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The London South East, Investing Matters Podcast - Episode 5 featuring Annabel Brodie-Smith, the Communications Director at The AIC

LSE 00:01

You are listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice so please do your own research.

Peter Higgins 00:17

Hello, and welcome to the London South East Investing Matters Podcast. Today I have the privilege of speaking with Annabel Brodie-Smith, the communications director at the Association Investment companies. She's award-winning communications director as well. She's done absolutely phenomenal work, enhancing the inflows and the education at the Association of Investment Companies. And she's been doing the work now at AIC for around 23 years Annabel?

Annabel Brodie-Smith 00:50

It’s actually 24 Peter and delighted to be here talking to you. Yes, it's a very long time. And obviously, it shows that I find this industry fascinating.

Peter Higgins 01:03

Well, they've been blessed to have you Annabel, you've done so much in the time you've been there. And as I said earlier, you know, you've won some awards as well. You've picked up lots of awards from your fellow peers who have mentioned you voted for you and enabled you to get the recognition you deserve as well.

Annabel Brodie-Smith 01:19

Well, that is true. And you know, my aim is to ensure that the reputation of investment company industry remains very good. But also I really am here to get the message out about investment companies, the message out to private investors, but also other types of investors too, and to explain really what investment companies are about, and what the benefits are.

Peter Higgins 01:44

Absolutely. I want to start with, if I may, when I read this, I thought absolutely spot on. Okay. And this was only last week. And this was Mark Dampier is the former research director at Hargreaves Lansdown and the author of the Effective Investing Book. Yeah. And he's also an executive director of two investment companies as well. Right. And this is what you wrote, I wish to shout out the Association of Investment Companies, the trade association that represents most investment companies. They are the S.A.S of the trade associations, a small band of passionate people who, as a trade associations should do, tirelessly promote the attractions of investment trusts, or investors in particular, I want to shout out Annabel Brody-Smith, who is the head of communication has done such an incredible job for over 25 years in pushing attractions of investment trusts to private investors and the advisor community. Well, there you go.

Annabel Brodie-Smith 02:39

I have to pay Mark later on aren’t I? Incredibly nice and very kind and very flattering of him to make those comments. Obviously, you know, I am a modest person, but it's always great to get that sort of recognition, it shows that somebody really recognises what you're doing.

Peter Higgins 03:00

Yeah, and this is the thing, every time we've spoken in the past, you're always very modest, very understated, but you're doing so much incredible work with your team. So this is why we're speaking again. And also because of the past 18 months or so, Annabel. There's been an absolute flurry of retail investors ploughing millions of pounds into investment trusts. And as Mark said in his article this year alone, investment trusts have raised beyond 13.6 billion in new IPOs and secondary listings. So it appears that the investors or retail investors are really getting the message about the value and benefits of.

Annabel Brodie-Smith 03:33

Yeah, it's actually 3.6 billion actually in raising new issues this year. In fact, in total receptors raised over 13 and a half billion. So you know, as I said, we've gotten over 3 billion in those new issues. But what's interesting is lots of our existing companies are issuing new shares, it's actually record breaking an issuance from those existing companies. And it does demonstrate there's really strong demand for investment companies, which have faced up to the challenges of the pandemic, and come through really well, the average investment company in the 11 months, the end of November, is up 13%. And in fact, last year's again, we were up, you know, it was a volatile roller coaster ride last year. But again, the industry was up. So I think investors have really recognised that. And they're also recognising some of the advantages, such as our ability to sustain dividends as a big benefit, and that's why they're coming to us.

Peter Higgins 04:34

Absolutely. So I wanted to start really because obviously we're having this this conversation your main focus is in educational content for retail, institutional, and professionals. So I wanted to start with regards to our retail investors in mind and talk about first and foremost, what is an investment company? What's the difference between a trust and a fund for you Annabel?

Annabel Brodie-Smith 04:56

Okay, well, investment companies are completely listed on Stock Exchange. So therefore has an independent board of directors as it's listed on stock exchange, investors can buy and sell it, it's got a closed ended structure, that means there's a fixed number of shares in issue, whereas an open ended fund is obviously not listed, and increases and decreases in size, according to investors buying and selling. And that makes a big difference, particularly if we're talking about assets that are difficult to buy and sell like for example, property, property, open ended funds had a torrid year last year, with most of them, in fact suspended for the majority of the year actually, because they couldn't sell their assets quick enough to give people back their money.

