The problem with traditional ESG investing with Anthony Doyle | ASX Week

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. Whether you're an absolute beginner or approaching Warren Buffett status, our aim is to help break down your barriers from beginning to end. My name is Bryce and as always, I'm joined by my equity buddy, Ren. How you going? 

Alec: [00:00:31] I'm very good, Bryce. I'm very excited for this episode as we continue our ASX week. We've got a returning favourite here at Equity Mates, someone who's joined us a couple of times before, and while his title may change his mind and investing insights hopefully haven't. We're joined by Anthony Doyle. 

Bryce: [00:00:49] That's it. We're really excited. Just a reminder, this is part of the ASX Investor Day week here at Equity Mates. The ASX Investor Day is a day designed to provide investors of all levels with practical tools and knowledge to help improve their investment strategy and build their investing confidence. Those in the Equity Mates community would know full well that we've been partnering with the ASX now and the ASX Investor Day in the past, bringing this week of content and a great chance to hear from some of the best investors from around the country. We're almost at the end and you want to give us a summary of where we're at.

Alec: [00:01:21] Yeah. So we started the week with Lauren Jackson from Fidelity, talking about key megatrends driving global markets. We spoke to Rachel Whyte from Vanguard about the changing face of investing. We spoke to Dania Nazarov from Wilson Asset Management, getting some key investment insights from around the world. Anthony Doyle from Fire Trial. He's also going to be sharing some key investment insights and some companies that no one will that we won't be able to pronounce. But we'll get to that. And then we're closing it out tomorrow with a buy hold and sell with Adam Dawes from Shaw and Partners. A big week, but that's only a taste of what ASX Investor Day has to offer. And if you're in Brisbane, Melbourne or Sydney, you can go and see Anthony and all the other speakers live. Bryce What are the details?

Bryce: [00:02:07] Brisbane kicks off this Saturday 14th of May. Melbourne is the 21st of May and Sydney is the 28th of May. Head to the ASX website to register your interest and also we'll have a link in the show notes if you're if you're keen to attend Ren and I will be there on the Saturday 28th of May in Sydney. If you've if you'd love to come and have a chat and meet some of the great experts that we have the privilege of chatting to. But without further ado, it is our pleasure to welcome Anthony to the studio. Anthony Welcome. 

Anthony Doyle: [00:02:35] Gents. Thanks for having me. 

Bryce: [00:02:37] So Anthony is head of Investment Strategy at Fire Trial Investments. Fresh job, full of new insights. We're ready to crack and excited for this one. So let's do it. 

Alec: [00:02:47] That's it. Anthony, your presentation is all about sustainable investing, and you ask a pretty controversial question in your presentation, and that's what we want to start today's episode with. Does the standard ESG approach make sense? You ask it in your presentation, we're going to ask you to answer it to start this episode. 

Anthony Doyle: [00:03:06] Yeah, sure. So I think to answer that question, why don't we take just one step back and consider why an investor, one of your listeners might want to invest globally. So we know that investors are going to look to invest in a global equity portfolio in order to get exposure to companies and themes and businesses that just simply don't exist in Australia. Right. So it's why a lot of your listeners will buy an alphabet or a Google or maybe a Tesla or a manufacturer. You know, we don't we don't produce autos in Australia any more. So there are great benefits from investing globally. There's diversification, there's getting access to currency risk, if that's what you want. There's benefits from optimising your your portfolio from a volatility standpoint. So if Australia, the index, which is full of banks and mining companies, if it's going through a tough time, you might get more exposure to quality growth like tech companies or a company like Visa, for example. So there's very, very strong reasons for why you might want to invest globally. There are surveys that show that typically Australians have a very strong home bias, which makes sense. You want to invest in companies and things, you know, you want to if you see Woolworths are doing more trade, you want to invest in Woolworths and benefit from that. But there's also great benefits from investing in globally that I just articulated. But when you look to invest globally, whether it's via a global equity fund or an ETF or an index fund which typically will charge lower fees, you're investing across 20,000 companies in the global index, the MSCI World Index, and these companies might not necessarily align to your own investment views or values that you personally hold. So when you consider the companies that exist in the global equity index, some produce weapons, some of their business models are harmful to the environment. Some produce too much carbon emissions. And, you know, just consider the weird weather that we're having at the moment. Consider the bushfires, consider the droughts. You know, we know that the climate is changing and some. You know, don't treat their employees very well. Some don't treat or don't have a good handle on their supply chains and how their supply chains. Are they harmful to the environment? You know, palm oil producers, for example, or fossil fuel extraction. So when you look at the global index, which was what we've done at Fischer, we think that 30% of the index are sustainability or ESG laggards considering ESG investing. And you asked a great question, which is one that I say.

