Ashoka WhiteOak Emerging Markets Trust (LSE:AWEM) — Investor Presentation

0:13 Situated in the right corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Prashant KEMKA. Good morning to you, sir.

0:35 Good morning, and thank you everyone for joining today for this webinar. I'm gonna try and keep my prepared comments to approximately half an hour, and then hopefully, there'll be a lot of questions as there's a lot going around from a market's perspective as well as from our portfolio and performance perspective. So a little bit background about our... About WHITEOKA. As a firm, we are coming up close to $10,000,000,000 in assets having set up or founded WHITEOKA in 2017. I have been investing in equities over several decades, having started my professional career with States with Global Advisors in '98 and joining Goldman in 2000 and moving to India to start the asset management business in India.

1:31 So... And since 2007, have managed India portfolio with a very strong track record initially at Goldman, and now you're the WHITEOAK team has peer group leading performance track record. And also in EM, I ran at Goldman for nearly four years, the, towards the tail end of my, tenure there, as CIO of Global Emerging Markets with very strong performance as you would see here over that four year period, and your WHITEOAK team has again delivered very strong performance, since its inception in June 22 for the EM strategy. With the TRUST that we launched last year in May, We bring in best in class structure coupled with... Combined with this strong track record and and the highly talented team.

2:21 This structure, as many of you would be familiar, is a performance fee. Obviously, they have the expenses on, but the management team does not get... The investment manager does not get any fixed fee year after year, you know, unless they generate alpha, in which case they get a proportion of the performance or the alpha over and above the benchmark as fee. So interests are very strongly aligned there. We'll talk a little bit about our analytical approach, what the team, does, day in, day out in, in its attempt to generate performance across emerging markets. And as you know, emerging markets, to begin with, a high alpha segment of global equity markets.

3:10 My view always has been that equity markets worldwide over extended periods of time would deliver, returns that are broadly in line with each other, whether it's developed world, whether it's US, Europe, EM. Historically, they may have given different returns, and we'll see some of that as well. But going forward, it's reasonable to expect them to deliver in line mid to high single digit return. What would differentiate the total return would be the alpha potential, the alpha that that an investor can add or their managers can add. That alpha potential is higher in emerging markets because of, EMs being more inefficient segment of the global equity market. So those are the key highlights here on the...

4:00 On on the summary sheet. We'll come to greater discussion of each of these in the slides that follow. Starting with... On the next slide, you know, while we started with 36,000,000... We are currently at $36,000,000 plus some as the markets continue to to to do well. We have held up quite respectively compared to the peer group in terms of the premium discount at times trading at premium, which is a rarity in the trust business. And as I highlighted, there's no annual management fee. Performance, while only a year... Less than a year and a half, but worth highlighting, it's one of the better performing, if not one of the best, performing strategies out there in EM world, having generated, NAV return of 19.8% net of all the charges and provisions for the performance fee... Performance share.

5:07 In that contrast with 16 odd percent of the benchmark. Remember, benchmark is a hypothetical construct. We all end up comparing against the benchmark, but it is not that the index fund or ETF would give you a benchmark return. And I'm not just talking about the management fees of ETFs and index funds. There are taxes that many of the countries levy on capital gains, including India, which means the realizable NAV or return from investors is far or materially lower than what you see as benchmark. So one need to recognize that while in years... Decades ago when capital gains taxes weren't, there or were not there to the extent they are today, maybe the ETF or the passive funds were a closer proxy to benchmarks, but that is no longer the case. As what you see here, in terms of performance of the fund, they are after paying taxes and fees. So that's an important distinction when you consider performance relative to, benchmark.

6:16 Yeah?

6:20 The performance is predominant... Predominantly being derived through stock selection over this time period. As you can see, we have about 60% during this time invested in large cap. SMID caps were over 25% compared to just over 15% of the benchmark, and there's been strong alpha generation, particularly in SMID caps during this time, through stock selection. The dark blue line being the stock selection line. These are some of the names that have contributed strongly to alpha generation, and these are the negative contribution. Very granular contribution and detract... And and detractors. The tenth largest contributor is larger than the top detractor.

7:06 So, the law of large number has been well at work as well as risk management and position sizing have played out very well for the team. To generate sustained performance over a long period of time, obviously, the... What we presented here is only a year and a half, but I'm talking about the entire track record of the team and including my track record at at over, you know, even a longer time frame. You have to have a very focused, strong investment culture, what we call performance first culture. Yeah. To give an analogy, I think of it as a sports team like mindset at the core of it, at the heart of it, where everyone on the team is driven by a single-minded objective to...