Due to the conditions from the pandemic investment companies listed on a stock exchange, you can buy and sell those shares, they continue to trade throughout the pandemic, the tough times that property had, they of course, suffered a share price, but then they bounce back.

So I think that that is a really important difference, the closed ended structure, the independent boards of directors, it particularly makes investment companies suitable for these sort of hard to sell assets like infrastructure, renewable energy infrastructure, property. And also because they sell at their share price, open ended funds, you buy and sell them at the net asset value, the value of the underlying investments.

Whereas with investment companies, you buy and sell at share price. So you would sometimes have perhaps a discount where the share price is lower than the asset value, the overall value of these assets. Or perhaps it's a premium, where it's actually above the share price is above the underlying value of the assets, I have to say the investment company industry has been performing very well, there's always going to be difference in the average discount, or the average discount is around 1% at the moment, which is pretty low, if you look historically, but there's always going to be variation.

So for example, the global emerging markets is out at 9% discount. UK smaller companies is 8% discount. And what that means is you're buying those companies, and you're getting an 8% discount on the actual asset value, what the underlying assets are worth.

Peter Higgins 07:35

Indeed, I mean, we've seen the retail investors been attracted to it. And what's happened of late is, especially with the REITs, and some of the logistics and warehousing, sort of real estate investment trusts, they're sitting at a premium, some of them are quite lofty. Annabel. Do you have any concerns regarding that?

Annabel Brodie-Smith 07:52

Well, that's one of the reasons why we're seeing so much share issuance in those categories. And explain here that the growth capital sector, which invests into the latest stage venture capital, very suitable investment company structures for that it's been the best performer this year, it's up 47%.

Similarly, you mentioned the warehouses, obviously, with the boom in online shopping, need for warehouse space means you know, that sector is the second best performing up 43%. So a lot of the companies in these sorts of sectors are issuing new shares, try and keep it sort of a lid on that demand. If they issue more shares, then hopefully that the idea behind that is it stops the premium getting so high. Because obviously, if you buy at a high premium, and if that company then suffers, then you know, it will have a sort of knock-on impact on your performance.

Peter Higgins 08:52

Indeed, and sort of one of the most recent ones, which was quite significant isn't it's a nice little niche that they're in. And in fact, because of the news, they were able to grab the actual ticker, you know, for them, and that was Life Science REIT. Yes, because symbol LABS, which I thought was absolutely fantastic.

Annabel Brodie-Smith 09:08

That's really interesting. I mean, it's a new launch just launched now in November. And obviously, you know, we've just been through a pandemic need for that type of building that kind of laboratory in the UK, and they've been out there busy buying on the market. I've seen them by at least four buildings already. And yeah, it's a really interesting company.

Peter Higgins 09:32

Yeah, I mean, for me, you know, dedicated property fund, dealing with laboratories, pharma, biotech, and so on and so forth. For them to be able to go out and raise What 350 million pounds, yes, shows there's a need out there, or at least as the demand out there, I should say.

Annabel Brodie-Smith 09:48

There really is a demand out there. You know, as I said, we've seen a lot of interest in these sort of specialist property vehicles. We've also seen a lot of renewable energy infrastructure launches so battery storage, solar, wind, all of those. We've seen a lot of money going into those. We've also seen some more general infrastructure launches, Pantheon Infrastructure (PINT) raised 400 million. And then we've seen some really interesting companies. So for example, you know, Seraphim Space (SSIT), invested in satellites, and all sorts of space technology, really fascinating.

Peter Higgins 10:27

It is. I mean, we've, when we last spoke, and we'll be talking about, you know, you and me being long- term investors, but some of the investments that are coming out now, and sometimes looking and thinking, right, okay, that's a bit different. It's a bit unique. And I think it was last month we saw Scottish Mortgage (SMT), which you know, everybody's talking about lots of people seem to have that invested in their the portfolios, and they forget or they drip feed into it monthly, and averaging. And that invest in three blockchain companies, a fungus developer, a battery recycler, I was like, wow, you know, this is proper future tech.