Alec: [00:05:46] Great question.

Anthony Doyle: [00:05:47] I think it's a great question. I think today people want to invest their savings, invest their capital. They don't want to necessarily invest in those types of companies that I just highlighted, you know, 30% of the index laggards. They don't want to invest and have their capital being harmful to the environment, to people or in a governance. You know, they don't want to invest in corrupt corruption, for example, in corrupt companies or companies that are bribing government officials. So when you consider all of that, it makes sense, I think, to to invest globally, to think with sustainability, a sustainable lens, to invest with with ESG in mind. But as as I said, does it make sense in that you can do that very, very easily via an ETF? You can do it you can outsource your ESG ratings, too, to one of the rating providers, such as a SUSTAINALYTICS or an MSCI. Now, my question is, they're historically backward looking, entirely backward looking, and you tend to find that those companies that score the highest are typically quality growth companies, whether you're looking at an index fund or an ETF or an active ETF. A lot of these funds typically hold the same names because they're rated the highest on a historical basis. Now, I'll give you an example of a company that's being penalised for a scandal. It was a scandal in 2015, Dieselgate, from Volkswagen. So a couple of years before you guys started your journey, but I'm sure you remember it. They were cheating. You know, they were cheating on their emissions, on their vehicles from 2015. So Volkswagen was still score very, very lowly. Some analysts give them the worst score possible on an ESG rating. However, that event in 2015 was the catalyst for Volkswagen to pivot and invest hugely in electric vehicles. And the revolution, which was really, I guess, started from Tesla and Elon Musk to the extent that by 2023, Volkswagen will be producing more electric vehicles than Tesla on our estimates. Now, with that in mind, think about the huge impact that Volkswagen are having in reducing carbon emissions globally as the largest EV producer, but they are still penalised on a backward looking ESG score. So when I say does it make sense? Most ESG strategies say invest in good companies and don't invest in bad companies. That makes sense. What doesn't make sense is looking backward rather than looking forward, but also starving companies of capital when they urgently need that money to decarbonise their operations or penalise, say, basic materials companies that are extracting valuable minerals that we need for electrification of the globe or reaching those net zero targets. So I think that there are many shades of green when it comes to ESG investing. There are many different ways that you can invest with a sustainable mindset, but historically most of them are backward looking. You need to actually truly understand what the vehicle and what the fund manager is trying to achieve. When you allocate your capital, whether it's your superannuation, whether it's your savings in order to meet some of those values that you share or have as an individual. 

Bryce: [00:09:16] So Anthony, you mentioned shades of green there. And in your presentation, you you talk about the different shades of green in sustainable investing. So can you talk us through these shades of green and perhaps the shortcomings with the current approach? 

