Right, well, do you want to jump on just one slide and quickly cover some of the headlines? I suppose so. The trust itself, very much sort of income and growth really. So we've got a twin objective here: to grow the capital above the FTSE World and also to grow the dividend above inflation, UK inflation. So that's sort of a real return on the income line. Now we're one of the dividend champions here with 56 years of consecutive dividend growth since 1966, and just after City of London with the second longest record of that consistent dividend growth, yielding about 2.4% today. We're obviously in global stocks; they yield a little bit less than City of London, but still a decent yield and something that continues to grow. We're forecasting about 5% growth this year. So the trust, very much income and growth, global equities, and we're about a billion and a half of assets, listed here in London but also actually in New Zealand as well. So we've got some New Zealand investors. We listed down there about 13.3% of the register is from New Zealand. And then I've been manager since 2003. Previous manager, Michael Moore, was manager from 1978 to 2003. So you really had a lot of continuity of investment process there. Sort of two managers, nearly 50 years now, and consistently growing NAV on the right-hand side there.
So if we jump on a little bit, let's look a bit more detail really at some of our core principles. So I think that twin objectives really drives a lot of our investment process. So we're looking essentially at companies which grow cash flow and generally pay dividends. We have some stocks that don't pay dividends. Some of the, obviously the Mag 7, things like Meta and Amazon that we own that don't pay dividends but are great stocks for compounding that cash flow, and we really hope in the future they will pay dividends, as we're starting to see things like Meta over in the US. So looking for companies with consistent dividend growth, strong balance sheets, so, you know, quality bias to a lot of companies we own, which again, you know, in very strong growth markets when everybody wants the new thing, we maybe lag a little bit, but we'll certainly make a lot up when life gets a bit tougher and these quality names sort of come to the fore. So, you know, not necessarily value per se, I've put there, you know, down towards we can shift between value and growth. The US portfolio looks quite growthy, but that's really what you've been having to invest in to get return out of the US market. The value end of the market has really struggled in the US, but value works a bit better in Asia, also worked a bit better in parts of Europe as well. So, you know, those portfolios look a bit more balanced between both some value names, for instance financials, but also some growth opportunities we'll touch on in a bit. The portfolio itself, I'll show you the team in a minute, but we're essentially split into regions, covering Japan, Asia, Europe, and the US, and really trying to find 100 conviction stocks in that whole region, in all those regions. So concentrating towards our best ideas to give ourselves some decent tracking error against benchmarks, very much believing in local experts, and I'll show you the team in a minute. And then finally, really trying to make sure we do this at a very efficient way and a low cost. So we don't have performance fees, we're not paying other managers to run the money, it's all run in-house at Janus Henderson. We've some two and a half thousand employees, we've got sort of 70-odd analysts covering the globe, and a lot of PMs in both sectors, specialists as well, to draw upon for investment ideas. So we're doing that all with an ongoing charge of 0.5, so that includes all the cost of running the investment trust, and the management fees are about 40 basis points, so 42 basis points. And then finally we've got some gearing, as a lot of trusts do, I'm sure you've discussed that in previous calls, but our gearing about 8% is roughly maximum gearing at the moment. We're actually towards the lower end of that, about 3% geared today, definitely taking some profits in the market run-up we've seen the last few months. But the cost of our debt is now only about 2.7%, and the first expiry is way out in 2035. So we've got good long-term debt at a very low cost as well, which should be beneficial for investors.
So jump on one more, look at the team. I mentioned myself. I've been investing since 1990, first of all in the US market, but then pretty much going global from the mid-90s. And so, you know, a lot of experience running hedge funds, pension funds, and investment trusts since 2003. And then I've got a team here, very experienced managers, all with, you know, decades of experience in their markets, but importantly they invest locally. I think that's really important. So Jeremiah there sits in Denver, which is our head office in central USA. Jamie here is running a pan-European, including the UK, in London. Junichi is in Tokyo, and Satya is in Singapore. So really embedded in their regions, I think that gives them a good grasp of what's working, what's not working, and closer to the companies to meet them as well. So I've mentioned before, you know, dividends matter to us, it's part of our objective. So the fund does need to generate a decent yield, but we do own some zero-yielders where we think the growth and the cash flow is definitely inflecting upwards. And very much free cash flow is probably our one metric that unites us all.