7:58 Let's say, for the sports team, it is to win the gold medal or to win the World Cup or the trophy. Here it is. The game is about generating higher returns for client portfolios, and everyone is driven by single-minded, drive, to generate the highest returns compared to anyone else in the peer group for our client portfolios. It's not a mindset to be above average or a top quartile or a top best side. We believe... Everyone on the team believes we we should, we can, and we must generate the highest return. And and day in, day out, three sixty five days, that's how we apply ourselves to the task.

8:46 This culture rests upon or is founded upon these four key pillars, team, philosophy, process, and portfolio construction, which are aligned with one another. Meaning that it's a stock selection based philosophy to, to to go with it. We have the best team, in my biased opinion, in the industry, implementing a time tested, disciplined, fundamental research process. And all along, from a risk management perspective, maintaining a balanced portfolio construction approach, which delivers consistency on top of magnitude of alpha. So the alpha numbers that I briefly touched upon earlier, they've also come with a very high degree.

9:33 I would like to think it's unparalleled degree of consistency over time. Now coming to each of these pillars now, the team. In any sport, you can have the best strategy and the best approach, but it's only good... As good as the team that implements it on the ground. Yeah. So we have the best team, in my view, in the industry, very well resourced team, a 47 member team, and a highly talented team. So not just numbers, but the depth. So we have breadth as well as depth. And that's important in in... When you're targeting, you know, what I talked about, performance first or highest alpha compared to the peer group. In the interest of time, there's three quick things I would like to highlight about the team.

10:28 One, what I already says... It's... Said it's the most well resourced team. We started in June 22 with our EM strategy with a 35 member team in place, yeah, which is probably the most well resourced team at start, at the outset in the industry, probably in the history of the industry, at least that I'm aware of. Because performance clock starts from day one. You can't go in, in my view. If you're playing cricket, you do... Can't walk out with half the team and and and think that you'll you'll build from six to 11 as the play progresses and if you do well. So we started from day one with the team structure and and, scale of the team that equipped us to deliver top notch returns.

11:22 Second, it's a very well experienced team in emerging markets as well as across developed world. So several people on the team, including myself, I've had eight years of developed world investing experience. Was investing client money in US as well as for a brief while in the rest of the developed world. I believe I'm a better investor in EM having had the experience of investing in developed world. Yeah. And, that goes a long way when identifying opportunities and recognizing patterns in emerging markets. Because investing is a lot about pattern recognition, and a lot of the, patterns amongst industries and stocks that you see in emerging markets have often already played out in developed world. Telecom is a good example in industry. I started my career, covering, you know, and I covered Vodafone at the beginning of my, career. So with Vodafone, which was present across developed world and across emerging markets, a lot of the industry structure evolution in individual countries in emerging markets followed what had already taken place in developed world.

12:43 So having had that experience, of investing in developed world is very helpful as well when investing in emerging markets, and we have enormous experience of emerging markets on the team. Third point I wanna highlight is a unique team within team structure. Usually, a typical emerging market team would be a handful of people or a dozen people who would each be exclusively covering a demarcated set of companies. So a typical team that covers a few 100 stocks, if that, their individuals would have exclusive coverage of few dozens or maybe a 100 stocks. What we here have, given the luxury of resources that we've built, a team within team structure, meaning it's a sectoral team coverage. So in health care, for example, led by globally by Manoj Garg, who has twenty eight years of experience, and his other team members, Krishna Duresh, who co leads with Manoja India Healthcare and was my lead sector, analyst at Goldman for ten years as well, and Nettik as well as Shubham. So five member global health care team that is individually and collectively responsible under the leadership of Manoj to identify opportunities, do the primary research,

14:13 which includes company management meetings, financial modeling, industry channel checks, and so on, make the presentation to the team, and drive all the way through decision making. Yeah. So to summarize these three attributes, the most well resourced team of seasoned investors with extensive global investing experience, EM as well as developed world, and a unique team within team structure. Each of these and collectively, the three of these equip the team to generate the kind of returns they've historically delivered, for client portfolios. The shared philosophy of the team is that outsized returns are earned over time by investing in great businesses at attractive valuations. So there's no, you know, great robotic insight here or scientific insight here. It's what you probably heard from most managers. What ultimately, the devil lies in details and execution and what our team stands out for is the disciplined application of its investment philosophy day in, day out, three sixty five days.