Anthony Doyle: [00:09:29] Yes. So as I mentioned, when you're looking globally, there's 20,000 companies. So some sustainable strategies or passive vehicles will do negative screening. So you screen out the worst companies on ESG scores. Some will do positive screening. So you screen in the best companies on ESG scores. Some do something called ESG integration, where you integrate it into your investment process. Some will have a policy of working with the companies to improve their ESG scores from poor, poorer to better. Some strategies are called impact investing, where you might give up some investment performance to ensure that the company is truly having a strong impact. On some of those ESG factors. So many different shades of any highlighted five here, but the list goes on and on. It's not just a hard and fast rule that you can follow when you're looking at sustainable investing. Similar to, say, what we describe as value companies or what we describe as growth companies. There are many different ways that you can approach investing with a sustainable lens, but historically, the one thing that aligns all of them is don't invest in bad companies. Invest in good companies. And they are typically backward looking. Especially those ETF funds that are very much rules based by their very nature. They can't be forward looking because they're not doing bottom up analysis. They're taking analysis from, say, one of the ESG ratings providers. 

Alec: [00:11:04] In your presentation. I think you really encapsulate some of the troubles with current ESG analysis with your example of copper. So for listeners, can you just explain the dilemma of copper? 

Anthony Doyle: [00:11:18] Yeah, it's a dilemma. It's an investor's dilemma, sustainability dilemma, because as I said, those companies that score the highest typically say tech companies, their operations tend to be very capital light. They don't have huge trucks that are filled with diesel emitting carbon dioxide. They aren't, you know, digging up the earth for minerals that are required by its very nature, a destructive activity. So what you'll find is ESG funds are all skewed towards those companies that tend to be more capital light or less less capital intensive than, say, a basic materials company like a copper mine. So if you want to get exposure to copper, which is rising, the price is rising rapidly at the moment. As a backward looking ESG investor, it's very hard to do because of the emissions that copper miners put into the atmosphere. The other thing is if ESG and sustainable investors only own good companies, who's left to own the bad companies? And those owners of the bad companies? Are they going to ensure that the company is well run, well governed, not destructing the environment, doing everything it can to be carbon neutral or even carbon positive in the future? When you're looking at a basic materials company like a copper miner, copper is vital. We need it in solar panelling. We need it in wind farms. You can't start an EV without copper. You can't store energy without copper. So it's how are we going to extract the copper? Give mining companies and copper companies the capital that they require to extract the copper for the avy revolution? If we're not investing in these companies. 

Alec: [00:13:00] I think a start in your presentation was clean energy from solar and wind uses 4 to 6 times more copper than fossil fuels. So if we're screening in the solar energy producers, but we're screening out the copper miners. That seems to not not be logical. 

Anthony Doyle: [00:13:17] Yeah. And again, then you suddenly find there's a supply crunch. The price of copper increases, the margins that the solar manufacturers are operating under start to get squeezed, you know, putting their businesses under pressure as well. You know, you have to look beyond these sort of rules based investing, which many ESG strategies encompass. And you have to be more forward looking, which you can only do by a fundamental assessment of what a company is doing and the contribution it is making to sustainability and positive change in the world. 

Bryce: [00:13:52] So Anthony, any professor, you talk about some of the biggest holdings of a number of standard indexes with some ESG funds, and you're also the head of investment strategy at fire trials. So what what was the finding from this? How does a fire trial approach sustainable investing? And as retail investors, how should we be really thinking about all of this? 

Anthony Doyle: [00:14:14] Yeah. So in one guise or another, we've been investing globally for 35 years so far. Trials spun out of Macquarie about four years ago. But the managing director, Patrick Hodgkins, he's been investing globally, as I mentioned, for a considerable period of time. If a trial saw a natural extension of the Australian equity capabilities that we have being an alternative fund, an Australian equity fund called High Conviction, the High Conviction Fund and the Australian Small Companies Fund looking to invest globally and providing a solution. As I mentioned, going very back to the first answer, a solution for Australian investors looking at global equity exposure. So the way that fire trial differs is that we have a forward looking assessment rather than a backward looking assessment. What we found from our research was that if you can identify companies that are early on in their positive change journey, you can typically find companies will rewrite on the back. Of improving sustainability characteristics as they progress up a positive change curve and improve their ESG scores and metrics. So we work closely with company management to achieve those higher ESG metrics. So when we're looking at companies, they typically share sustainable characteristics that we've identified, such as sustainable business models, sustainable earnings, and they're contributing to positive, sustainable, positive change. And we categorise these companies according to one or even more of our four positive change themes. So there's a lot of positive changes, but the themes are health and wellbeing, innovation and equality, climate impact and sustainable world. So these companies, they have to have the three characteristics. They have to be either a future or current leader contributing to positive change, and they have to be contributing to one of those themes. 

