up now for Q&A if anybody has questions.

[Operator Instructions] Your first question comes from Julian Braganza with Goldman Sachs. Please go ahead.

Just the first question. I was wondering if you could provide some color just around the gross flows and gross outflows. Just be interested. I know you don't provide the numbers, but just be interested to see how that's been tracking more recently.

Julian, thanks for the question. As you know, we don't break that down. It's sort of hard for me to answer that in any generality without providing selective disclosure here. But what I'd say is that we continue to have positive inflows on a gross basis and obviously outflows on a gross basis. So it's not completely 1-sided.

Okay. Then maybe just then, in terms of the tax rate, the 25.3%, is that sustainable from here going forward?

Yes. So I think that as we've talked about before, the unique nature of U.S. tax for a firm like ours is that we have many different states that we pay taxes in. So we pay federal tax plus state taxes. And the state tax rates change all of the time. And it's obviously unpredictable to know exactly where tax rates will change state by state. So the best way to think about taxes has been just to take the current print and extrapolate that forward. I think that's the most accurate way to project taxes out in the future. We know, of course, that they will change, but there's no reason to believe that they should directionally change one way or the other. So I think that the best thing to do is just extrapolate from the most recent tax rate and carry that forward.

[Operator Instructions] Your next question comes from Elizabeth Miliatis with Macquarie. Please go ahead.

I am sorry if I missed it. I was just on another call. Just around portfolio positioning, overall we have been noticing a bit more of a lean into tech across the 4 funds. Just your view on what has shifted there.

Yes. We have found better opportunities simply because some of the drivers on the compute side seems to be far more sustainable here versus even 6 months ago. For example, if you look at GPU rentals late last year were actually declining. Now they turned up a few months ago. If you look at the reseller price of GPUs, same thing. They were selling a meaningful discount late last year. That has begun to turn. And second, the last part is the valuation of some of these hyperscalers had come off significantly. For example, NVIDIA, as I mentioned, was 35x last summer, is 16x, 17x. Amazon was again, high 20s or 30x earnings back to 20-odd times earnings. So multiples have come off some of these names.

The second part is in this sell-off in Korea and Taiwan, we thought that this is an excellent opportunity to actually go back in some of these names simply because we do believe that the markets might remain tighter for longer and the free cash generation is fairly strong. So that is the other area we added. So net-net, if you look at it today, the portfolio positioning seems to be fairly different from where it was March. So we are actually overweight tech and semiconductors across all the books, marginally underweight emerging markets still. But if you look at, for example, in international, it is a few hundred basis point overweight. But I think the other big part is that the industrial CapEx numbers seem to be broadening out, whether you look at Europe, Asia for most part, but definitely North America.

That's the other area that we added. I think there's a lot less defensive posture in terms of our positioning as of now.

Okay. Got it. Maybe just around on the financials, just costs going forward. How are you feeling around that cost to income ratio should flows continue to remain negative?

Yes, Liz, the way I'd answer that is that we obviously are very careful about managing expenses. We obviously don't provide guidance, but there's no reason to believe that our aggregate expenses have to be meaningfully higher or are somehow abnormally low right now. I think we'll just continue to be careful in managing expenses. As we've said before, obviously, the margin is driven by revenue, right? If you had market off by 10% or flows off by 10%, our margin would be impacted, of course. Equally, if markets are up 10% or we had significant growth in revenue, our margins would expand. So it's really the revenue line, and obviously it's unpredictable what the revenue line would be. But all things being equal, there's no reason to believe that our margins would change materially from here.

Your next question comes from Siddharth Parameswaran with J.P. Morgan. Please go ahead.

Just a question for Rajiv. Rajiv, it seems like you've considerably changed your sector posturing, and I suppose even some of the logic that you were previously giving around being defensive on tech. I think previously you were talking about a secular funding, et cetera. Just curious, firstly, is that not an issue anymore? Secondly, it's such a rapid change in your assessment of this. How are your clients reacting to this? It seems like, having taken a very extreme stance leading to some of the performance we've seen, to switch now, it seems like it's probably the right thing to do, but have you had conversations? How are they taking this? Could you just give us some idea of exactly whether they're on board with this?

Yes. Look, I think, Tim, you want to take that?

Well, Rajiv, I was going to offer, let me take the client piece, and then maybe you can talk about how you got to repositioning. Siddharth, I think it's important to understand that this is actually not atypical for us. We don't have it in the slide deck this year, but if you go back and look at our historical earnings releases, you'll see that the movement, we move the portfolio around, and often quite meaningfully and quite rapidly. That's part of what we're known for, is we talk about having a very adaptable approach, and we're following the data. It's bottom-up, stock by stock. Clients expect that. As long as it's international and they understand that what we're seeing in our research is causing us to move portfolios, clients are on board for that.

That's what they're expecting us to do, is we often say, if you want a dogmatic growth manager or dogmatic value manager, you can go find them. But what clients hire us to do is to move and be fairly aggressive in moving the portfolio, be adaptable, and follow the data very rigorously. I don't think we have any risk with clients being upset about the portfolio moving. Now, what we have to do is make sure that we are communicating that clearly and that we're doing that for the right reasons. There may be some clients who have their own views, and they will sell our portfolios because our views are no longer in line with theirs, but it won't be because of the fact that we moved the portfolio. That is something that clients expect.

Yes, look, I think as Tim said, if you go back to 2021, second half, we cut back very aggressively in the last quarter of 2021, a meaningful overweight tech to significant underweight tech, and we wrote about that extensively. In 2022, we entered 2022 with very little in tech and almost a high-teen exposure to energy. Okay? We exited 2022 with something similar, and in February, March, we were back overweight tech, right? I think this is not atypical. I can go back over 25 years. We've done this again and again. But the question is why we're doing this. The reason is that whether the data points sort of indicate if you're getting paid or not for the names that we would love to buy based on the valuation growth and obviously durability of that growth.

It's the question of the conviction, and we did not have that high a conviction, and obviously the multiples are high. Now, as I said, where we have underestimated is the demand strength for compute and the pricing. If the pricing changes, look, the GPU rental is $1.50 or $4 or whatever it is. I mean, that changes economics for a lot of different things. I think our job is to refresh the book on literally on a daily basis. It is bottom-up, name by name, and we'll make mistakes as we have done before. But I think in the long run, this adaptability has served us very well, because if, for example, things change again, it doesn't mean we are wedded to these names.

I mean, that's actually, as Tim said, most of the clients come here for, not sort of saying we're going to be long, fastest-growing names forever, or we're going to be long energy forever. I mean, that depends on the bottom-up basis expected returns.

That makes sense. Just a second question, if I can. Just fees, I mean, average fees held up quite well. Just keen to understand if any conversations at all are being pursued by clients around fees. If you could just make some comments around the fee outlook.