15:29 So it's like, you know, to have a healthy body, we all know that we must eat well, sleep well, exercise, and have a stress free life. Easier said than done. Even though all of us know what is to be done for what is most important thing in our life, it is not easy to practice beyond first few days of January. So the, test is in implementation, and that's where our team stands apart is the key point here. What we consider as great business is one that has these attributes of superior returns on incremental capital, scalable, and well managed both in execution and governance. These are born out of the fundamental value equation that value of any business is present value of future cash flows. To generate cash flows sustainably, it is imperative that returns on forward or incremental capital be higher than cost of capital? Otherwise, there's no sustainability to cash flows longer term, and you have to understand the industry dynamics and the competitive advantage that the company might have within that context.

16:29 Scalability is about growth. Can the company outgrow the industry, which itself may have strong growth potential? Can the company expand its market share and scope of operation? And when you have potential for these two, very important to have a management and an execution DNA that can deliver on those. Otherwise, these are just ideas and ideas that Diamond doesn't. And above all or to start with, whether there is adequate governance DNA at the organization. Because if all the other attributes are present, but governance is lacking, then it may be a great business for the controlling shareholder, not for us minority shareholders. Yeah. When we identify companies that possess these attributes in good measure, it's very important then to value them. Yeah. And we... During the course of a year, we would easily have well over 3,000 meetings collectively as a team with company managements as well as their listed and unlisted competition, their supply chain, their distribution partners, and so on and so forth. When we find a company that possess this attributes, it's important to value them logically and only invest as long as there's substantial upside to fair value. Otherwise, you may have a great company, but not a good enough investment.

17:48 Yeah. So we are not from the school of thought, great company by any price. Doing so may help over long period of time to beat the market and deliver some above average return, but our goal is not just to beat the market, but beat the best performing manager out there. And to that, add valuation discipline, adds a few extra percentage points to performance. Having said that, we don't look at PE multiples or EBITDA multiples at at all because they can be very misleading. What we focus on is first principle based, DCF adapted to or modified or enhanced to align to align with our investment philosophy. And and how... What is the adaptation? I would walk through this. Please bear with me. I'll try and simplify as many investors believe this is our secret sauce. Well, I would say this is one of the tools and a powerful tool and framework that the team uses in analyzing and valuing the companies, and and it should be viewed in that context.

18:55 Any company, let's take, a British company, pharma. Yeah. We would, in our analysis, deem it to comprise of two deemed subsidiaries, Finco and Opco. All the plant and machinery and factory as well as working capital are assigned to the Finco. The revenue and EBITDA assigned to Opco from which it is deemed to pay an operating lease cost or what we call a fixed asset rental cost and a working capital financing cost at the cost of capital of the firm plus whatever amortization and so on. It's like leasing. Just like we as individuals may lease a car from a leasing company, think of Opco leasing the plant and machinery from the finco as well as getting the working capital finance.

19:50 After paying those costs, which is the cost of capital, and paying tax to the government, what is left in Opco is the excess return on invested capital free cash flow because cost of capital has been paid. And the present value of these free cash flows is nothing but the value of excess ROIC in the company, in in, which is this first point here, superior returns on incremental capital. We are quantifying it. So we are not just saying we'll... Typically, what someone may be prompt... Prompted to or prone to do is a high ROIC company, pay any price, and continue to own it forever. As I said, that may help generate somewhat above benchmark returns.

20:40 But what this approach helps us is quantify that superior returns on incremental capital because there's not just one company that generates superior ROIC. There are many, many, many companies. Half the companies generate above average ROIC. Right? And and so on and so forth. So identify companies that are undervalued by quantifying the value of the excess ROIC. The value of Finco is separately valued. It's simply because by design, the cost of equity is in... Is equated to return on equity over year. The value of the business is just one time invested capital, which depending on... If, let's say, the discount rate is 9%, then, the multiple would be 11 times cash flow, whereas this business has potentially much higher multiple depending on the sustainability of the characteristics that in the first place allow the business to own excess ROIC plus the growth rate and so on and so forth. So these two are the most basic inputs, insights that we derive from exercise and the inputs into our valuation exercise, which is the split of the enterprise of the DCF value into its two distinct components, which are vastly different in their value or or or valueness.

21:59 And then once you rearrange the terms, I'm not going to details of that here. But once you rearrange the terms, you get what is the price to excess ROIC multiple. So not p multiple, but price to excess ROIC multiple, which is the value of the opco divided by the cash flow of the opco. So price to excess ROIC multiple for this entity, and that allows a more apples to apples comparison across companies within or a sector or across sectors rather than p multiple because this approach normalizes for capital intensity as well as capital structure of the company, neither of which is true for p multiple. And hence, multiple often leads to apples to lemons kind of comparisons and and incorrect conclusions and decisions.