Alec: [00:16:15] Right. So, Anthony, you've given us three companies to talk about that fit this idea of the three and then fitting one of these sustainable themes are most a lot of fund managers come and give us companies that we may not have heard about before. You've given us three companies that we're going to struggle to pronounce, so you're really stepping up there. But before we get to the three companies, we're just going to take a quick break to from our sponsors. So Anthony, before the break, I mentioned that you've given us three companies that fire trial are looking at or have invested in that we're going to talk about today. I've mentioned that the near impossible to pronounce. Well, two of them. Luckily, I get to say the first one, which is easy to pronounce for these three companies, would love to understand what the company is, why a trial likes it as an investment, and then how it fits into fire trials. ESG framework. The outline before. And then finally, any risks or watch outs that we should be aware of. So let's start with the one that's easy to pronounce. Darling ingredients trading in New York. Take a day off. 

Anthony Doyle: [00:17:21] Yeah. So you haven't heard of darling ingredients before? I have an. Okay, what you're going to get from the three Global Opportunities Fund is a fund that's very different to an index and very different to other global equity funds because of our unique approach to sustainable investing. You know, how are these companies contributing to positive change within the next five years? If a company tells us they're going to be carbon neutral by 2050, too long, it's too far away, you know, what are you doing by 2027. Address some of those thematics that I spoke about earlier? Say, darling, ingredients. What a story I have for you. Right. Did you know in North America, one of the things that is being stolen from restaurants is used cooking oil vats of used cooking oil. 

Alec: [00:18:08] That reminds me of a Simpsons episode where they say retirement. 

Anthony Doyle: [00:18:12] Retirement oil. Exactly. Yes. So there's a clip from The Simpsons where Bart and Home may go to steal the oil from the cafeteria. And it's Groundskeeper Willie's retirement oil. Well, this is happening in real life, reflecting the run up in energy prices, which again is a result of the invasion of Ukraine by Russia. So obviously, we're highly aware of what the oil price has done. Well, renewable energy prices have also followed a similar path skyward and in particular, biodiesel. So darling ingredients manufactures biodiesel. You don't need to necessarily go out and buy a Tesla. You can run your Ute Bryce, your Toyota Hilux on on biodiesel, which is synthetically a replacement for traditional diesel and a renewable source of energy. So what they do is they take the cooking oil and they turn it into biodiesel. Not only do they take cooking oil, but they also take offcuts from meat carcases. So typically in in America, 50% of the carcase is used and the other 50% is thrown away. Or darling are actually using the 50% of offcuts in order to manufacture renewable sources of fuel. So they have relationships with 140,000 restaurants across America to take the cooking oil or the offcuts from meat carcases in order to produce biodiesel. And they've been a standout performer over the course of the last three or four years. And again, it's one way that you can invest sustainably without having to necessarily invest in the old fossil fuel producers, which are contributing to global warming. You can get exposure to that, the magic of rising energy prices via alternative sources of fuel, for example. 

Bryce: [00:20:09] I'm assuming that they're not the only company in the world that is doing this. So why is this an attractive investment compared to some of its peers, and how does that fall in the four pillars that you just spoke about? 