No, there's nothing material on any. I mean, we have obviously thousands and thousands of clients, so I can't speak to every single client, but there's no material pushback on fees. I think our fees are very favorably priced in the marketplace. We started out the business that way. It's very consistent. So, no fee pressure of any substance there. The one place that I would note is obviously in this period, we did not have performance fees, and in prior periods we have. So that's a significant contributor to the revenue line. But even still, the number of assets on which we have performance fees is sort of single-digit percentage of our overall book. So it's not a huge driver to the business in any event.

There are no further questions at this time. I will now hand back to Mr. Carver for closing remarks.

Wonderful. Well, thanks again, everybody, for joining us, and thank you for the thoughtful questions. We will look forward to seeing you on our roadshow here in a couple of weeks. Wishing everybody all the best.

Good afternoon to our U.S. stockholders, and good morning to our Australian CDI holders. We are pleased to welcome you to our Annual Stockholders Meeting, which we are holding virtually to increase access and participation. My name is Rajiv Jain, and I'm the Executive Chairman and Chief Investment Officer of GQG Partners. On behalf of the GQG Board, it is my pleasure to address you at our 2026 Annual Meeting.

Before we proceed with the business of the meeting, I would like to introduce my fellow directors: Tim Carver, our Chief Executive Officer and an Executive Director; Elizabeth Proust, our Lead Independent Director; Melda Donnelly, an Independent Director; and Bryan Weeks, an Independent Director. Also present today are Charles Falck, our Chief Financial Officer; Anthony Skoda, and Drew Rudolph with KPMG and company's auditor; and Rick Sherley, the company's General Counsel and Secretary, who will act as Secretary and voting inspector of the meeting.

Charles, would you formally commence the meeting on my behalf?

Thank you, Rajiv. As we have reached the time set out in the meeting notice and have given proper notice, the meeting is hereby convened. As stated in the notice and in the proxy materials, the purpose of today's meeting is to consider and act on the reelection of Elizabeth Proust and Melda Donnelly as Class II directors. A few administrative points on how this meeting will proceed.

First, shareholders and CDI holders can submit questions at any time during the meeting. [Operator Instructions] Please submit your questions as soon as possible. We will also address questions that were submitted in advance of the meeting. We'll take questions on the items of business when we vote on those items, and general Q&A will occur at the end of the meeting. Stockholders and CDI holders are asked to limit themselves to 2 questions to ensure everyone entitled to ask questions has an opportunity to do so.

Second, stockholders can vote at any time until polls close. We will make an announcement shortly before the polls close. CDI holders needed to submit their voting instructions before the meeting as explained in the meeting notice and won't be able to vote during today's meeting. If you have any questions about the process, please check the online portal guide. Lastly, we'll declare the results of the vote and release them to the ASX as soon as we can after the meeting. After the vote, Rajiv will share his views of the market. And after that, we will open the meeting for general Q&A.

Rajiv, would you share your thoughts on GQG?

Thank you, Charles. Nearly 10 years ago, we founded GQG with a vision of creating an enduring institution that would outlive its founders. Today, I believe we have made great strides towards that vision, and our team is as committed as ever to delivering for our clients and shareholders through the responsible stewardship of their capital. Our commitment begins with fostering alignment between our teams, clients and shareholders.

Since GQG's IPO in 2021, our team members have remained majority shareholders in the business and have made significant investment in our strategies alongside our clients. This shared perspective reinforces our dedication to the long-term success and underscores the trust placed in us by those we serve. Adaptability has been a cornerstone of our philosophy and is deeply ingrained in our organization. By continuously challenging our thinking and refining our investment approach, we aim to position GQG for enduring success in an ever-changing market landscape. While we acknowledge that we will not get every investment decision right, and we will underperform from time to time, we are confident in our process and believe that the resilience and strength of our investment culture will drive long-term outperformance.

I'm incredibly proud of the Board we have built, which is composed of exceptionally skilled and deeply committed individuals. Tim and I remain actively involved in all parts of the business and are honored to serve our shareholders in dual capacities as both executives and Board members. Our independent directors contribute a wealth of diverse expertise, knowledge and insight, enriching the Board's ability to guide the firm forward. As GQG's largest shareholder, I'm deeply optimistic about the firm's future.

I share your expectation that the executive team will remain committed to delivering value for our clients and which in turn drives sustainable long-term shareholder value. I'm proud of our team and the strong execution of our investment process, and I will continue to champion a culture of engagement, focus and excellence across our professional staff.

With that, I will turn it over to our CEO, Tim Carver.

Thank you, Rajiv. I'd like to begin by thanking our team for their unwavering commitment to excellence. I believe our team's alignment with clients and shareholders remains one of the defining characteristics of GQG. Our alignment is reflected in our team's collective exposure to our strategies, which totals hundreds of millions of dollars and their ownership of more than 185 million vested and unvested shares or CDIs of GQG.

We eat our own cooking and our outcomes are closely tied to those of our shareholders. This alignment starts at the top. Rajiv and I take 0 bonuses personally and together remain the largest shareholders at GQG, ensuring that our focus remains firmly on creating long-term shareholder value and delivering results aligned with the interests of our clients and of our investors. Our business continued to grow in 2025. As of December 2025, our funds under management reached $163.9 billion, driving net revenues of $808 million for the year, a 6.3% increase over 2024. Net operating income rose 7.6% to $622 million, and diluted earnings per share increased by 6.7% to reach $0.16 per share.

As I've said before, performance is a leading indicator of flows, and GQG has experienced a period of net outflows over the latter half of 2025 and the beginning of 2026. Our investment objectives have always been to protect client capital from downside risks and compound returns over a full market cycle. Our defensive positioning over the past year has been highly intentional as we recognize indicators of late cycle dynamics and speculative activity. While we are never comfortable with periods of relative underperformance, we note that our performance has historically lagged during times when market exuberance overshadows fundamentals as we believe is the case today. Despite this, our investment team delivered $14.8 billion in investment performance for clients in 2025.

I believe our differentiated view and approach to this market provide meaningful value for our clients. And against this backdrop of market volatility and uncertainty, in the first quarter of 2026, each of our flagship strategies outperformed their respective benchmarks. A final dividend of USD 0.365 per share was paid in March, and the Board declared a first quarter 2026 interim dividend of [ USD 0.0354 ] per share, representing a 90.14% payout ratio of distributable earnings for the first quarter.

In closing, I want to thank you for your continued trust in us. The dedication I see from our team reinforces my confidence in our ability to deliver for both our clients and our shareholders for many years to come. I remain deeply passionate about the future of GQG and look forward to working together to build on the strong foundation we have created.

And now I'll turn it over to Charles to give an overview of the 2025 financial results.

Thank you, Tim. I'll keep this brief as I'm sure many of you have already reviewed our annual report. As mentioned, we were pleased with our financial results for 2025 and have seen good momentum into 2026. In '25, GQG experienced strong growth. As summarized on Page 3 and detailed further back, revenues increased 6.3% and amounted to USD 808 million. Operating income increased 7.6% and amounted to USD 622.5 million. You'll note that on Page 7, we have also added some additional details on services rendered by our independent auditor. Those amounted to $1.7 million in 2025, of which $1.3 million was related to audit and related services and the balance was for tax advice. We will be disclosing this information in our proxy statement going forward.