22:49 That much on that, happy to answer any questions. In terms of investment process, we distill from a very large universe, and that's one of the reason we, I believe, have a preference from... For large talented team because the universe that we look for is humongous. If you have a small team, either you'll be able to cover a lot of names with very little depth. So you can have a lot of breadth with a large... With a small team, but very little depth. Yeah. Or if you have a very large team but not talented enough, you may have breadth but not have depth. So large and talented team provides the breadth and depth of coverage to mine this universe, to exploit the inefficiency of the universe to the optimal level, to the highest level.

23:45 We distill this down to approximately top 5% of the companies which possess the attributes that we talked about in the prior couple of slides. Not to spend a whole lot of time in the interest of time, but governance is very important element. We think of misgovernance as manifesting itself broadly in five categories. One is cheating existing partners, which is where company management or owner share... Owners controlling shareholders are siphoning off value from the company or cash from the company through overt or covert related party transactions or otherwise. Other form is cheating investors at large by manipulating the stock price and dumping it to unsuspecting investors through various means.

24:33 Unethical or illegal business conduct is typical. You know, you can't completely avoid this, but you have to be very mindful and aware of this. This is where, you know, conglomerates, and this is true... Has been true historically. Every country passes through phase. So even in US, there have been many stories, and and not just stories, but, huge volumes and books written about the likes of Rockefeller and the Vanderbilts and so on. And and the emerging markets are just a hundred years behind in the evolution part. As I was saying, patent recognition manifests in this form as well. So you would have, you know, conglomerates and other business houses who could be blamed of some of these practices. But as I said, it has happened in every developed market as well at some point or the other of their evolution history.

25:28 Misaligned interest objectives is government owned entities mostly because, you know, no CEO of a government owned entity wakes up in the morning, be it Petrobras, PetroChina, or ONGC, worrying about how to maximize the return on invested capital for minority shareholders. Yeah. And and then poor accounting, either it is due to the norms of accounting bodies or otherwise, you know, intentions of the management, you have to correct for and avoid the most egregious one. Coming finally to the... So we cover the team, the philosophy, the process in brief, and now the portfolio construction and risk management. Here, the goal to reiterate is to maximize alpha over the long term and minimize the volatility of that alpha in the interim.

26:16 Yeah. We seek to achieve this dual objective by investing more capital in alpha rich segments of the market. Because remember, you can't zero the risk. If you zero the risk, you'll get an index fund. Yeah. So you have to tolerate risk. And if you go... We believe alpha is achievable through stock selection, whereas risk is predominantly... Well, stock selection would also, cause risk, but that is good risk. What is... As long as it is, you know, commensurate with the alpha potential. But then there is also risks due to factor risks, macro risks. Those do not generate any alpha in our view, so we all seek to minimize this factor risk. You can't zeroize. Even if one stock is different the benchmark, you'll have both stock specific as well as factor risk. So I guess not to try and zeroize this, but to mitigate it as far as possible while retaining stock selection alpha potential. So that we do by allocating more capital to alpha rich segments of of the the market, like small and mid caps are more inefficient.

27:23 And there's ample evidence, huge body of evidence that suggests there is small and mid caps are more inefficient segment of the market. We ourselves have a long track record of generating alpha across each market cap segment, but we... That track record also shows that SMID cap has much higher potential alpha. And hence, we allocate more capital to SMID cap, tolerating that risk that if SMID caps were to do very poorly at some point in time, then that would be a headwind to our performance. Yes. Sometimes they'll be... Do poorly. Sometimes they'll do better over time. That'll be a zero sum game. Through that time, we'll generate strong stock selection alpha... Stronger stock selection alpha due to larger allocation to SMEDCAP. Similarly, there are other factors which may not be as straightforward and obvious, but an alpha gradient exist. Governance, first and foremost, is one of a big, and powerful factor where we believe stronger alpha can be generated in better governed segments of the market than poorly governed segments of the market. So it's important to remember, I'm not suggesting or we are not suggesting that small caps would outperform large caps.

28:32 Yeah? All market caps can be presumed to perform in line with one another over time. Similarly, all these can be presumed. Poorly governed companies can be presumed even though intuitively it would seem that better governed companies would outperform poorly government companies over time as a basket. We are not making that presumption. If that happens, that's well and good, works well for us. But what we are saying is the alpha potential is higher in better government companies. Similarly, the other factors... One of the factor I want to highlight is we believe more democratic countries have higher alpha potential than less democratic countries. Again, it is not to say that more democratic countries would outperform less democratic countries. At aggregate level. While it has been the case historically, does not necessarily mean going forward, but it is more to say that alpha potential is higher. So just be mindful that if in the market, at any point in time, there's a combination of this playing out forcefully, that means poor governance is outperforming.