Anthony Doyle: [00:20:21] So no one in Australia is doing it. Okay. But they're definitely the market leader. The reason they are the market leaders, because of those relationships that they've established with the plethora of restaurants that they're in, the sources or they have the biggest source of used cooking oil, for example, and also the abattoirs. So they have in total a 40% share of the collection market in North America. And you guys, you've been to America, you know how much stuff they fry.

Bryce: [00:20:52] Yeah. 

Anthony Doyle: [00:20:53] That's that's a lot. But it is a key ingredient. So they've got the key ingredient, 40% of it locked up and that's why it's more difficult for for competitors to obviously erode some of the market dominance that they have. In addition, if you're looking at forecasts of biodiesel going forward in terms of the growth runway, it's massive. So this is a company that stands to benefit from increasingly in particular, cars shifting to biodiesel. But I noted the other day that one of the airlines flew their Airbus A380 entirely on renewable diesel, for example. But from place to place, I can't remember. But you could.

Alec: [00:21:35] Probably that's a lot of fried potato chips. So. 

Anthony Doyle: [00:21:38] Well, this is something that would otherwise of not had any other use. So it's. Benefiting from that sort of circular economy, for example. 

Alec: [00:21:45] Anthony It's a fascinating story. I do want to challenge one thing you said there, that no Australian company is doing it. There is an Australian company, Oz Coal, subsidiary of GrainCorp, ASX listed that does this in Australia. The other is I know that is because when I worked at Coles I worked in waste and recycling and they collected our cooking oil and chicken farm and they. 

Bryce: [00:22:07] Go, Oh. 

Anthony Doyle: [00:22:07] Really? 

Bryce: [00:22:08] Now it was converted already if you want to. I knew that I. 

Anthony Doyle: [00:22:11] Wanted to test you. 

Alec: [00:22:13] Feel free to pass your Aussie equity out there. 

Bryce: [00:22:16] That's good. 

Anthony Doyle: [00:22:17] I'm sure they already know about it. If you want exposure to some of these types of companies, you really do have to look globally.

Bryce: [00:22:22] RM Alright, moving on to the second company, my guess I will look, I'm going to have a stab at the answer. I want to say vice versa.

Anthony Doyle: [00:22:34] You might have said it. I don't know. 

Bryce: [00:22:37] Maybe you'd be saying warehouse. Yeah. 

Anthony Doyle: [00:22:40] But yeah, Bryce was is that from October 1st or something? Because you've. 

Bryce: [00:22:44] Got investors coming. There.

Anthony Doyle: [00:22:46] You've done well there. 

Bryce: [00:22:47] I New York Stock Exchange, the ticker is wy. That's all I know about it. If you want to enlighten us, it would be great so what does what does the company do? Why is it an attractive investment for FY trial? And then how does it fall in your ESG framework?

Anthony Doyle: [00:23:08] So this company is the largest private landowner in North America, right? Over 120 years old. 

Bryce: [00:23:15] Isn't Bill Gates private of America? Look, Google. Oh. 

Anthony Doyle: [00:23:22] Okay. So y has a owns 11 million acres and 14 million acres and they lease 11 million acres in Canada. Come on, man. 

Bryce: [00:23:33] I thought maybe. You know what? You know what? 

Alec: [00:23:36] He's the largest farmland. 242,000 8000. 

Bryce: [00:23:43] Point.

Anthony Doyle: [00:23:44] 14 million acres lease and another 11 million.

Alec: [00:23:47] Okay. Okay. 

Anthony Doyle: [00:23:49] So one. 

Bryce: [00:23:49] All right. Good for. 

Anthony Doyle: [00:23:52] You. Redeem myself. 

Bryce: [00:23:53] You set me up there. This competition. Oh, yeah.