Net income increased 7.3% and amounted to $463.3 million. And as Tim mentioned, earnings per share increased to $0.16 per share from $0.15 in the prior period. We continue with a high dividend payout ratio of 90% and recently announced our first quarter dividend of [ $0.0354 ] per share.

With that, I'll now turn it back over to Rajiv.

Thank you, Tim and Charles. It is now time to note the record date and quorum for the meeting and to commence the business of the meeting. Rick, would you please do so?

The Board of Directors set April 1, 2026, as the record date for this meeting. A partial count of the shares of common stock represented at the meeting in person or by proxy shows that the holders of more than a majority of the outstanding shares of common stock of the company entitled to vote at the meeting are represented. Therefore, I declare a quorum present and the meeting ready for the transaction of business.

Rajiv, would you declare the polls for voting to be open?

I declare the polls for voting to be open.

[Voting]

I note that the polls are therefore open as of 7:10 p.m. U.S. Eastern Daylight Time. Stockholders are being asked to vote on 2 items of business, namely to elect each of Elizabeth Proust and Melda Donnelly to serve as Class II directors. For these items to be approved, the nominees must receive the affirmative vote of the holders of a plurality of the votes cast by stockholders present in person or by proxy and entitled to vote at the meeting. All stockholders entitled to vote at this meeting have the ability to do so online.

If you are a stockholder entitled to vote at this meeting and you have not yet voted or if you want to change your previously cast vote, please do so through the website used to access this meeting. If you have already voted by proxy, it is not necessary to vote again. If you are a CDI holder, you may not vote at this meeting. All shares are represented by proxy and will be voted as specified in the form of the proxy. Shares represented by proxy where no vote is specified will be voted in accordance with the recommendation of the Board of Directors, which is in favor of the proposal. Elizabeth, would you discuss your background and suitability to serve on the Board of Directors with our stockholders and CDI holders. Elizabeth may be having some technical difficulties. Actually, Melda, would you care to discuss your background on the Board of Directors with our stockholders and CDI holders?

Sure. So I've served as an Independent Director of the Board since the company was first listed in 2021. Since that time, I've also served as Chair of the Audit Committee and as a member of the Risk Committee and the Remuneration and Nomination Committee. I've held a range of directorships of both Australian and international companies and currently serve as Chair of Coolabah Capital Investments. Since 2021, I've attended all but one of GQG Partners Board meetings and I've attended all the committee meetings, and I have sufficient time to devote to the Board now and in the future, and I look forward to it. Thank you.

Elizabeth, are you now in a position to discuss your credentials.

I hope so, Rick. Can you hear me?

I can.

Thank you. Thank you, Rick, and apologies for that problem. I've served as Lead Independent Director of the Board of Directors of GQG Partners Inc. since the company was listed on the ASX in 2021. Since that time, I've served as Chair of the Risk Committee and of the Remuneration and Nominations Committee and as a member of the Audit Committee. I've held leadership roles in the public and private sectors for more than 30 years and currently serve as a Non-Executive Director of Lendlease and as Chairman of Cuscal. I have full attendance at all GQG Partners Board and committee meetings and have sufficient time to devote to the Board now and into the future. Thank you.

We will now respond to submitted questions related to the proposal. Rick, please review the questions.

My apologies. We have one question that is in relation to the proposals, which is which proxy advisers issued a report relating to today's AGM? And did any of them criticize us for not offering a remuneration report? Why not voluntarily offer a rem report vote next year to be as a best practice?

Tim, would you like to take this?

Thanks, Rick. Yes. The proxy advisers for today's proxy votes, we do not comment on the specific proxies received. We are, as you may well know, both Rajiv and I have no bonus compensation and our CFO is -- has compensation voted on by the Board. The rest of our employees, we feel are highly aligned with shareholders and a shareholder vote on compensation for other employees, we view would not be additive to the process of setting compensation for the team. And therefore, we do not offer votes for compensation.

Okay. We do have a second one that is directed to Elizabeth Proust. The question is, we made a big bet against AI this year. As Lead Independent Director, could Elizabeth comment on how much influence, if any, she had over this decision?

Thank you, Rick, and I am hoping that you can hear me. Can you confirm that?

I can.

Great. Clearly, the issues around investment decisions, including AI, energy and indeed any other sectors that we invest our clients' money in is one for our Chief Investment Officer, Rajiv Jain, and the rest of the team. The Board's role is to probe and to question and to be involved in the direction of the organization. But the questions of which sectors and which companies we're involved in very much a matter for the CIO, but the Board strongly supports and backs the decisions that have been made.

I see no additional questions for -- to present at this time. Rajiv, would you present the preliminary voting results?

This completes the presentation of the proposal to be voted on at this meeting. I now present a slide which sets out the preliminary proxy votes that were received as of the applicable cutoff time for the CDI and shares in relation to the items of business. We will now pause for 1 minute to allow stockholders to make any final votes. Any votes cast before the polls close today will be counted in the final tally along with the proxies previously received.

[Voting]

As everyone has now had the opportunity to vote. I declare the polls closed for the matters voted upon at this meeting. Rick?

I note that this is as of 7:19 p.m. U.S. Eastern Daylight Time. Polls may take some time to count to obtain the final results and verify fully. After the votes have been counted, the results will be released to the ASX as soon as possible. Rajiv and I'll provide a few remarks around the current state of the markets, and then we'll have an opportunity to respond to questions.

Thanks, Rick. As you know, we have been fairly defensively positioned due to our continuing concerns on the valuations and the frothiness of not only technology, but the whole AI infrastructure build-out. The overall revenue of -- coming from AI remains a tiny fraction of what the capital expenditure seems to be, not to mention the circular finance that we have talked about at a number of our papers. On top of that, we are now extremely concerned about what's happening in the Middle East and the fact that Strait of Hormuz is still closed.

Obviously, that could change any time, but our view is that, that may have meaningful implications as time passes, particularly in certain markets and certain sectors. That could also have impact on credit markets, the Fed policy and so on and so forth. So our view remains that the markets are not pricing in the overall risk that is there in the market. And some -- and our longer-term objective is to outperform over a full market cycle and less risk. So we are always concerned with downside protection. Obviously, there are no guarantees for downside protection, but that's our key focus over the long run. So obviously, the other part is that we remain open-minded about the opportunity set from time to time. And as you know, we are extremely aligned with our clients as well as shareholders in the longer-term return profile.

We will now answer properly submitted written questions. We currently have one, which is when did we last tender the audit and when are we likely to tender the external audit function. Charles, would you like to take that?

Thanks, Rick. Yes. We have had KPMG as external auditor since the inception of the company in 2016 and kept KPMG also as part of the IPO in 2021. We have a structured process for the Audit Committee that Melda Donnelly chairs to review the quality and scope and independence of KPMG's services, in particular, as they relate to audit, but also to any other type of services.

And as I mentioned, for example, in the last year, we also consumed tax advice from KPMG. We're pleased with the services that KPMG provides. They are of high quality, and we feel that our shareholders are well served by having KPMG as the external auditor.