So let's talk about markets, I suppose, and more the theme of what's going on. I just thought I'd put one slide really to define, I think, how we're thinking forward from here. And really this is global long bonds, 10-year bonds aggregate around the world. And you can see most of my, that's pretty much my career from 1990. You know, long bond yields are 8-9% and they've just continued, we call it the ice age, as they've just glided down all the way to almost zero sort of through COVID. And we've had, to my mind, a major reset. You can see that line has gone up. Bond yields are sort of round about four, a little bit lower in Europe, and obviously Japan starting to raise interest rates and hoping their long bond yields will rise as well. So I feel there's been a big reset in the cost of capital here, and we're still only just beginning to see the effects of this. And so the next five years, if we look out in our rest into horizon, I think we've got to factor this in. I don't see this going back to zero. I think inflation being that sort of genie in the box has been let out, and it's very difficult to get back in again. We're seeing persistent wage growth, deglobalization as well as increasing costs. So a lot of factors out there, I think, are leading to, you know, inflation should be in this sort of 2% plus range rather than below 2% when we had those very low interest rates. So, you know, I think we've got to factor this in, this cost of capital. It means a lot of areas in finance where cheap debt was funding a lot of ideas is really historic. And as those bonds roll over and repay, we'll see a resetting in valuations. And we're seeing it in a lot of the corporate world as well. A lot of corporates were quite clever and termed out their debt, but that's, you know, the consequences of that are slowly tightening on a lot of industries that are overleveraged. So we're trying to factor that into what we're doing within the portfolio, and we're finding a lot of interesting ideas that should lead out of that. I've got a couple of areas there I'll focus on to give you a bit of a flavor of where we're quite excited currently.
So if we jump on a slide, you know, I think as a theme, electrification is going to be an increasingly powerful theme for us. It's actually tricky to get, you know, really interesting ideas in here. A lot of this story really is running through, I suppose, the electric cars. It's running through data centers. So just our requirements in the economies and glowing developed economies is going to need a lot more electricity than we're used to. If you look at the graph I'm showing you there, US power demand, it's been pretty flat for the last couple of decades. And within there is a growing demand for electricity, but countering that is an increasing efficiency, moving to LEDs, etc., etc. So in a pretty flat demand over the last few decades, but the next two or three decades we look forward, you know, massive increase. Trump, I think, will slow that towards electric cars, but I think the future is pretty clear over a couple of decades. And then obviously data centers, you know, huge new increase in demand for electricity coming in there as well. And so we're seeing, you know, this theme happening everywhere. If we look at some of our bigger holdings on the right, you know, Nari Technology is a Chinese company. This is happening quicker, much, much quicker in China, this push towards EVs. The price points of EVs really driving very rapidly, I think, from gasoline engines towards electric, and really trying to improve connecting renewables as well. So Nari is right in the middle of all that, of trying to develop technologies to extend the grid. Power Grid is in India, so again a nice emerging market story again there, driving electrification through the economy. And then we've got companies that make a lot of the equipment which goes into those, into these countries. So Siemens and Hitachi. Hitachi has been a fantastic stock for us over the last 12 months. Trane Technologies, again a lot about air conditioning for data centers, but again more data center story than Honeywell as well. So this is about 5% of the portfolio and it's growing. We're looking for new names. Some of them are a bit expensive, but I can see this growing towards 5 to 10% over the next year or so, and that looks pretty much a very nice theme, electrification.
The next one is about healthcare, and I think first of all, two of our biggest holdings are Eli Lilly and Novo Nordisk in Europe. And so these two companies really are the forefront of what we call GLP-1. So these are the anti-obesity drugs and diabetes control drugs. And I think, you know, both diabetes and obesity are the two really biggest healthcare issues, I think, for developed markets and developing markets. And so we could, we're just on the left, you look at the scale here in billions, these are the forecast revenues growth for these GLP-1 drugs. We are at the bottom there, about 10 billion of revenue currently, and this is forecast in the next five years to grow to 80. So huge growth. They're spending a lot of money putting in production here. It's just launched, Wegovy is just launched in China, again a huge market, I think, for obesity and both diabetes as well. So we see huge growth coming in here, and really the first two companies, Eli Lilly and Novo, I think, will take the majority of the market share in these markets. A number of other companies got similar drugs, but I really think the dominance of the two names there and the longer-term records, you know, should mean they're winners. So this is a great advance. And then on the right, really, again, healthcare, we've been pretty light healthcare for the last sort of decade, and really essentially some big drugs coming off patent and people replicating those at much lower cost. But I think we're beginning to see with a bit of AI and a bit of other things, gene mapping, we're seeing actually, you know, increasing number of new compounds coming in some very interesting areas which should see very strong growth that we're seeing with these GLP-1 drugs. So we're very excited, I think, about the future here. We've got a very impressive healthcare team at Janus Henderson to help us find ideas in this space, and we're very excited, I think, about the future for healthcare. So it's finally, you know, from being about two or three percent of Bankers' assets, we're about ten, eleven percent today and growing. It's cheap, it's been a bit left behind in the rush for AI, but this is a sector that should benefit very materially from AI development in terms of new drug and testing for drugs and compounds. So again, an area I think, you know, down the road of AI is very exciting, a lot better value than some of the key components of the manufacturing of silicon chips in the AI space. So that's sort of healthcare for us on the edge of an age of innovation.