Anthony Doyle: [00:23:57] So being a private landowner of forests, they are obviously involved in lumber and timber. So they're fully integrated. They're in the mills, they are in the forests. And of course, you know, the US housing market, much like the Australian housing market, absolutely ramped over the last couple of years, reflecting low mortgage rates and low interest rates and very strong demand for for new builds, new houses and timber and lumber is totally renewable. So this company plants more more seeds, plants more trees than it extracts every year. So over 150 million trees per year. And it's vertically integrated islands. You know, as I said, the mills, the timber itself, the lumber, the trees and is hugely carbon positive, of course, because those trees are sucking in a huge amount of carbon dioxide. So, you know what a company, what a sustainable company to have. Now, boys, they say money doesn't grow on trees. Oh, but you can make a lot of money out of trees, as I mentioned, from lumber. And if you followed the lumber price. Yeah, I. [Alec: [00:25:04] Was going to say it just went crazy. 

Anthony Doyle: [00:25:07] Went crazy. 

Bryce: [00:25:08] Yeah, yeah, yeah, yeah, yeah. 

Anthony Doyle: [00:25:09] I'm still at very elevated levels, but yeah, one of the strongest commodity price runs that we've seen, post-COVID. So they obviously made money out of of lumber in terms of why we see this company sitting in our fund aligned with that sustainable world theme that I mentioned earlier and delivering on positive change is there benefiting from from strong housing demand, from the run up in lumber prices. But there's that is carbon optionality as carbon markets develop particularly in the US. So they lagging behind Europe and Australia in terms of the carbon market. But as the carbon price starts to rise in value, as companies look to offset their carbon emissions, White House can sell very high quality carbon credits into the market. So rather than cut down the trees for lumber, they can select parcels of their huge landholdings to retain for carbon credits. Not only that, but they can lease underneath the trees for carbon storage. So money doesn't grow on trees, but you can make a lot of money out of trees. And that's so that's a business sustainable business model, sustainable earnings and contributing to sustainable positive change. Think about those trees sucking out carbon dioxide out of the atmosphere. 

Alec: [00:26:28] Yeah, that's fascinating. What's Bill Gates doing with his land?

Bryce: [00:26:33] Cattle? Well, don't get me started on Canada. 

Alec: [00:26:39] All right. So Bryce had a crack at saying pronouncing that company's name. I guess I have to step up to the plate here. Antofagasta, how would you have done it? 

Bryce: [00:26:51] I would have done that. It sounds like an Italian style. 

Alec: [00:26:54] It sounds Italian, but it's listed over in London. The ticker is A.O. before you even ask Anthony. No, I haven't heard of this company. Tell us about it. 

Anthony Doyle: [00:27:05] Chilean copper miner. So, you know, going back to that thesis on copper that I spoke about earlier, copper is also another commodity. There aren't many. I think the only commodity that hasn't done much is coca chocolate, cocoa, chocolate, but a Chilean copper miner that really stands out in terms of the peer group. Now, Chile is known for copper extraction, but this is a company that has fantastic relationships with the villages and people that live around the mines. They're investing heavily in desalination plants and renewable energy in order to fuel the operations of the mines, which can be obviously very energy intensive. So they've got the desalination plants to convert saltwater into fresh water, usable water that they can use within the mining operations rather than extracting fresh water. And the other thing is they've committed to 100% renewable energy use as well within the mines within the next five years. So again, a Chilean copper miner that stands out from a sustainability standpoint for us according to our sustainability criteria, which might be screened out, which from other ESG funds or even a passive vehicle, for example, again, a company that's done well as a result of that core product that they sell, copper prices rising. And of course, as I mentioned earlier, we expect the demand for copper to remain really strong as the world moves towards that ambitious target of net zero by 2050.

Bryce: [00:28:36] Wow. 

Alec: [00:28:37] A good spread of company. Is there use cooking oil and animal offcuts, forestry and logging and then copper mining? Yeah. Three sectors we don't speak a lot about. We actually get criticised a bit for not speaking about mining enough. So thank you for bringing up our quota.

Bryce: [00:28:53] Well, we're, you know, we're. 