Annabel Brodie-Smith 10:59

I know. I mean, we have got the right structure to do this with this closed-ended structure and it’s permanent capital. And what you're seeing is a trend even with conventional investment companies, traditional investments, like Scottish Mortgage, they are increasingly investing in unquoted companies. And you know, obviously, it's very innovative. But companies are staying private for longer. Yes, particularly high growth companies. So for investors, the get those opportunities, and investment company is the way to go about it.

Peter Higgins 11:34

I absolutely agree with you. So with that in mind, then you talk about private equity, a lot of the private equity now and now use the word I'll be I'll try to polite as possible here now, plundering at the UK PLC, and coming and buying the private equity, that the venture capitalists are coming and buying a lot of our entities, you know, Morrisons is the last big one to go and be taken over. Is there any concerns that there's going be less and less for…..

Annabel Brodie-Smith 12:02

This is a topic we've dealt with. I mean, the first thing is, I think it's important to identify the difference between these private and American generally, private equity companies coming in. I think in the past, some of their practice has been dubious. And there has been too much debts that's been loaded onto the company, they haven't perhaps had the best long-term interests of that company at heart for sure.

I think you've got to differentiate between that and our investment company investors, for example, we have a private equity sector, here in the investment company industry, it's actually performed very well, it's at 26% this year and they are taking stakes and taking the long-term stakes in companies and working with those companies, and putting people on board to develop those companies over the long- term. And I think you've got to differentiate between that. And perhaps some of the practice we've seen in the US private equity companies. And we did actually put this very question to UK equity managers.

And obviously, of course, it's having an impact on the share prices and some of the companies they own, which is positive. But they did have some concern as to the viability of this change over the long- term. Because of course, it does reduce the options for them in terms of what they can invest in.

Peter Higgins 13:27

That's a very important point, and I completely agree with is the vast difference, the vast difference with the debt and stuff that's going on there. Annabel, I want to move a little bit slightly across a little bit and talk about Venture Capital Trusts now. Yeah. VCTs. Yeah. VCTs. A lot of people moving into that, the importance of that, and the benefits of that. Can you share that as well?

Annabel Brodie-Smith 13:47

Oh, yeah. Well, venture capital trust. I mean, for investors, they have very generous tax breaks, you know, you get 30% upfront capital tax relief, if you hold that for five years. So upfront capital gains 30% relief, I can actually explain that a little bit better, you know, your rate of income tax relief is 30% back straightaway.

You can invest up to 200,000 pounds every year, but you must hold those VCT shares for five years to qualify for that income tax relief. Also, importantly, any of the dividends you receive are tax free. And that makes a big difference. But I think the best thing about them, actually, and obviously those generous tax breaks are very important is that they are invested in the UK’s smaller, fast growing, ambitious companies.

And those are the companies that are going to grow and support the economy in the future. Interesting returns of venture capital trust managers all the time. They seem not surprisingly lots of opportunities in technology and health care at the moment, which makes a lot of sense.

But you know, those sort of companies have big economic and social benefits. For the UK, they have been investing in these small types of companies, making sure they're strong through the pandemic. And they will be continuing to do that. So I think for investors, you know, there's a great, generous tax breaks, but they also have strong performance. And you are actually helping the economic and social benefits for the economy so that they are very, very interesting in investments.

Peter Higgins 15:35

Yeah. And the thing that says the same regarding the investment companies, per se, really. And when we last spoke, we're talking about anniversaries and all the rest of it. And you've been going since 1868. So, you know, a lot of these investors are long-term investors, which takes me straight on to the dividend heroes and explaining to our investors what they are, and some of the strongest ones that have been going forward now 50 plus years, some of them in fact.

Annabel Brodie-Smith 15:58

Yeah, well, this is actually very important. And again, it's a very important difference from open ended funds. Because investment companies have got a unique feature, where they can hold back up to 15% of their income.

Every year, they hold it, they've in reserve in the revenue reserve. And then when times get tough, and boy did times get tough last year, we all know about drag about it, when times get tough, they can use this revenue reserve to boost their dividends. And that's the reason why investment companies were given over 1%.