29:32 That means sectors like commodities, energy, utilities, which tend to have predominance of poorly governed companies. If they outperform, if SOEs outperform, which also are plagued by poor governance, if authoritarian regimes outperform, and if large caps outperforms mid caps, then there is going to be a headwind to our strategy in this... Such environments. We either may not outperform or outperform to a much smaller extent. With all those in mind, now it should make sense what the portfolio looks like, something like this. You struggle to find attractive opportunities in certain sectors like energy and utilities because they're dominated by government owned companies or or otherwise companies that leave a lot to desire in terms of governance. Yeah. So we we we have very little exposure there. Otherwise, fairly good exposure all around other than financials, which are dominated by government owned SOEs in China.

30:24 Smart smart gaps are higher allocation. As I said, in terms of regional, it's better to see the country level exposure or through this numerically. So just by country of listing, if you see, we have 69% in Asia, which would suggest a 11% underweight compared to 80% of benchmark. But we also own several developed market names, which are predominantly deriving value from emerging markets and predominantly derive... Deriving from Asia. So adjusted for that by economic exposure to the largest country, EM country, 78% EM. So that's about just one in Asia, which is about just one and a half percent underweight. A lot of you would be interested in China. China is 24% benchmark weight. On the surface, we would be 9% underweight as of September.

31:21 And, but once you adjust for companies like Process and some of the luxury names and HSBC and so on and their exposure being predominantly to China... Predominantly being EM and primarily within that China, then we are two and a half percent underweight. Now the reality is somewhere in between neither nine nor two and a half, maybe 5% or so underweight. And that's likely to be because a lot of the Chinese market governance we find is very challenging to deal with. Close to 30% is government ownership, which is larger than the EM basket average. And also within the remaining 70% that is private, on average, I would say it's fair to say in our assessment, governance is below average.

32:08 So the effective available universe to invest is much smaller than what the indices might represent. India, on the other hand, is the other way around. Yeah. Governance, despite some individual stories that get highlighted from time to time, it is an alpha rich market. It's a democratic country with very, good property rights and, on average, better governance. And we have, you know, unparalleled and disproportionately unparalleled resources on the ground, and my own experience is disproportionately skewed towards India. All those make, India a very alpha rich market for us. And hence, as I said, allocate more capital to alpha rich segments of the market. So India would structurally likely be, higher allocation in the portfolio. Sometimes, like, the last two weeks, three weeks when China has done supremely well and India's, lagged behind, that would cause headwind to our portfolio. And that's part and parcel of the game just like I I I pointed out earlier, if, you know, authoritarian regimes were to substantially outperform democracies, then it would be a headwind. And that was the case last couple of weeks, so it could be a headwind in such time periods. Yeah.

33:29 Most democratic countries, as was highlighting, is 15% overweight in the portfolio at 82% compared to 67 of the benchmark, whereas the least democratic countries, includes China and and the Middle Eastern countries, that's 16 and a half percent underweight in the portfolio. Again, not a view on what these countries would do in terms of overall market performance, but the alpha portion is property rights tend to be weak in the least democratic countries. I'm happy to expand on that there are any questions during q and a. SOEs, also, we are underweight by 16%. Private run enterprises, we are overweight by 16%. I forgot to highlight, though, that, you know, some of these authoritarian regimes that were the sizable underweight, we try to mitigate by owning names in developed world.

34:16 So about 15% of the portfolio is in developed world, which helps mitigate the risk of underweight in these authoritarian regimes. So when China skyrocketed by 30, 35% over the last couple of weeks, The China proxies like, others as well, they were very strong. Might not have kept lockstep with China, but still substantially outperformed their developed world and were up. I don't know the exact numbers, but probably up at least half as much as China during this time period. So mitigating the risk of the China underweight. And then that's what I meant. Like, this... Maybe instead of two and a half percent weight underweight, effective underweight maybe somewhere around 5%. How are we doing on time? So just maybe coming up to forty minutes, I'll try and keep it now crisp.

35:08 Top absolute and top activates is a very granular portfolio. One of the things that I think I missed highlighting is it's over 200 names, more like 225 odd names. I've always run portfolio, and the team is very used to running portfolio with very large number of names. Yeah? So 104 plus 79, they're roughly 183 names in the portfolio. Lot of people... I think it's one of the biggest myths that has been propounded and propagated over decades that a concentrated portfolio is better. At least we have a way. We have found a way, and we followed a way over the last seventeen, eighteen years now, including my prior form, where I've always had very large number of names, and that's not prevented us from, gen... In fact, my view is it helps in maximizing alpha.