Thank you, Charles. We have one more question, which is NVIDIA shares hit a record high this week. What is our history in terms of owning the stock? And do we own any now?

Noting that we do not typically discuss current portfolio holdings. Rajiv, would you care to comment on this?

Yes. We've obviously owned the stock before, but it would be inappropriate to talk about specific ownership at this point. We, in general, do remain extremely underweight technology across all our books, and that remains the case in all the 4 core products.

Thanks, Rajiv. It appears we have no more questions.

We appreciate your attendance at today's meeting. Thank you, and have a great day. The meeting is now closed.

Thank you. That does conclude today's conference. Thank you for participating. You may now disconnect.

Thank you for standing by, and welcome to the GQG Partners Inc. 2025 Full Year Earnings Release Conference Call. [Operator Instructions]. This call will contain forward-looking statements, including statements of current intention, opinion and predictions regarding the company's present and future operations, possible future events and future financial prospects. While these statements reflect expectations at the date of the call, they are, by their nature, not certain and are susceptible to change.

The company makes no representation, assurance or guarantee as to the accuracy of the likelihood or fulfilling of any such forward-looking statements, whether expressed or implied and except as required by applicable law or the ASX listing rules, disclaims any obligation or undertaking to publicly update such forward-looking statements. Participants recording this call may use such recordings for their internal business purposes only and are prohibited from making any such part of the recordings available to the public without the prior written permission of the company.

I would now like to hand the conference over to Tim Carver, CEO. Please go ahead.

Thank you, and thank you, everyone, for joining us for our 2025 full year results earnings call. We're thrilled to be here. As always, I'm joined by my partner, our Chairman and CIO, Rajiv Jain; our Chief Financial Officer, Charles Falck; and our Global Head of Distribution, Steve Ford.

If we go to the second slide for our financial highlights, you will see that we had a solid year in 2025. We ended the year with just about $164 billion in funds under management, an increase of just over 7% from the prior year. If we actually update that to the end of business U.S. markets yesterday, we ended internally unaudited, we ended right around $172 billion, which is right on top of our record FUM for this business, which we achieved 6 months ago in June of 2025. So the business from a funds under management standpoint continues to be very robust and very resilient.

For the year, for the 2025 calendar year, we had net outflows of $3.9 billion, offset by $14.8 billion of assets driven by investment performance. Now the business continues to be very well diversified across 4 major strategies and with large books of business geographically dispersed and across a number of different product types, both retail and institutional. For the year, we saw net revenues of $808 million, an increase of 6.3% from the prior year, net operating income of $622.5 million, an increase of 7.6% and net income of $463.3 million, an increase of 7.3% from 2024. The Board has declared a fourth quarter dividend of USD 0.0365 per share, which represents a 90% payout ratio of our distributable earnings, consistent with the third quarter 90% payout ratio that we announced last quarter.

We're going to start this presentation with Rajiv giving an update on our performance and our investment environment, and then I'll bring back -- I'll take back over to talk a little bit more about the business after that. So Rajiv?

Thanks, Tim, and thanks, everybody, for joining. It's been quite a fascinating year. That's the best way I would put it in context of what's happening in the markets and obviously, geopolitically. But I think if you switch to Slide #4, I think what we're talking about is that there's been a clear shift towards cyclicals, particularly AI-driven theme as such over the last, just over 2 years. And as you know, we had significant exposure to those very names, but being disciplined to generate longer-term returns, we start cutting back in the second half of '24 and very aggressively first quarter of 2025, which obviously, in hindsight, was a little premature. However, having lived through some of these cycles, and I think it's fair to say that either you're early or you're late. It's very hard to time these cycles.

Problem is that if you look at the underpinnings of the whole AI theme as such, we feel the underpinnings have gone progressively worse, not better. We continue to work on this theme, not just with our traditional analysts, but also with our nontraditional team. And the data points are actually quite startling in a negative way. Now the other aspect is that if you -- despite the fact that global unemployment numbers are creeping up, I mean, looking at 3- to 5-year highs in vast majority of developed countries, a significant part of emerging markets, too, including China, the defenses as such are actually fairly attractively valued.

And as you can see on this page, the first -- the left-hand side chart, it is actually quite remarkable where the valuations are and the fact that some of the defenses have been underperforming for almost 4 to 5 years now, while you are seeing early signs of green shoots appear across the board. I mean, if you look at the last few quarters, things have gone progressively less bad or early signs of even improvement, but the valuations are not discounting that. Number two is, if you look at the weights in the index, what we do feel that some of the weights in the index of these names are actually quite -- of the tech names and the tech type names, which are basically driven by the whole theme is actually close to 50%, including emerging markets. More than half of the growth was really driven by what's happening on the memory side.

And even within tech, as you know, software is finally getting hit. We wrote a piece of paper around 4 years ago is software, the new shale, which, again, we were a little bit early, but had you sold some of the software names then, you actually would be better served because of the dramatic sell-off that you're seeing. The accounting was very aggressive, and we feel some of the similar traits are now appearing on the semiconductor side. But the Max7, not only they are running out of cash. I mean, if you adjust for the stock-based compensation, et cetera, they are actually hitting the bond markets. And FTE had a piece that they will be looking to raise just under $0.5 trillion. Our view is good luck with that.

And in the meantime, if you look at our positioning, if you go to next Page #5, what you're seeing is that the software is seeing still buying the tip. One of the questions we get all the time is that the retail desire to own anything that says up, i.e., buying the tip will continue. Our view is that, that I've seen in way too many cycles that happens at the tail end of the cycle, and that's not exactly what will support. In fact, you're seeing that in broad-based software ETF, there's massive call buying as well as inflows. That hasn't really supported the space because once these things fundamentally change, it will be very hard to maintain those.

This is an informed chart, by the way, on Slide #6. I think we sometimes get compared to some of the larger competitors who got hit hard 4, 5 years ago in Australia. And I think the position couldn't be fundamentally different. We have overweight areas that have actually underperformed for 4 or 5 years and are very attractively valued. So we -- this was a conscious decision to pivot into that area. And as I said, having lived through a lot of these bubbles, whether agent property bubble, dotcom and GFC or the housing bubble, you almost have to be early. It's very hard to time these on the exit side. And you're seeing that in software, by the way, most of the growth managers have really struggled to exit those names because they first creep on you and they start melting.

And if you look at our positioning, we are essentially overweight consumer staples, utilities and health care in a meaningful manner, not emerging. Emerging, we sell a lot of banks in various markets outside of China. The other -- the flip side is underweight into check. And I think there are clear signs of double triple ordering memory as well as DRAM, NAND as well as DRAM. And I think those things typically happen at the tail end of the cycle. There are clear signs of double triple ordering. By the way, that's perfectly normal. And I'll just start by saying that if you look at companies like Micron Technology, it was at the same price -- absolute price point last year as it was in year 2000 when they had fire-driven shortages. And if that is not cyclical, I don't know what defines cyclicality.