Last year 85% of them increased or maintain their dividend, whereas just 23% of the equivalent open-ended funds did. So it's really, really important. We have 18, dividend hero investment companies, and six of those have been increasing their dividend every year, for over 50 years. And investors find this incredibly reassuring, you know, proof is all good when it comes but you know, actually have the reliability of that income. It means a lot and growth is good when it comes but we never know when it's not going to come. And then at that stage those dividends really pay off.

Peter Higgins 17:22

Absolutely. I mean, this is the beauty of compounding the portfolio compounding the investments in the portfolio.

Annabel Brodie-Smith 17:26

Absolutely reinvesting those dividends absolutely.

Peter Higgins 17:30

Can you highlight two or three of those dividend heroes for us Annabel?

Annabel Brodie-Smith 17:33

Oh, yeah, well, I have to say, I mean, City of London (CTY), is really the ultimate dividend hero in the UK equity income sector. It's managed by Job Curtis, who has been managing it an extremely long time. And he is a really lovely, but incredibly reliable person. And it has been 55 years of consecutive dividend growth. I mean, that's pretty impressive.

You know, we've got, for example, Bankers Investment Trust (BNKR), again, if that's in the global sector, I always smile because it's managed by somebody called Alex Crooke, that you know, 54 years of consecutive dividend increases.

Peter Higgins 18:23

He’s banking dividends, that's what he's doing.

Annabel Brodie-Smith 18:25

Yes, absolutely. So another Alliance Trust (ATST), again, a global sector, very, very long history that company's got, they've outsourced their asset management to Watson Wyatt, and they are a multi manager, 54 years. I mean, it's really worth if you if you have a chance, go to The AIC’s website, it's literally theaic.co.uk. And the dividend hero section is one of those sections that is really most used people go and take a look and want to find out which of those companies which have got those long records. We've also got a lot of companies which have increased their dividends between 10 and 20 years, too. But I think it's very reassuring to see those dividends rising every year.

Peter Higgins 19:14

Absolutely brilliant. That's really, really good for portfolios and for pensions as well. We've not mentioned pensions.

Annabel Brodie-Smith 19:19

For pensions. Absolutely. And for people who are retired to look into supplement their pension income, or it's a great thing to consider.

Peter Higgins 19:29

Absolutely. So we've spoken about long-term investing a little bit. I wanted to ask you, what's the current size of the assets under management for investment companies that you cover?

Annabel Brodie-Smith 19:38

We’re at an all-time high at the moment! 274 billion. I actually don't have the end of November data. I will do very shortly. Let me put that in context for you, Peter. When I joined the AIC I think it was about 56 billion that is 24 years ago. So it's nearly a fivefold. increase.

Peter Higgins 20:01

That is amazing. And when we spoke in June 2016, it was just 65. So it's gone up another 109. Since then.

Annabel Brodie-Smith 20:09

Yeah, we've seen very, very strong growth. I mean, most of that is just the company's performing well, we've had a particularly strong fundraising year this year, as you said, it's record that a lot of that actually comes down to the companies actually performing really well.

LSE 20:26

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Peter Higgins 20:43

Right, I wanted to talk a little bit Annabel because you're obviously the communications director, but you're also a private investor in your own right, and you're investing long-term. So wanted to talk a bit about your investing style. Yes, we're going to touch on diversification. But I want to touch on it with regards to your own investments as to what you've been up to and what you enjoy?

Annabel Brodie-Smith 21:03

Okay, well, not surprisingly, Peter, my portfolio is investment companies.

I do tell everybody should have a diversified portfolio. But clearly, it's what I understand best. And I'm getting that diversification, you know, they're pool investments with a professional fund manager in charge.

So for me, it makes sense for me to have that. And I've got a bit of around 15 or so maybe just slightly more investment companies, I've got to say I am mainly growth focused, but I do have income focused investment companies as well.

And it is just for that very reason that I think, you know, the discipline of dividends generally, first of all, I think it makes managers perform well, if they've got that discipline of dividends with them. They, as I said, when things get tough, at least you have those dividends coming in, and you can reinvest them. And it really gives you a boost. And my portfolio is predominantly equity.