36:16 So that has helped maximize alpha. And as a side product, byproduct, it has also delivered highly consistent alpha. As I said, unparalleled consistency. And if, in fact, we're fair to say, unparalleled magnitude of alpha combined with unparalleled consistency of alpha. Usually, you would think high alpha would be combined with high inconsistency or high risk, but this portfolio risk management and cons... Portfolio construction has allowed for, the highest of alphas along with the most highest of consistencies. So if we were to, that's why you'll see fairly soon as activates... The highest activates less than 2%, And very soon, the position sizes come down to 1%. And I see it as a positive, not as a shortcoming.

37:11 More importantly is active risk. So large number of names people may think it's a benchmark like product. Well, if it's a benchmark like product, it can't have strong alpha. Performance can't be so different. And a better gauge of... Is is active share. Yeah. A 25 name portfolio can have less active share than a 215 name portfolio. So better gauge of the activeness of the, fund is the active share of 75%, which is fairly high. You know, the, growth is materially higher for the portfolio. Beta is of about one. And then the other metrics are consistent with what you would expect of a of a team that follows the strategy that I just highlighted.

38:01 A p multiple is to be expected to be higher, because we don't own the SOEs and... Or we have big underweights in SOEs and authoritarian regimes, whereas the cash flow multiples are far closer, for a far superior governance quality, which is the primary factor impacting multiples, as well as faster growth. So superior quality, superior growth for that, a small premium is how I see the metrics here. So valuation at a broader EM level, as you can see here compared to the developed world, and relative multiples are really what makes most sense, though we've given absolute numbers here as well. I tend to focus more on relative because all valuations are relative.

38:47 And, still, despite the recent uptick here that you see, still well below the longer term average, not quite as low as 2002, but pretty much, lower than at any other point in time since then. Same is the true... Same is true for price to book multiple, slight uptick off late with the Chinese rally, but still, this one is towards the low end since 2005 over the last twenty years at its lowest point. This is the price performance since '92. So over thirty two years despite the small uptick. So the rally that you see captured here is the slight uptick, but still treading along the long term price bottom relative to the developed world.

39:36 And, Lee, I want to share this slide. Now last many years, so, you know, including 2024 plus twenty twenty one... Ten, EM has been underperforming the, the overall world markets, meaning developed markets. Right? But it's not always the case. You'll see the first decade of this century, EMs delivered a 16% return driven by 13% earnings CAGR. Yeah. There's a total... World was 3% compared to 5% earnings CAGR. US was only 2.7. Europe was 5%. Yeah? And then there was a mirror image of sorts where US was the highest compared to being the lowest, and then Europe at 5.9 and EM at four percent the prior decade.

40:29 Yeah? And and over the entire twenty year time frame, if you were to see first two decades, EM was the best performing equities. All these are dollar term returns at approximately 10% return compared to global average of 6.6 and US of 7.5, Europe at five. And this was supported by the fastest earnings growth in EM as well. The multiple expanded for everyone given the interest rate regimes and given where we started at the end of twenty twenty. Now this decade, so far, EM's been flat. US has led the global returns, yeah, as well as, in in earnings growth this year, this decade, EM has lagged, though earnings have moved faster than what the returns have been.

41:21 So I'm just highlighting this to to remind you all that there is strong recency bias. And in 2010, if you put yourselves back in the same shoes that you were in in 2010, if you try to recollect, people had written off US as the next Japan following the global financial crisis, and and US was the center of global financial crisis even though Europe was, at that time, considered as one that was dealing with it most miserably. So both US and Europe were expected to to do nothing for for for times to come. But EM was the flavor back then because led by China, EM was growing far more healthily, and the financial system was also in much more robust spot.

42:17 And their return were very much leading all the regions. And and so EM was the best... Considered to be the best place to be and and... Because of these factors. Yeah. And today, it's the other way around. But the outcome over the next ten years could be completely different from what macro might suggest or what the conclusions... Because the conclusions of today are heavily influenced by the backward looking returns. And just... We all ought to be mindful of that. So to summarize, we have... What we bring to the table is an outstanding track record of not just my longer term track record, but the team here is now seven plus years at WHITEOAK. Yeah? Though the trust may be only less than eighteen months, but the team is the same team for most part. Yeah?

43:11 And has shown a a extraordinary ability to extract alpha. The resources that... The extensive resources that we've deployed, they have shown an extraordinary ability to extract alpha in what is an inefficient segment of global equities. We're coming with a best in class, structure, which aligns the investment team with the interests of investors, zero management fee, annual redemption fee, and so on. We basically only get paid if we add value. The way managers can add value is by outperforming the market.