So our view is that this is kind of very, very late in the game. Vast majority of folks would have tough time exiting, not to mention some of the names may actually go -- the names that we may actually go up because there's a way too much capital that will leave. I mean, if you look at NVIDIA, that's almost 8% of the S&P. If you look at cumulative energy plus utilities, that 5%. And that's trillions of dollars invested over decades. So when -- it may be easier to sell NVIDIA, but we're much more hard to get into some of these names. And in the last few weeks, again, it's very early days. I don't want to take victory laps here. But I think you would see that the upside pressure on these names could be quite interesting, especially very similar to price action that we're seeing as we saw in the second half of 2000, early 2001. Tim?

Great. Thanks, Rajiv. Let's move to Slide #8. And if we look at Slide #8, what I want to make sure everybody understands is, why is it if we look at the relative underperformance of our strategies over the course of the calendar year, why is it that we sit here today at near record levels of funds under management? I think that what really explains that is the way we position ourselves to prospects and to clients, the way we talk about our strategies with asset consultants, we always tell people that our objective is to outperform over a full market cycle by a couple of hundred basis points with lower volatility, protecting better on the downside and that we won't participate in runaway markets. And I think what you're seeing here is clear acknowledgment that our clients aren't expecting us to keep up, and that explains a lot of the reason why we haven't seen more significant outflows given our relative underperformance.

If we look here on Slide 8, what I've highlighted here is that our promise is that we are going to do our best to try to deliver high single-digit, low double-digit rates of return over a full market cycle. As you see here, that's exactly what we've done and what our client experience has been. The other key point, if we move to the next slide, is that our business is extremely well diversified. And while the headline numbers and the headline news is highly focused on the U.S. equity market, what you see in our book of business is that nearly half the business, over $70 billion is in an international equity strategy that did north of 20% returns last year. So it's not a surprise that clients aren't leaving us when they've done 20% with us in the $70 billion book of business.

And if you add EM alongside of that, that's over $110 billion that did better than double-digit rates of return. And while, of course, we didn't keep up with markets, I'm not suggesting we did. We're not likely to see catastrophic changes to the business or outflows when we have solid returns like this. Again, if you look at the U.S. equity strategy where our relative performance is most weak, it's the smallest part of our business, and I think, again, explains why the assets continue to hold up.

If we go to the next slide, as Rajiv alluded to, inflection points matter. And so the other key point that I'd make here is that in the short term, performance has been quite strong. Even though markets haven't -- markets have been effectively flat for the past quarter, we've gained back quite a bit of what we gave up in the prior year, particularly on the developed market side here just really in the past 30 days, again, against sort of flat markets. And so we can see that we can gain back performance just as quickly as we gave it up. And I think that's why we see the clients stick with us and not reacting to short-term performance as long as we continue to deliver the way that they would expect us to deliver consistent with the philosophy of our strategy.

If we move to the next slide, I just want everybody to see what it is like -- what the client experience is like at GQG. And what this shows is, had you been a client from the beginning of when the strategy since inception, you not only see solid returns, you see that even with the relative underperformance of last year, we're still at the top of the top quartile for that client experience. So for almost all clients with the exception of the most recent clients that came on Board, the client experience has been quite positive.

And again, if we go to the next page, you see it again. Here, what you see is all 4 of our core strategies, if you pick any date in time where you have a 5-year return available to you in almost every single rolling 5-year return period across all 4 of our strategies, we've outperformed. So there's been a tremendous persistence. So the point of this is that the business is resilient because the vast majority of client experiences on a 5-year basis has been positive relative to the market. So when you add all of these things up, the very diversified book of business, the long-term consistency with our philosophy, the way that we communicate with our clients and the absolute returns over time, I think this explains why we continue to have very solid, very robust assets in the face of short-term underperformance.

So with that, let me turn it over to Charles, who can walk us through the financial results for the year.

Thanks, Tim. If you'll switch to Page 14, please, I'll touch on the financial highlights and then go into a little bit more detail around the income statement. So as Tim mentioned, we closed out the year at $163.9 billion in FUM. Average FUM was actually higher at $164.3 million. That's a 10.8% increase over the prior year. And that's really what drives the net revenue figure of $808.3 million over $760 million the prior year. We continue to show extremely strong operating income as well as net income. Both of those grew 7.6% and 7.3%, respectively. You see the progression of net revenues in the bar charts on the bottom left, which indicate a compound annual growth rate of about 11%. And then the profitability, as shown by the line in our operating margin. We increased our operating margin, which is already high from 76% to 77%.

So I think very strong financial performance. And if you switch to the right side of the page, we continue to pay out high dividends for the year at $439.3 million as a result of, as Tim mentioned, a 90% payout ratio on distributable earnings, which have also increased to $477 million. Illustrated on the bottom is our growth in net income as well as the diluted earnings per share of $0.16 per share.

With that, I'll move to the next page, please. for a little bit more detail on the income statement. You see how revenue is composed of management fees and performance fees. Management fees, I touched on earlier. We experienced a small decrease in fee realization from 49.6 basis points down to 48.4 basis points. That's a result of a mix shift that resulted in vehicles with lower fees as well as strategies with slightly lower fees, driving management fees. On the OpEx side, we managed those very prudently. We're able to reduce general and administrative by $6.2 million or 14% by having a prudent approach to projects and management of operating expenses. And if you look at compensation and benefits, while that increased $4.9 million and 4.9%, average headcount for the year actually increased more. We went from 212 average headcount in 2024 to 240, which would be a 13.2% increase.

One other item that I'd like to highlight on this page is our income taxes went up as a result of obviously higher and continued strong profitability. The effective tax rate moved only very little, but up from 26.5% to 26.7%. That's where we would expect the effective tax rate to be. It's been range bound since 2022 between 26% and 28%, so within that range.

Moving on to the balance sheet. There's not that much to note there, very strong balance sheet with high cash balance that's used for working capital as well as the dividend payout, which I'll get to in a second. And then the deferred tax asset, which was created at our IPO, and we continue to depreciate over time. One other thing of note is that we did not have any debt outstanding at the beginning or during or for that matter at the end of 2025.

Moving on to Page #17, the dividend payout. Tim mentioned this $0.0365 per share was declared by the Board earlier today. That's equivalent to an aggregate payment of $108 million in total dividend for the fourth quarter and continues to represent a 90% dividend payout ratio at 90% of our distributable earnings.

With that, I'll turn it over to Steve for the update on distribution.

Thanks, Charles. Appreciate that. If we can move to Slide 19. I just want to circle back to a couple of the points that Tim made and try to give you the view from the front lines of how we talk to clients and how we set expectations and what I think ultimately leads to some of the resiliency in the client base that Tim and Rajiv have both alluded to. And the first thing that we talk about when we talk about our style of investing with clients is what is the expectation that you should have for returns. And over the long term, we want to beat the benchmark over a full market cycle. But we do that by delivering high single-digit, low double-digit compounding. And that comes out of every client-facing person's mouth at GQG Partners over and over again.