But I actually interestingly have two property investment companies. And I actually made a choice, I trade very rarely. But last year, I thought there was a big opportunity, and the market was very undervalued. So I invest in a property investment company, and I also invest in a UK smaller companies company, I am a bit of a contrarian.

I love a contrarian opportunity. And normally, that's when I trade when I think I really think there's an opportunity, because I'm happy with my portfolio, I've you know, I've selected it's very balanced, it's very diversified.

Generally, I'm happy with those companies. But after I think there's a real opportunity out there, that's when I will, perhaps sell something and move into a new area. And in this case, UK smaller companies, and a UK commercial property company. And I have to say they have performed very well.

So I'm very pleased with those decisions. Germany contrarian decisions, do you perform well, but not always? You've always got one or two. I think investments that you know, you wish they were doing better?

Peter Higgins 23:15

Russia and Japan always seem to be on the cusp of and never really materialised.

Annabel Brodie-Smith 23:19

Yes. And you know what, Peter? I have both of those in my portfolio.

Peter Higgins 23:24

I think you mentioned them last time to be fair, the thing I wanted to touch on here and about it's very, very important, is about the research element, because you're doing your research, and you're picking up on contrarian opportunities and anomalies in the market, I wanted you to expand a little bit as to what you're looking for sometimes in the management of these companies, and also in the niche, and what you're looking for, in thinking, actually, this is an opportunity here.

Annabel Brodie-Smith 23:50

Quite often a manager change company, or maybe they had a lot of activity here in the investment company industry, we've got a lot of investment companies actually changing their management group.

And this is a big advantage of the investment company structure. The board of directors is there to look after their shareholders’ interests. So if the board are unhappy with the performance of the fund management group, then they can actually change the fund management group.

We've had six investment companies change funds managers this year. And often a change of management group can present an opportunity, a change of manager can present an opportunity. So I was looking for both of those.

I obviously also looking for something that's undervalued.

So trading at a wider discount than the sector average for that sector. And there's normally a catalyst like a manager, or maybe last year, they were just really undervalued in the UK was so undervalued.

Commercial property was obviously completely bombed out, haven't happened. Then I always look at the manager. And I do look quite closely at the manager, I look at their performance, if they're coming into manage from somewhere else, I look at their performance under their other funds.

I like to actually see them. I'm very lucky because I can actually go out and see a lot of managers. But you know, you go online, you look at videos, I like to actually see the manager. And perhaps if I'm lucky, actually ask him some questions, but I just like to see them before I actually invest.

I like to look at the gearing we haven't talked about gearing as an advantage of investment companies, the ability to borrow to invest in assets, you know, if you think something's perhaps an investment opportunity, you can borrow up and invest.

That's the whole idea behind gearing. And I like to look at the gearing as well, I think If an area is undervalued, and it's perhaps a new manager, and is brought on board, the gearing now I think it does demonstrate some positive thinking from him, course there's no guarantee it's going to work. But that's sort of my mindset. I was always obviously look at charges. I always look at charges.

Peter Higgins 26:08

Yeah, the two things I wanted to touch on there. From what you said, I really appreciate that really full reply that you gave me there. Two things here listening and reading and researching the fund managers.

But also you said about listening to the videos and recordings that stem previously, but also possibly about AGMs. And then also the charges, obviously, it fluctuates between, but it seems to be coming down, which is a benefit to everybody.

Annabel Brodie-Smith 26:31

I think it is coming down. And you know what we've had 37 companies introduce changes to their charges this year, bringing them down to benefit shareholders. And that is a trend that's been going on within the industry, we're seeing a trend where people are getting rid of their performance fees. They're introducing tiered fee.

So as the company grows in size, the shareholders get the benefits of economies of scale, and the charges go down as the company grows. So obviously, charges are very important. I do think they are coming down. I think you're quite right. There was second part of that question. And now I can't remember it, I was so busy talking about charges.

Peter Higgins 27:12

No talk about the recordings on the video. And also an AGM is about looking into the whites of the eyes Annabel.