44:00 And we only get paid after not only we outperform the market, but also deducting the costs of running the trust. So there is a very strong alignment. Obviously, in addition, the investment team, as many of you might know, are huge shareholders in the trust. Collectively, WHITEOKA employees and the firm WHITEOKA own over 25% or close to 25. The numbers might move because some tap issuances might have brought it down, but let's say close to 25%, definitely over 20% or 20 to 25% call. So very, very strong alignment, and we get paid fees in form of our stock, the the trust stock, which also has certain, ownership restrictions.

44:53 So I'll pause there and look forward to answering questions from you all. Prashant, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. Just while the company take a few moments through the questions that have been submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. As you can see, we have received questions throughout today's presentation. And, Prashanth, if I could just hand back to you just to read out those questions where appropriate to do so, and I'll pick up from you at the end. Certainly. Just give me a second. I'm going to the questions tab. And I'm... Because there are several questions, I'm going to do a bit of a rapid fire here.

45:41 And and if, if I don't do justice, maybe we can follow-up separately on those. Has the recent rally in Chinese equities changed your views in being underweight China?

45:50 So, again, we don't have a top down view on countries in terms of whether country would do well or country would do poorly. We try to mitigate risk even when we have very strong views above from from a compound perspective. We don't have any confidence in them. And I'm... I've always very consistently maintained this that we have zero confidence in our market timing views in any market. Fortunately, we also have zero confidence in any of our competitors' market timing ability. That being the case, we tend not to have large underweights of all weights that in of themselves would make or break our performance. A small underweight like we have right now, effective underweight of, let's say, 5%, I think it's a very tolerable level of underweight, and we are fine with with that. Now now macro view on China is is is is that it has gone through a structural derating, already.

46:52 So because... And that's not because of slowdown in economy or COVID zero policy or anything. It's because of regression of the political regime from what was expected to move towards a, eventually towards a multiparty democracy like has happened in other countries in in the region, be it Korea, Taiwan, Singapore, and elsewhere in the world, which have evolved from authoritarian regimes to a multiparty democracy. Similarly, the expectations expectations of the market, and market is a forward discounting mechanism. Yeah. So given the West's, so called engagement model, US led and the... And and agreed upon by Europe that you engage with China. And over time, it would it would, you know, transform into a a vibrant democracy, that has been seriously challenged.

47:52 That road map has been seriously challenged, at least, instead of making progress in that direction that it was making over several decades, it has regressed, taken a u-turn to a authoritarian regime with, for an indefinite period, and and and no clear road map from Europe on how it can transform into a multiparty democracy. The reason it's very important from a stock market perspective is because, one, there's a long history. I don't have the graph handy here, but our team has done a lot of work on this. Equity markets always pay a sizable premium to democratic markets and a big discount to authoritarian markets. This has been true for the last twenty five years, but since the end of the last, century, at least since the time we plotted the data. Yeah.

48:45 And and so China went from the going towards democracy bucket to authoritarian bucket, and that is why the derating that happened is more structural in our view. It's not... It's got very little to do, with the economic slowdown, or the COVID zero policy, which you can argue both of those were in fact reflection of the core issue, which is moving towards, a more authoritarian regime. This fiscal stimulus and other stimuli that have accompanied or might follow, unless they change that fundamental issue, that that I just outlined of having moved towards authority emerging may not provide a sustainable relief to, the corporate world and, hence, to the equity markets. Because under authoritarian regime, property rights get weakened. The problem with authoritarian regimes and democratic regimes from an equity market perspective is simply that property rights are very weak in an authoritarian regime. What happened with, let's say, some of the... I mean, if I were to give example, we all are are familiar with, you know, like, the education sector or with, you know, Ant Finance IPO and and and and with Jack Ma and so on and so forth are very difficult to, you know, expect those kind of things in UK or US or India, yeah, or or, or, you know, Brazil. I'm not saying they can never happen, but they are very... I

50:15 mean, look at Elon Musk. He's strongly supporting, Trump, and and and and and without any fear of repercussion of what might happen if Trump might lose. And Harris... Or or it's a Democratic party at the helm. Because the property rights are so strong that you don't have to worry about what you say, politically and and whatnot. As an authoritarian regime's Property rights are very weak, and equity is nothing but a property right. Property right to cash flows in perpetuity of a company. Yeah. If property right is weak, you'll pay a low value to that. Same is true for land. If, if the title of a land is defective, you would not pay a full price, so you might not even pay any price, some of, some people. Or if those who pay would pay a highly discounted price. So that has been the structural derating in the in the Chinese market.