And so what I put on the right-hand side of this visual is just zooming out just a little bit past the very short-term performance that people get focused on to look at a 3-year number. And you'll see our worst strategy compounded client capital at 13% annualized, which I think most all of them would have taken beforehand. And if you would have also asked the clients and said, there's going to be a market where the index is going to compound at 23% annualized, what do you think the likelihood of GQG outperforming in that market is? And I think most of them would have said that that's not a high probability event at all that we don't tend to outperform in runaway in frothy markets. And so what I think that you're seeing here is part of the reason why there's resiliency in the core client base.

And we put on the bottom of this just those same numbers rolled 1 month forward to the end of January, not even incorporating what's happened so far this month. And you already see that picture improving on both an absolute and relative basis. And so this can actually move around relatively quickly when you're a high-tracking error manager. And I think it's why clients are going to be paying very close attention and be very thoughtful about maintaining long-term exposure to what we do.

So let's go ahead and move to Slide 20. And the reality is it's not just about excess return. It's also about risk-adjusted return. And so when you look at this over most periods and certainly over the longer term, our risk-adjusted returns, the picture gets better, both against the benchmark and absolutely better against the peer group. And so that is -- it's those kind of things in common with the rolling returns that Tim showed before that all lead to that client experience. And again, I think part of why there's resiliency in the client base.

Let's move to Slide 21. It's worth spending a little bit of time here more than we usually do talking about the diversification because I think as Tim noted, it's easy to think of this as a very, very siloed type of business. But the reality is -- or just looking about it through one investment team. But the reality is that the scale that we've achieved, the number of strategies we have, the geography-based diversification, the channel-based diversification, what you end up with is hundreds of thousands of individual client entry points with different rationales for portfolio construction over different time frames that will be correlated in their decision-making, but ultimately quite idiosyncratic and diverse.

And when you put on top of that, what's going on, the divergence between, say, emerging and developed markets or ex U.S. markets, suddenly, you get a very distinct set of decisions being made across thousands and thousands of different investors. And certainly, some of them will be correlated in their decision-making. But again, it's just part of why it's much more complex than looking at a 1-year performance number.

Let's move to the next slide. So let's talk about -- let's talk about flows. So we publish flows on a monthly basis. So I don't think there's any surprises here. As Tim talked about, we saw some outflows in the back half of the year. And I can tell you from the front lines, what we're seeing largely is clients reacting to shorter-term performance. And of course, we try to educate every client that we can on the front end that that's not a way to think about investing with us. But inevitably, some do, some have lower thresholds for pain. And we can't help every one of them make great decisions about entry and exit with GQG. But what I don't see is any deterioration in the -- what I would call the pillars or the foundation to our distribution strategy and our client retention strategy. So if you think about platform access, if you think about platform ratings, if you think about consultant ratings, et cetera, all these kind of core things that are the cornerstones for the leverage that exists in our distribution. As of today, those all remain solidly intact.

So let's move to the next slide. We've talked a lot over time about our wholesale channel. Obviously, it's been a huge part of our growth over the last few years. And what I would say today when looking at the wholesale channel is at no point in our history have we had more access to platforms around the world than we have today. So over the course of '25, we continue to add product to different platforms, different strategies to platforms that we already do business with, et cetera, et cetera. So it doesn't matter what geography or you're looking at, that's been the case. And so while that's not going to stem near-term outflows from short-term performance, what I do believe is that as that picture improves, we're in the strongest position we've ever been in the wholesale channel to create growth when the opportunity presents itself.

On the right-hand side, you'll see some thumbnails of actually content that we've produced. So if you follow along with us on our investor website, you will have noticed that our content strategy, I believe, continues to get better. And certainly, the quantity continues to go up. And in an environment where we do have short-term underperformance, and we know that clients are paying close attention to that, it's extremely important that we deliver transparency and insights about how we're investing and why. And as I always say, there's really 2 reasons that people do business with us. The first is performance and the second is insights. And so I think the feedback that we've received on the insights that we've delivered about the markets, about why our portfolios are positioned the way they are, has been extremely good, and it's a very important part of our overall client retention strategy.

Let's move to the next slide. And I'll finish with this. This is on the back of the strength that we just talked about in our wholesale channel and the access that we have available. This gives you the sense of the attention that we're commanding in the institutional channel by looking at eVestment Alliance database, which is the largest global database of institutional investors, you'll see that we are essentially the #1 most viewed manager in the world across the strategies that we manage. And so again, I think that just shows you that we're commanding the attention of investors. We have a very deep and robust client base. And as the performance picture improves over the short and intermediate term, I think our ability to capitalize upon that remains as solid as it ever has.

So with that, I'm going to turn it back over to Tim.

Great. Thanks, Steve, and thanks, team. I think we can open it up now for questions and have a dialogue with shareholders.

[Operator Instructions] The first question today comes from Nick McGarrigle from Barrenjoey.

Maybe just to start with one around positioning happy kind of same markets.

Nick, sorry to interrupt you. We can't quite hear you. Could you maybe get closer to the microphone?

Is that a bit better?

Yes, much better. Thanks, Nick.

Maybe just a question around portfolio positioning in the last 6 or 7 weeks. I guess we've seen software rollover haven't seen some of the defensive necessarily outperform enormously, but just how you think the last few weeks kind of colors your view around portfolio positioning moving forward, presumably taking some confidence from particularly the performance in defense.

Rajiv, you need to unmute.

Yes, Nick. So this is Rajiv. So look, I think if you had asked vast majority of folks, folks like yourselves, the expectations were that if the markets go down, we'll go down, maybe less, right? And our view was this is far more similar to dotcom bubble and the reaction afterwards, which means that the defense is because the gap is so dramatic, they should actually go up, particularly if the fundamentals are fine. And I think what has happened last few weeks because if you look at our performance, it kind of stabilized pretty much end of October, early November, and we have kind of kept up despite the run-up.

And I think what has happened last few weeks gives me more confidence that the cracks appearing everywhere. I think the fact that E&Y is now questioning what Meta is doing, the cash flow numbers, Microsoft down, I think, about 1/3. Oracle has completely blown up. And I think it's a very narrow group of deepest cyclicals within tech, which are working. And I think that means that you are seeing classic signs, which is far -- typically happen at the tail end of the cycle. So it gives us more comfort. In fact, I mean, we haven't really changed anything over the last few weeks or even months. And I think -- look, I think the underlying corporate earnings news has been fairly good across a vast area of our names, not every name, but vast area of names. So as the narrowness of the market in terms of what's working within the AI team because even within the AI team, the cracks appearing.

So private credit. I'll give you one data point that more than 60%, just over 60% of data centers being built in the U.S. are non-hyperscalers. So the perception that is the hyperscaler doing everything, first of all, is not true. It's actually wrong. The second thing is that NVIDIA has been one of the single biggest investors in AI infrastructure, okay? So -- and the question you have to ask is, if things were so good, why does NVIDIA had to invest another $2 billion CoreWeave, which, by the way, has more debt service and this is the fourth or fifth largest Neocloud has higher debt service than its revenue, okay? So our view is that you are teetering at the edge, you can keep kicking the can only for so long. So we feel pretty good. And I think the market reaction kind of tells you that, that there could be a -- who knows, but you've seen the meltdown in software. We feel it will spread to other areas ultimately.