Annabel Brodie-Smith 27:19

I think this is a big advantage for investment companies, we all companies, you are shareholders, you can vote and have a say about the future of that company, you are part of it. And great advantage, again, is that you can attend the AGM. And you can ask the manager and the board those questions that you want to.

And I think that is incredibly beneficial. And what's great, there has to be some advantage of all the difficult times we've been through. But you know, one of the advantages is now with technology with Zoom, or whatever it is webinars, you can attend online. And I think that's just really wonderful. It's really opening up shareholder democracy, quite honestly, because it's really helping investors all over the country, have a say in how their companies run.

Peter Higgins 28:09

I think it's been absolutely phenomenal of late. And I think also Annabel there's something here I'm going to have to give you credit for which I don't think you've given yourself credit for is that a lot of the investment companies are actually reporting and writing out actually what they've done fully. It's not a case of you scratching head thinking I don't quite get what they did there and why they're actually writing out and their communications, they've got so much better over the past 10 years.

Annabel Brodie-Smith 28:33

Well, you know, we have done our best.

Peter Higgins 28:34

I know you have. I think that's why you should take credit for it.

Annabel Brodie-Smith 28:38

Oh, thank you, we have done quite a lot work on improving those communications, we actually hold awards, shareholder communication Awards, the best to try and encourage them to do better.

Talking about AGMs. We've also just introduced this year and award for shareholder engagement for platforms, because of course more and more of us being created a holding our shares on platforms. And we want to encourage these platforms to engage, make sure that their investment company shareholders are finding out about the AGM or finding out when there's an opportunity to vote are finding out about any important, you know, corporate activity type changes. So we're encouraging that to actually for the platform to do a better job but yeah, those communications I think you're right, they have improved, but there's always room for further improvement.

Peter Higgins 29:32

Absolutely. So with that in mind Annabel I saw your managers won an award for communications recently, Elmley you're already nurturing the next generation.

Annabel Brodie-Smith 29:45

I was so pleased he was a rising star award, Investment Week Investment Company Awards. And I have to say you know Elmley is just phenomenal person so dedicated, so passionate about investment companies. He is actually very He recently left the association. He's going to work for 3i, big private equity investment company. So really, really delighted for him. But of course we're missing him.

Peter Higgins 30:11

Absolutely. has given him a plug there and he's going away.

Annabel Brodie-Smih 30:15

Oh I know. But he has been with us for four and a half years Peter.

Peter Higgins 30:19

Brilliant. So I mean, obviously, as we're speaking about awards, you guys won the headline, Money Press Office Team of the Year 2019. Yeah, highly commended. 2019 as well. Thought Leadership Initiative 2018 yeah, Headline Press Office Team of the Year 2013 and 15 all under your auspice as well. And tenure? You've done it!

Annabel Brodie-Smith 30:43

Well, let me tell you, the thing about us is we are passionate about what we do. We are passionate about investment companies. We believe they are the best long-term investment actually, for investors. And as a result, I mean, I think that inspires us to do good work.

Peter Higgins 31:03

Yeah, got to give a shout out to your colleague that's still there, Nick Britton as well.

Annabel Brodie-Smith 31:08

Nick, I couldn’t live without him. He is my partner here. And yeah, incredible support from him. And you know, obviously, as a former journalist, just incredible writing skills. And you know, absolutely great, great person to work with just so lucky to have him.

Peter Higgins 31:28

Absolutely, your right hand as we say, Oh, brilliant. Right, about we're going go back a little bit to your portfolio, your investing and all the rest of it. When we last spoke, you talked about your cost centres, and I want to speak about your children and how have they got their own investments going? Are you encouraging them?

Annabel Brodie-Smith 31:45

Yes, they've got their Junior ISAs. Yeah, they've all got private equity, long-term investments.

You know, I've always been a big believer in private equity, actually. So now they've all got private equity investment companies, because centres are now 14 and 11.

Wow. They're getting much older than they were. And, you know, I think since we last spoke, we moved to the country site. Oh, well, you may have to Oxfordshire, which has been quite a difference.

I'm commuting three days a week now to the office. But now the cost centres are on good form. Now I'm very keen on financial education is very important, particularly for children.