51:16 And and while we are not taking any top down call of being underweight at the same time, you know, we don't feel left out with just a 5% underweight that we have. Are you seeing more pre IPO opportunities like SencoGold? Yes. Pre IPO opportunities are there all the time, and SencoGold has been a great success where we got anchor allocation. We just recently, I I would say, a week or two ago, had another opportunity that the trust has benefited very largely from as as they're just listed late last week, I believe, with very strong listing, if you will. Those opportunities do come every now and then. And we...

52:09 Our team has done a... It it involves a lot of work, and and and our team has done very well in exploiting those opportunities way ahead of the peer group. And we've carved out a name for WHITEOKA in that area where we get the portion flow, the deal flow that we see is is better than or second to none, if not better than everyone else. Couple of questions for the business, please. How is the 9,700,000,000 split between India and the rest of the year, and what is your capacity ceiling, particularly given your focus on Smith? So 9,700,000,000 is predominantly India at this time, as we started with India in 2017 and have a much longer track record.

52:57 And EM is right now just crossed $200,000,000 because it's only 2 years plus. As many of you know, most of you don't give any meetings unless team has three years track record and 100,000,000 EUMs. So there's a giant chicken and egg We've already come out of that problem at least in one dimension, which is we have a three year... We have a 100,000,000 plus overall strategy EUM. But three years will cross in six to nine months... In nine months' time. So we're already seeing very good healthy pipeline and traction, and we we expect that to to, you know, translate assuming the team continues to do good work. Now capacity is not a problem in EM because it's only $200,000,000.

53:43 The question comes up more often on India. Given how the Indian market's... Market cap has risen over the years and liquidity has expanded even faster than the market cap as velocity of trading has increased, We still have ample room... Ample runway to go for an India assets as well. At this time, as per our estimates, using the same framework as we've always used, we still have 40 plus percent room for... Before running into capacity related issues. On portfolio construct... As the trust scales with the investment focus shift to include more large scales, or will it maintain emphasis more than the result? We have constructed the portfolio or just not... We have constructed, but the portfolio construct just happens to be such and has always been the case with 200 odd names.

54:41 Yeah. And average name in small caps is, like, 30 basis points or something, maybe sub 30 basis points at this point in time. That a side effect of this way of investing is that you don't have to change the market cap profile. If it was a concentrated portfolio of 20, 30, 40 names with high amount of SMED caps, then with scale, you might have to reduce the number of... The the weight or number of positions in SMED cap, but that's not the case with us. The portfolio, I expect over time to see as much or more SMED cap as there are presently. You don't invest in Vietnam. We do... As it is currently frontier market, not EM. However, it's growing very fast and likely to join EM. We do have actually couple of in...

55:29 At least one investment in in Vietnam. That... We might own more, and we are waiting in line to buy. But in Vietnam, it's a little silly market structure where you have to first transfer the money and then wait in line to be able to buy. And some of these stocks are foreign restricted, so to keep the money waiting there till their foreign restriction opens and then buy. So there are some names that we are waiting for, and, you'll likely see, we have more Vietnam in the portfolio than less.

56:02 What is the portfolio turnover and what is the cell discipline. We'll do a more, you know, accurate feedback on this one if you can send us an email. But over time, portfolio turnover, if you adjust for the inflows and outflows by... The only way you can do that is by looking at a separately managed account, has tended to be, for me, 30 to 40% by weight. Call it 40% by weight over time. And name turnover has tended to be somewhat less than that. Call it 30 to 35%. Call it a third of the name. So average holding period for by name has tended to be, you know, three years or a little longer.

56:49 How do the substantial cost and we'll make it, unfortunately, given that we are right about on PR, we'll make it the last question. How do the substantial cost of the 47 man investment team get paid on a monthly basis if you underperform? So very good question. I used to get this a lot more often in the years past when we launched ASHOKA India Equity Trust, which was in 2018, and we had just started in 2017. And at that time, also, we had one of the larger in one of the largest... At a start up, probably the largest India investment team of nine people. And and and this question came up very often as that AUM was much smaller at that time. But today, with close to $10,000,000,000 in AUM, of which, I believe, more than 90% on some form of fixed fee as well.

57:38 Yeah. Trusts are the only exception as they're so beautiful, and and I love them so much in terms of managing closed ended money that we decided to go with zero fixed fee and only performance fee. So thank you so much everyone for participation. A few questions I could not get to, but we'll hopefully address them if you can either email us or otherwise separately. Thank you once again, all of you, for joining this morning, taking the time, to spend with us. Thank you. Perfect, Prashant. Thank you very much for updating investors today. Could I please ask investors not to close the session? As you know, we automatically redirected to provide your feedback in order the management team can better understand your views and expectations.

58:23 This will only take a few moments to complete, but I'm sure it be greatly valued by the company.