And then just in terms of conversations with clients, obviously, you may be finding that hard to get through to clients last half year, given everything was going pretty well up until November. Just the tone of conversations with clients in this year and maybe some comments around the January flows were quite pronounced, but is it fair to say that there's some seasonality in the way U.S. investors allocate? So you kind of see a larger than normal either inflow or outflow depending on the momentum in January versus other months?

Yes, Nick, look, a couple of things I'd say. So starting point is if you look at the Morningstar ratings of our products, if you start with international, it's a 5-star rated fund. Global and EM are 4 stars and U.S. is 3 stars. All of them are gold or silver rated. So I think that there's a perception that clients are -- have more anxiety than they do. I think that -- and Steve can speak to this with more granularity than I can even in more meetings, but clients understand where we are. And again, because they don't expect us to keep up in markets like this, they're actually quite pleased with our positioning, particularly just seeing in the short-term performance, how much we're gaining when markets aren't rolling over yet like that's just a really positive performance pattern in the ultimate near term.

And so we don't -- none of us anchored in the near term, but as it pertains to the experience that clients have and therefore, the client conversations we're having, I think clients are comfortable. Now look, there's clearly -- we had a lot of momentum in '23 and '24 with particularly retail in the U.S. equity strategy. I think some of that sort of performance chasing you're seeing on the other side on the way out, and that explains a lot of the outflows in Q4 and Q1. There is clearly seasonality. There's no question that January, you've got -- you do performance reviews for the full year. And you're going to have -- it's not at all surprising to me that we had higher outflows in January. And by the way, it wouldn't be surprising to me to see that continue through Q1.

But it may take a little bit more of a market meltdown for us to see the outflows stem. But I just -- I'm not worried about meaningful really meltdown in client assets. And what we're seeing is the nice thing about this business and the way we're positioned, the portfolios are positioned is that when we're underperforming in runaway markets, the market return outstrips client outflows. That's been our experience so far. It was last year and continues to be. And then if the market falls, we would expect to outperform pretty materially, which should drive positive flows back to us. So I think we have a countercyclicality here that is very positive in terms of resilience of the business. So -- and you net all that out and where you're at, we're at the highest assets that we've ever been at, plus or minus sitting here as of end of business yesterday.

Great. And just in terms of the seasonality, just I guess the implied outflow rate into the first 8 business days of February looks like around $2.5 billion, scaling it up to a whole month. Just to help us understand, is January typically a more pronounced month, either positive or negative depending on the momentum leading into that because it's a reallocation month for U.S. investors. Just maybe Steve can comment on that.

Yes. Look, I mean, it's hard -- I'd be careful not to generalize, Nick, because like it's hard to say that they reallocate every January. What we do know is that every January, you're going to have a performance review. And so I do think in this case, we are seeing more pronounced January and maybe, again, may extend into February because the reviews happened in January, we're seeing more pronounced outflows based on the relative underperformance of last year. I do think there's seasonality in that, but I would be careful and I hesitate to extrapolate that to every single year. But Steve, you can add your thoughts to that.

Yes. I mean, I think that's generally a true statement, what you said, but I'd be really careful saying that it was exactly what did or didn't happen with our numbers in January. We don't have the granularity to truly know that.

The next question comes from Elizabeth Miliatis from Macquarie.

Just the first one on flows and what you're seeing from a client perspective. Sorry to keep hopping on this. But from the disclosures in your pack, it sort of seems that outflows are pretty broad-based by asset class and channel as well. Is there any particular pockets of weakness? So are you seeing a bit more of that lack of resiliency from your client base maybe on some of the newer clients. And so they have said we've not benefited from stronger performance. So they're the ones taking the money out? Or is there any particular pockets that you can sort of talk to? Is it pretty broad-based as the data might suggest?

Yes. Thanks for a good question, an important question. So if you look at the data, what you see is that, obviously, we've had sort of consistent institutional outflows that I think are not as related to performance. And then you've had near term really only 2 quarters of outflows, 2 quarters now plus a month in the retail side. And I do think -- although we don't have data to prove it, but I do think that this is likely, again, more momentum-driven investors, performance investors are following hot performance that we had in '23, '24 and then reversing here in '25 and beginning of '26. But again, I want to be really careful not to extrapolate too much from that because we don't have the granularity of the data to know exactly which investors come in and out of the mutual funds, which are the largest product type that we have. So -- but I think it stands to reason that that's what we're seeing.

Okay. Got it. And then just on the costs, the cost base has definitely pulled back a bit. Cost to income is, I think, towards the bottom end over the last few years. And particularly, the second half is typically higher just because of the share-based comp, but it's still -- if I look back over the last 4 halves, the cost base is actually quite low. It's the lowest half out of the 4. How should we think about costs going forward? Should we assume a similar sort of cost to income? Should we assume a bit of total cost growth? Like can you give us a bit of a steer on it because it does have quite a bit impact and it's tricky to forecast that out?

Yes. Look, we've not historically given any guidance. What I've said, and I'll continue to say is that while we never target a margin, we're never saying, okay, we want to have a cost-income ratio of 77%. We never say that. You can see it's been reasonably consistent around there. I think that if the business grows, particularly -- I mean, one way to think about this is if -- let's assume we have 0 flows in or out and you had $10 billion of growth in assets through performance. Well, most of that should be subject to -- there are variable costs associated with that, but paying a way to platforms and things like that. But otherwise, all that falls to the bottom line, and that should be margin enhancing, right?

I think we are clearly very mindful of managing our operating expenses, but we're also balancing that with being very, very positive about where this business goes and making sure that we are making smart investments for the future. So we did increase headcount. We increased that on average with lower expense headcount, and we're investing in the team and training the team and growing the team, and we'll continue to do that. But I think that from a modeling perspective, the vast majority of our hiring is behind us, where we will hire will be where we see opportunistic great hires that we can bring on and/or where the business grows and we need to continue to support the infrastructure for that growth.

The next question comes from Julian Braganza from Goldman Sachs.

Just the first one. Can you comment maybe just on the recent trends around gross inflows and gross outflows? Just want to understand the relative pressure there across new business and outflows?

Thanks, Julian. Yes, listen, we don't break out gross versus net. We really only talk to net. But I think that the gross trends probably not surprisingly, you're going to see similar types of trends where in these types of markets where we underperform, you probably have less aggregate selling. So -- and I think you can see that reflected clearly in the net numbers.

And just relatively speaking, any qualitative comments, is it more accelerated outflows the performance? Or is it just on the new business side more so? Or is it both coming down pretty evenly?

Sorry, Julian, could you ask it again? I had a little bit trouble hearing the question.

Yes. I was just trying to understand if both inflows and outflows are coming down pretty evenly? Or is there more of an acceleration of the outflows relative to the inflows or vice versa, just relatively speaking, between the inflows and the outflows, which one would be moderating faster?