Yes. So I am encouraging the cost centres to get to grips in terms of investing and their money and managing money. And you know, my eldest now, you know, he's obviously got his own accounts. And it's interesting, the ongoing debate as to how much pocket money is enough and how you manage that. That's how you begin, you start to budget for that.

Peter Higgins 32:45

Absolutely. And given the individual's you know, your son’s chores, what to do to earn the money, and then absolutely invest.

Annabel Brodie-Smith 32:53

And you know, he will do that, actually, if I need some help changing the beds or something, I pay him some money to get on it, get off to do it.

Peter Higgins 33:03

That's brilliant. Brilliant. Now, I wanted to go back because you weren't, and you had a voluntary role back in a while you did it for 10 years, as a trustee with Personal Finance Education Group. And you're also an active member of the Gender Equality Workstream for the Diversity Project. And an ambassador for Women on Board. So you're a very, very busy lady. If you go in reverse order, Personal Finance Education, you know, what's been happening since you left?

Annabel Brodie-Smith 33:27

Yes, absolutely. Now, it has merged into Young Enterprise. And they have a strand of work called Young Money, actually. Again, their ambition is to give young people the skills and the confidence to manage their money properly. And they've been going out into schools, working with teachers to achieve that. And it's phenomenally good work. And it is so important. And I still cannot understand how little value we give to financial education in schools, some of our work, and it is now on the curriculum. But you know, so it's so important because everyone is going to leave school, everybody's going to be managing their own money.

Peter Higgins 34:10

Absolutely. So I'm working on a project now. And we're hoping to launch it fully next year, which is going to be around education of children and individuals regarding investing. So I'll tell you more about that.

Annabel Brodie-Smith 34:42

I really look forward to hearing about that.

Peter Higgins 34:23

Absolutely. And also about your other ambassador roles, a diversity of projects and Women on Boards, could you tell us a little bit more about that?

Annabel Brodie-Smith 34:30

I'm really passionate about diversity. I am really passionate. And quite honestly, the investment company industry has been changing, but there's much more work to do. Can I say when I joined all those 24 years ago, I would think there was only about three or 4%.

Directors who were female. Literally, we're now up to 34%. female directors. And that is something that is obviously increasing.

But there's still a lot more work to do, there's a lot more work to do on other forms of diversity. And I'm passionate about diversity, because I think it does really deliver returns for people. That's the whole point of it.

So Women on Boards, I've done some interesting work with them, helping encourage more women to consider becoming an investment company directors, their diversity projects I've been doing work with them, that's actually encouraging. And this is really interesting.

Encouraging more young people, including women, to consider being fund managers. Obviously, there's a lot of work to do. Again, when it comes to diversity in the fund management industry. The figures are around 11% female fund managers, they're very poor. When it comes to ethnic diversity, there's a lot more we need to do.

So it's something I'm really, really passionate about. And as I said, I think it delivers performance. That's what it's all about. It does.

Peter Higgins 35:56

It does. And it goes back historically, what to what we've said as well, thinking about females in investing or female investors, almost every single bit of research I've ever seen always says that female investors and female leaders are performed better than the men. So there's a win-win there.

Annabel Brodie-Smith 36:11

What's not to like about that? I mean, I, I couldn't comment on it, I think we need more women in investments, that's for sure. We know middle managers may need more directors, we need more chief executives, we need all of that, quite honestly. So I'm very keen to go out there encourage young people and, and older people, quite honestly, to consider getting involved.

Peter Higgins 36:39

Brilliant, I'll be helping you support you as much as I possibly can in that quest and that goal. Annabel.

Annabel Brodie-Smith 36:43

Thank you so much, Peter, thank you so much.

Peter Higgins 36:46

But this is part of the reason why London South East have decided to put together these Investing Matters Podcast is about educating everybody as well. You know, it's purely educational, which is why we're doing this.

Annabel Brodie-Smith 36:56

Yeah, absolutely. Education, but investing, investing, actually, you know, if you've got money sitting in a bank accounts, if you've got enough money to cover your bills for the next three, four months, you've just got money sitting spare, is not working for you, you need to get out and make it work for you. And if you can talk to a financial advisor, that's great, but lots of us, you know, we're in a position where we go out and we do our own research, and we feel confident investing. And I think, you know, the pandemic has really encouraged lots more younger people to consider and start investment.