Anthony Doyle: [00:28:55] We're a company. We're high conviction. We're concentrated. Each of these companies that I mentioned earlier, over 200 hours of research has gone in before selecting those companies. So concentrated, high conviction and a very low overlap with the index. We're very different to the index. We're identifying companies that other firms or other active managers or passive managers might not necessarily own as well. So so we're very different in that sense. And again, we've been doing it a long time. 

Bryce: [00:29:22] Well, Anthony, it's a shame we have we have run out of time. We do have three final questions that were cracking, too. But I just want to remind the audience that if you've loved listening to Anthony today and want to hear more of what he has to say, because there's plenty more to come, make sure you sign up and come and join at the ASX Investor Day. Brisbane kicks off this weekend, 14th of May at the Sofitel. Melbourne is on the 21st of May and Sydney is on the 28th of May. Anthony prides himself on delivering presentations with no power points. Is that true? 

Anthony Doyle: [00:29:55] I think I've got three slide that ASX made me do it slightly. 

Alec: [00:30:00] But if you invest in the calendar because he's he's going to well that's it. 

Bryce: [00:30:05] So we're really excited for that. But yeah. Anthony, thank you for your time as always. But we've got three questions to finish off with. 

Alec: [00:30:12] So Anthony, we have a standard three questions, but we've asked you them before. Yeah, because you've been on the show a couple of times, so we thought it would put a bit of a twist on each of them. So bear with us in case this really falls flat. 

Bryce: [00:30:26] No, no, let's do it. 

Alec: [00:30:27] The first one we normally ask are best books instead. What's the best article or piece of analysis that you've read recently? Ideally something that we can put a link in the show notes. 

Anthony Doyle: [00:30:38] Yeah. So I thought about this and going back to my bond market experience. I was in bond markets for 15 years and they often say, you know, the bond guys and the bond the bond people are the most bearish, always looking for things that go wrong and the equity investors are always looking for things that go right. So I'm going to put my Bond hat on for a second. And I thought one really interesting piece of research that I saw came out from a guy called Larry Summers, if you've heard of him. He was very senior in the US Federal Reserve and he was also economic advisor to might have been George Bush or. Yeah, so yeah, he's now a professor at Harvard and he's very well known in the sort of investment strategy world, which is, you know, my title. So say the research that he produced went back to the fifties on the US economy and was just looking at the likelihood of recession within the next 24 months, given a couple of very simple economic variables, which is the unemployment rate and inflation. And you know, it's such an odd time at the moment, you know, inflation's running over 7% whilst unemployment is less than 4%. So statistically speaking, you know, history might not repeat, but he was suggesting that according to this analysis there's an 80% chance of a US recession in the next 24 months. 

Bryce: [00:32:03] Wow. 

Anthony Doyle: [00:32:04] Yeah. So yes, you know, you can hear about inverse yield curves and all the rest of it, but I thought that was interesting piece of analysis. And yeah, much will depend of course upon how the US raises interest rates and how markets react and how households react. But yeah, interesting too to bear in mind. Yeah, well. 

Alec: [00:32:23] Yeah, yeah, bear in mind. 

Bryce: [00:32:26] But yeah. Yeah. 

Anthony Doyle: [00:32:28] Well, I should have said why a house. It was a growth company as well again. 

Bryce: [00:32:32] I get it. Yeah. Yes, sir. 

Alec: [00:32:38] Anthony, the second question we like to finish these interviews with is what's the best company you've ever seen? Instead, we're going to flip it on its head. What's the worst company you've ever seen?

Anthony Doyle: [00:32:48] Yeah. So one of my colleagues, James Miller, who's in the portfolio management team with myself, he used to short companies in in his experience of running portfolios. And I asked him and he said, there's too many bad ones. I get the question, but I wanted to pivot. That's okay. I thought what might be more relevant for the listeners is bad products that I think are just shocking and yeah, leverage. So I just think they're just a really bad idea. So some of the famous ones over in the US are three time oil levered ETFs, inverse ETFs and, you know, just go against the grain of everything that that we're about as investors. It's just purely about speculation and I just think their weapons of mass capital destruction, you know Levered ETFs just a crazy idea and I thought that that might. Something that your audience might value. 