Yes. Sorry, Julie. So we don't break that down. I'm going to decline to comment on the difference between gross and net right now.

Okay. Okay. That's fine. And then maybe just for the investment team, just interested in any comments whether you've had any turnover in the investment team, just given the weak investment performance, but also the pullback in average comp per person. Just keen to understand any comments around investment team or even in the distribution team.

Yes. There's been no material turnover in the investment team. We have -- we do have a sort of more junior analyst program that is -- people tend to stay for a couple of years. You may see a little bit of turnover that where people don't re-up after that. But the senior investment team is very, very stable. The team is functioning extremely well. Where you see the average comp per employee going to come down, that's not driven by investment team that's driven by the full 200-some-odd number of people across the firm where we are disproportionately hiring younger folks on the team and training them today. I think the team is extremely well compensated. I think we have very positive ratings in terms of people's experience at the firm. So not -- I have no concerns culturally in terms of turnover. I think we're in a great place.

Okay. Let me add a couple of points here. I think the perception in most of the shops after underperforming like this might be that, whether the business arrive or not. That is not the case here. I mean I think this was a conscious decision to position this way. And we still feel we are early, not wrong. And I have been there, done this before. I mean, look, I underperform more than what you're seeing here. And I think this is a specific call made. We didn't accidentally end up here, and we are looking around, gee, we don't know what's happening. So there's actually positive. We're quite excited, by the way. And days like today, obviously makes us more excited, as you might appreciate, right? Because the -- as you know, they're all saying the markets go down in an elevator while go up in an escalator. And I think you're seeing that here.

So I mean, look, if you go back to post GSE, post-driven, the biggest trades, whether it's just banks or energy or commodities, I mean there was a commodity -- supposed to be a commodity super cycle or before the dotcom or before the housing -- the property bubble in Asia. So there's a palpable excitement because we have done our work and the data points so far are confirming that, and you begin to see cracks appear in fairly well-held names. So if you take a 3-, 5-year view, the alpha proposition, we believe, could be actually pretty exciting. That's the tempo. It's hardly that, oh, they're going to be team turnover or anything like that. It's actually the opposite.

Got it. That's clear. And then just a final question for me. Is there any discounting any repricing on headline fees to retain at this stage, Tim, at all? Any -- even if it's around the edges, is there any repricing at all?

Sorry, can you ask the question again? We're really struggling to hear.

The line is not very clear. Yes.

Apologies, can you hear me now? Can you hear me now?

Yes, much better.

Okay. Perfect. I was just wondering, can you just also maybe just confirm just any repricing or discounting on headline fees to return even if it's around the edges. I just want to understand if that's becoming a feature at all in your discussions with the clients.

No, no. There's been no changes based on performance to pricing.

[Operator Instructions] The next question comes from Shreyas Patel from UBS.

Just a question on your performance. When you look at the depth of your underperformance and I guess, your own attribution analysis of that, if this AI thesis plays out, would that be sufficient to kind of unwind all of that performance? Or do you feel like there's a large component of that, which is being driven by stock selection versus some of the sector allocation and won't necessarily bounce back if this thesis plays out? Just curious on your thoughts there.

Yes, it's a good question. So look, could the stock picking better? Of course, it could be better. There's always room for improvement. Having said that, I think the -- and sometimes it is not well appreciated that the tentacles of this AI theme go wide and deep. I mean, if you have a lot of industrials, the power generators, for example, in Europe and U.S., if you look at it in some of the industrials in Asia, obviously, Czech, Korea, almost 2/3 is memory, right? So I think we -- not just we wouldn't be able to cover -- we will be able to cover the gap. I think this could be far better because that will -- we believe that this could actually push over the economy in a recession.

I mean, if you look at unemployment in France, for example, in Germany, in U.K., in Australia, in Japan is almost always fully employed, but the economy isn't exactly booming. Then obviously, U.S. and Canada, China, that this would push the economies over the edge into recession. And once that happens, a lot of those deep cyclicals are trading at valuations you basically have never seen before. I mean, if you look, for example, U.S. banks, they have not really traded at these multiples on a price to book or price to revenue basis in 25-plus years. I'm talking to the investment banks, right? So I think this will actually roll a lot of things.

For example, if you look at the U.S. banks, would they really be trading at these multiples if the IPO and M&A activity stops? Private equity would not be able to exit a lot of the software exposure even other -- and other exposures. So we feel this will have massive implications. So the question is not about 1,000 basis points or something. In fact, you gain 1,000 basis points on an average in some of these -- some of the bigger products we have without the market going down. So our view is that this could be far more significant. So it's a true alpha opportunity over multiple years. That's what we believe. You could be dead wrong, but that's what we believe here and now. So it's not simply cutting the ground. And by the way, if you look over to '21, '22, it took a few months for us to recover. I mean, not that dissimilar gap.

The next question comes from Andrei Stadnik from Morgan Stanley.

Can I ask around your distribution? Can you talk a little bit more about maybe some of the new vehicle launches that you've had recently? And how are you thinking about evolution and next steps in terms of your fund or your vehicle lineup?

Steve, do you want to take that?

Yes, happy to. So I mean, the most recent additions vehicle-wise for us have been in the ETF market in the U.S. as well as what's called CIT product set here in the U.S. as well, which is directed towards our version of what's similar to a super plan in the 401(k) market. And so those are fast-growing areas of the market, and we've seen initial response very positive. It does take a little bit of time for the new products just to build the trading history, the AUM history, et cetera, that gets access to the platforms, but we've seen material additions to platforms in the back half of the year, and we'll hit the 1-year mark for that kind of middle of this year, and that's a threshold for a number of other platforms.

So -- and then beyond that, I think we are actively looking at other strategies that have the potential for the ETF vehicle. We already have that in all the CIT vehicles. I think there's always an important investment question to answer as well, though, which is the balance between transparency and capacity in those vehicles. And so that's an active consideration that we'll continue to make. And if the investment team feels that they're comfortable with those vehicles, then we'll look to launch additional offerings as well.

The next question is a follow-up from Elizabeth Miliatis from Macquarie.

Sorry, I had a quick follow-up just again, on the cost side of things. If we just look at compensation and benefits ex the share-based payments, that grew in '25 by about 3% versus average FTEs of 13%. So just wondering what that differential is? And is it just a mix or paying people a few -- a little less bonuses? And is that something we should continue to see going forward?

Yes, Liz, it's almost all explained by hiring more junior or lower compensated people as it's a mix shift. It's not a meaningful shift in overall comp to the existing team.

Okay. Got it. Sorry, I should have probably not asked specifically about bonuses. Just wanted to get a bit of color.

Yes, of course.

There are no further questions at this time. I'll hand the conference back to Tim Carver for any closing remarks.

Great. Well, thanks again, everybody, for joining us, and we look forward to seeing many of you when we're down in Australia in a couple of weeks for our semiannual roadshow. Thanks, everyone. Goodbye.