If we jump on finally, a sort of market we're still favoring very much, it's drawn back a little bit in the last six months, but I think really to us still very exciting is Japan. And here we're about thirteen, thirteen percent of the portfolio in Japan. And essentially, I think the story is definitely an economy that's picking up. We're seeing some inflation, you know, finally wage growth is picking up as well, which is the driver of inflation. And so we should see consumption improve as well on the back of that. If you think prices are going up in the future, it draws forward a lot of consumption, whereas in deflation, then why buy now when you can buy later? So I think we should see better trends of economic growth in the market. But on top of that, it's really what the companies are doing and improving the cost of, sorry, the return on equity. Japanese companies is still about half the rate of the US, so a lot of room to improve return on equity. And we're seeing that come through in some of the aspects on here. So dividend payments definitely improving. You see that green line nicely accelerating up. So payout ratios are rising, but still only about a third. And the US, you know, and Europe about half. Buybacks are improving quite dramatically, which again is showing the value of equity there. And we're also seeing, you know, a lot more, I think, governance improvements as well, where companies are a lot more pressure now to stay in the indices, to pay out cash, reduce cash on the balance sheet, and that's all leading to better leverage for us as equity holders. So we should see equity return continue to go up. So at the bottom there, we've seen over ten years got a seven percent compounding growth in earnings, but that's led to nine percent compounding in dividend and one hundred and seventy-seven percent on the compounding on the buyback. So again, I think still a very nice story of the economy getting better, some great companies in certain industrials and technologies, and increasing better governance leading to better returns.
So we jump on one more, look on really positioning. So US, you know, is the largest global region. It's not surprising to see our largest holdings there. And again, focusing on a lot of companies that generally pay very good dividends. So, you know, this year certainly the winners have been American Express there for us has been actually our number one contributor to returns in the portfolio. We've got some of the chip manufacturers in there, KLA, Broadcom. Again, we're very excited about Broadcom. Broadcom, sorry, it makes sort of ASIC AI chips that are very focused on speed. And actually, we think actually that's a very interesting growth story, come much better valuation than Nvidia. So a lot of US names I've mentioned, the Japan exposure really doing there. We've probably cut back UK and Japan and Europe this year. You know, it's definitely had a tougher period of growth, but is beginning to look more interesting in some of the names there. So we focused down a little bit on those companies.
If we jump one more into sectors, you can see, you know, very much information technology is big for us being a global fund. We've narrowed that a little bit this year as obviously the market's focused on some of those Mag 7 names, but we're trying to, as I've mentioned with Broadcom and some other names, sort of dive down a little bit lower for better value, but good growth, definitely getting very expensive valuations for the US market. Financials is something I didn't mention before, and again, I think what's interesting there, you know, we've switched a lot of our holdings from sort of what you think as sort of fee-paying financials, you know, historically, into net interest margin sort of financials. We believe that rates would stay higher for longer, and that's certainly coming through. So a lot of the traditional banks and Morgan Stanley in the US and UniCredit, Sanpaolo Bank have been again two of our best performers over the last twelve months, and really that net interest margin improving, fees, interest for them has definitely been a big run there. And then also insurance, I mentioned again, resetting of rates, a lot of that cheap money found its way into insurance markets, and that's beginning to ease out. And we're seeing, you know, one element of why insurance rates are rising is definitely that money exiting, and it's leaving the traditional insurers to make a better return, I think, on capital. So again, opportunities rising in there, a bit lighter on some of the industrial areas. So energy, materials, again, with China struggling to grow, definitely not a place to be in the short term. And then on the right, you can see our sort of allocations. The US is sort of forty-six percent, UK is about seven, Europe twenty-two. So, you know, North America, it's a big chunk. It's not as much as the index, but again, I think, you know, it is an expensive market. It's had a very strong run, and we're seeing sort of better opportunities, I think, parts of Asia, definitely in Japan and bits of Europe as well, to compare against it.
Finally, I think, you know, always mentioned the discount. I put the long-term chart here, five years. So Bankers, you know, traditionally trades at a tightish discount. We're actually issuing shares in 2020. So over five years, we've still got a positive, you know, net share count actually, but we've been buying back as all discounts sort of widened in that twenty-one to twenty-three period. I think as interest rates rose and obviously certainly a lot of investors decided that five percent risk-free rate was better than being exposed to the market. And so the whole sector's moved out, all investment trusts really, and we're buying back pretty steadily. And we think it's good value in this area and sort of just over ten percent discount. And, you know, again, historically we've had a good support from investors, and I expect that discount to narrow at some point. But in the, we've bought about six percent of shares back this year, so we think they're good value. So with that, I think my fifteen minutes just about up.