Bryce: [00:33:41] Capital destruction. Yeah, I.

Alec: [00:33:43] Thought I think if anyone is interested in them, they have to be aware of the slippage and, you know, the different structures of ETFs because what they track over time, they might not closely track depending on how the ETF is built. 

Anthony Doyle: [00:33:56] Well, it's not investing. It's speculating. And it's you know, you're better off at Anzac Day. Heads and heads or tails. 

Bryce: [00:34:02] Blowing. 

Anthony Doyle: [00:34:02] To up. 

Alec: [00:34:03] Did you make any money this year? 

Anthony Doyle: [00:34:04] My dog got three kids.

Bryce: [00:34:05] I think is six. And I'm a four year old twins, right? Yeah. I'll be ahead. It might be ahead of you guys. Not far ahead. You don't have time to go to the park. So no. 

Anthony Doyle: [00:34:18] Camping in my backyard. 

Bryce: [00:34:20] In the tent. Right there. Most of it, yeah. 

Alec: [00:34:24] Yeah. And then, Anthony, we generally like to ask as a final question, advice to your younger self. But you've just moved jobs, you've just joined fire trial. I'm sure plenty of people were giving you advice as you moved. What was the best piece of advice you heard as you move jobs and started a fire trial?

Anthony Doyle: [00:34:43] Yeah, so I think what's relevant is that I worked with the managing director when I first started my career as a fresh faced 22 year old at Macquarie for four. And I've spoken to another podcast about my, my journey around the world and the rest of it, but I worked with him for five years and I didn't expect to work with him again. A fire trial. But since I've joined, you know, I've found the culture has been extremely collaborative. Everyone is invited to investment committee meetings and see the equity research that is produced. You know, that 200 hours that I mentioned earlier, I'm learning a lot. Everyone's very willing to share in terms of, you know, the process and the people and also access to company management and things like that. One thing I found really interesting is that at the end of one of the investment committees, so it's essentially going through the stock research. There's a blind vote, so there's no anchoring. Everyone gets a vote, not another portfolio, not just a portfolio management team, but also the other analysts that have participated or heard, the analysts who's responsible for the research. So it's rated on 0 to 4 for being the best and it goes around the room and you show you a number. So interesting way to avoid anchoring bias or, you know, just the most senior person in the room giving a score and everyone else anchoring themselves to that. That's cool. That's cool. It's an environment of of teamwork. There's no stars, no alphas, you know, males or females. So I'm just really enjoying it. And, you know, the best piece of advice that I've had is, you know, I got to know them really well. I've I've worked with Patrick, the managing director, Patrick Hodgins, as I mentioned in my career before. So I knew them pretty well. And the most important thing I think was that I was joining a culture one that I would enjoy. And I think that's a pretty good lesson for anyone. You know, I know how much you guys enjoy what you do. I think if you enjoy what you're doing, you know what I tell my kids as well, you know, it's going to be a lot easier for you. So it's been a great start so far and one that I'm looking to build on. And so hopefully at the ASX Investor Day is one that I can share and talk to people about as well. 

Bryce: [00:36:57] Absolutely. We're we're looking forward to seeing how far the trail grows underneath your investment leadership. If you want more info on what far trial do, you can head to far trial dot com. Otherwise head to ASX WSJ.com dot IQ to register for the ASX Investor Day. Anthony, thank you so much for your time. Always such a pleasure speaking with you and we look forward to catching up with you at the ASX Investor Day in Sydney and yeah, following a journey over the rest of the year. So thank you very much. 

Anthony Doyle: [00:37:24] Thanks, guys. Thanks for having me.