Isn't that wonderful? And obviously, we have investment company managers invested in cryptocurrencies, quite honestly. But you know, if you want to invest in some of the cutting-edge technology that's around there, you need to look at the investment company industry. If you want to invest in conventional companies, you need to look at the investment company industry.

Peter Higgins 37:53

Absolutely. Now, you did a really important bit of research a while back Annabel, I want you to just touch on it a little bit for us. You did some research into investing at the worst times.

Annabel Brodie-Smith 38:03

Oh, yes, I do remember that.

Peter Higgins 38:06

Do share with your findings here.

Annabel Brodie-Smith 38:10

Oh, you pin me on the spot. Now, Peter, because I'm not going to be able to remember the exact numbers. But I can tell you the reality is if you listen at the very worst time, just before the market crash. And I think we look back before the financial crisis.

And you first right at the height of the market. Within 10 years, you would have so made a considerable amount of money, actually. And I think that's the most important lesson about investing is for the long-term.

And if you take a long-term perspective, then you know, the exciting ups and downs of the markets shouldn't worry you because you're there for the long-term, you can take that long-term view, but yeah, that's what that was.

If you invested in last March, for example. Yeah, then obviously, you're going to perform even better. But you know, it's time to start investing his time not timing in the market that counts when it comes to investing.

Peter Higgins 39:16

Absolutely agree Annabel and you've been investing now for 24 years. So you've seen quite a few cycles already.

Annabel Brodie-Smith 39:22

I have most definitely. I've seen the tech boom and bust of course then through the financial crisis, and now the pandemic. So yes, I have seen my fair share of ups and downs quite honestly and it's, you know, it's reassuring people to take a long-term view to not panic when things get tough. Let it ride it out. You know, you look at your portfolio does it meet your investment needs? If it does, you're happy with it. Leave it well alone.

Peter Higgins 39:51

Absolutely. Now, Annabel, I've covered my questions. We've absolutely rattled through all of my questions. But I've got one last thing to ask you. If I may, right. If I could be so bold with regards to investing for you and for all the investors, what should they be looking at? If they're calling themselves a long-term investor? What should their minimum timeframe within an investment?

Annabel Brodie-Smith 40:14

We say, at least five years? But I think, personally, for me, it's at least 10 years. At least 10 years. But I have to be honest, as I've confessed, I'm not a big trader. I do trade now and again, for sure. Yeah, I'm a great believer in regularly investing, you look at your portfolio, you've got somewhere an area where you think, you know, that means for mending I need to invest in that area.

So then I will regularly invest every month in that investment company. But you know, you have to take a long-term view, got to take a long-term view. I've been investing for my retirement quite honestly, my SIPP my self-invested personal pension. So you have to take a long-term view. And as I said, for me, it's at least 10 years, but actually for a lot of my investments I've had for 20 more.

Peter Higgins 41:07

Brilliant, brilliant, Annabel, just lastly do you share with us you've got a massive website and library of content. Where do investors are interested in investment companies find your content so that to learn and improve?

Annabel Brodie-Smith 41:20

They need to come to our website theaic.co.uk, and we've got great information. We've got great data on investment companies there you can do all your research there. But also if you don't know much about investment companies, we've got great educational guides, too. You can read them and find out more.

Peter Higgins 41:40

Brilliant, thank you ever so much. Annabel.

Annabel Brodie-Smith 41:41

Peter. It's been a pleasure as ever. It's great to talk to you.

Peter Higgins 41:46

Thank you so much. That was Annabel Brodie-Smith, the Communications Director at The Association Investment Companies, award winning spokesperson Annabel been absolute delight. Thank you ever so much again for being on Investing Matters.

Annabel Brodie-Smith 41:58

Thank you Peter.

Peter Higgins 42:00

Take care. God bless.

LSE 42:07

Thank you for taking the time to listen to investing matters. Be sure to check out the London South East website for free tools and info to research your next investment. You can also join in the conversation on our social media channels. And don't forget to subscribe to our YouTube channel for more content, including our CEO interviews. Catch you next time.

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