So we hold five. It's easier to knock the two off that we don't hold, and one is Tesla, where, oh, it's a diff, it just, you know, I'm not sure it's trading on, it's trading a lot of hope and ideas which may well work, but it doesn't trade on a traditional valuation basis. You really got to assume that they're self-driving cars, and yeah, I suppose that's really the big opportunity is self-driving as software is adopted by a lot of other names. You know, I think robots is still a bit too far out, and I think it's just not been a traditional stock for us given its volatility and it's, you know, again, the cash flow is a lot driven by credits, which again can be turned off as well. So I think that one we struggled with. Nvidia, you know, definitely was a miss initially. We don't own that one. You know, it's come from, you know, very strongly. It was always very expensive, and so I think it's always one that's just popped out of our, you know, trying to avoid expensive stocks. But it's been an amazing run. We've tried to capture that semiconductor run, and we have done things like Taiwan Semi. We own a lot of that one, which is manufacturing all of Nvidia's chips, and that's been performing very well. My issue with Nvidia, I suppose, is price. You know, it's on a very high multiple of sales, which is an industry that is traditionally cyclical. You know, it has a book, you always value these things on book to bill, you know, the amount of reorders they've got and the amount of their shipping, and that's because this industry is volatile. It takes, I don't know if people know this, but it takes somewhere in the region of four months to make a chip, getting longer now for these really complex GPUs. So four to six months for those. So you've always got to be manufacturing massively ahead of demand, and that leads to, you know, a lot of oversupply at certain points. And so, yes, there's a lot of demand at the moment, but, you know, I historically don't think you should be paying sixty times earnings, fifty times earnings, and twenty times sales for these sort of industries. And so those are the two we don't own.
We're very excited by probably Meta, I think is very interesting. If AI is going to work, it seems extremely well placed and is not priced for it. The underlying business is doing very well, and their AI models are very highly regarded, but are really not really in price in our mind. And they've shown over the last year and two, you know, the ability to turn the margin up very dramatically, which has done very well, as Amazon, which is another one, you know, clear category killer. And again, turning the margin up, we always knew they could repurchase at some point when they wanted to stop growing, and they managed to keep the growth and repurchase the margin. So those are probably two of my favorite picks in the Mag 7. But I think AI in general, I'd say I'm a little bit more skeptic that the returns on this huge investment are going to come through. I think they will on a five or six-year view and worry a little bit in the shorter term. And the market's going to get more harsh and say, well, where is the revenue coming on this massive increase in capital spending? If we think we're two years since ChatGPT launched its product, that they're making a bit of revenue, but really not a lot. And I'm not seeing the killer app or the things that have changed our lives dramatically, you know, neither now in the next year or eighteen months. You know, but AI, as I mentioned with healthcare, with some efficiency gains, it is helping a lot of companies. And so I think five, ten-year view, without a doubt, it'll be transformative. But I'm struggling to see it as the industrial revolution of the future. So a little bit of skepticism, I think, is probably always healthy.
So we've got, I mean, we've got about twelve or thirteen stocks in the semi space, and we've just, you know, it's the old adage of owning the picks and the shovels on the people sort of mining the stuff. And, you know, definitely, you know, I see huge demand for these products, and therefore the manufacturers of them should be a lot more safer, you know, but they often, these sales are very lumpy. So things like ASML, we do own, but much, much smaller holding. We cut it back early in the year, and you can see very lumpy sales there, and you'll see that with some of the others, I think. So whereas Taiwan Semi, I think, is just very consistent. Samsung is a bit more about memory, which again has been, I think, you know, a little bit overbuilt, and there's oversupply coming out of China and some other areas. So again, it's that's showing you again, reminder, it's cyclical. These things do make good money in the ups, and it's a bit more tougher, and the pricing gets harder. And so just really trying to find the, you know, good cash flow, good growth, but not overpaying. And particularly, I've always liked businesses that return a bit of capital. The dividend shows discipline, not just to keep overbuilding. And I think discipline overbuilding is again where semis tend to go wrong. We probably undoubtedly will see it in the next three years when, you know, certainly governments all around the world want semiconductor manufacturing onshore. I can see why it's very understandable why they'd want it, but it will be, the industry will overbuild without a shadow of doubt again, probably three or four years out. That isn't it, but you'll have an oversupply situation again, and pricing, you know, is very dynamic in those times. So I think we just got to be a bit cautious into that. But, you know, some of these names, you know, KLA, very interesting. They make a lot of the testing equipment as these chips get smaller and smaller, and you go to, you know, the current cutting edge is about two nanometers. It's a very small space on a wafer, and so the testing equipment, the failure rate can go up very dramatically. And KLA provides all that equipment to make sure you're producing, you know, quality chips, and your efficiency and your, you know, the load effectively is better. So again, that's the sort of company should, you know, is towards the end of putting in these new fabs, but they should see a lot of order flow over the next two years. So trying to capture some of those, I think, is the opportunity.
