Thanks for the introduction, Alex. Hi everybody. Thanks for spending some time today. I hope that my comments will be instructive, and I'm looking forward to the interactive session as well. I certainly recognize that there are warranted questions that can be asked about Finsbury Growth and Income Trust performance and its portfolio today. So just as a preamble, I might say I'm not a great one for retrospection, for looking back. I'm really much more focused on what might happen next and hoping that what might happen next will be good. But listen, I can't resist in pointing out that this month, December 25, is the 25th anniversary of my business taking on responsibility for Finsbury Growth and Income Trust investment affairs. So that's a quarter of a century that I've been responsible for this portfolio. I am still a little bit proud of that longevity. I was really quite proud of the investment returns for the first 20 years of that responsibility. I'm much less proud, much less proud about the last five years, which have disappointed me and shareholders. And you know, I need to pick my adjective here, but in the interest of candor, I actually feel ashamed about the performance over the last 12 months. It's pretty much, I've been in this business a long, long time, it's pretty much the worst 12 months for relative performance in my career. And you know, I'm sorry. I'm sorry for that.
I think in the context of this now prolonged period of mediocrity or worse, I do think that it's very, very appropriate that Finsbury's board should have convened its first ever, the company's first ever continuation vote. That vote is live at the moment. The AGM is in January, and as I say, I do think it's appropriate that the shareholders of the company should be able to express their opinion through their vote about whether or not they think that the company should continue or continue in this form. And if I may, I'm also going to assure you that Finsbury's board, as it should, is very, very focused on any measures that it could take to improve long-term shareholder value, midterm shareholder value, and even short-term shareholder value.
I'm also just going to say that as some of you know, I am personally a significant shareholder in Finsbury, maybe 4% of the equity. However, after careful consideration, I've decided that I am not going to vote my own shares on this continuation vote. And the reason for that is because I think that there's too much of a potential conflict of interest involved in that decision, and that it's better that the future of the company be determined by those shareholders who are not also service providers to the company as I am. But I do hope that no one would construe the fact that I'm not voting on the continuation issue, no one would construe that as me signaling that I don't want the company to continue. Of course I do. And also, I wouldn't want anybody to think that it signaled a lack of confidence in the portfolio or the strategy. I do have confidence, and if you'll allow me to say so, I bought a few more shares for myself earlier this week. And I hope that that's a clear statement of my confidence in what we're doing with the portfolio.
So yes, I bought more because I think that I've got, I believe I've got to believe that recent underperformance has created value in the portfolio, and I want to take advantage of that value. And for the rest of my comments, I hope I can at least make you consider the opportunity that may be in this portfolio. So what is Finsbury's portfolio currently? Well, as it's been by intent anyway throughout the last quarter of a century, Finsbury's portfolio is a collection of what we analyze to be outstanding business franchises, currently 100% UK-listed business franchises. And when I look at this slide showing some of the key holdings that we have, what comes to my mind is an observation made many, many decades ago by Charlie Munger, Buffett's business partner of course. Munger said, and it's kind of been a refrain for me throughout my career, Munger said if you put together a collection of great businesses, over time, sooner or later, good things will tend to happen. And I have to say, as I look back, I said I wasn't going to retrospect, when I look back over my engagement with stock markets over my career, I've very rarely been able to time periods of strong performance. I've never known when the portfolio was likely to be doing well or badly. I've just relied on that sort of Munger-type observation that if you do hold good businesses and wait, sooner or later, certainly in the past, performance has eventuated. And that I guess is where I am today.
Again, just looking at this slide. Even after a more competitive 12 months for the UK equity market as a whole, returns have been a bit better, as you know, for the UK stock market. I still wonder whether global investors and even domestic investors recognize the caliber of some UK companies. It is possible in this so-called value market of the UK, it is possible, in our opinion, in my opinion, to find absolutely world-class businesses that are evidently as good, if not better than global peers, being presented with growth opportunities that these UK companies are strategically the best positioned in the world to exploit. And maybe just to again, looking at these names here, just to highlight three actually that I think are really pregnant with opportunity.
If you believe, as I must say we do, that artificial intelligence is going to be transformative of many industries, and if you think, as we do, that AI-enhanced tools are likely to transform the provision of credit around the world, lending, then I'm not even sure it's up for debate that Experian is the best-positioned company in the world to lead that AI-enhanced improvement in the efficiency of the allocation of credit. Experian is not just the biggest credit bureau in the world, although it is. It's also the biggest credit bureau in the world's most dynamic and credit-hungry economy, the United States. But Experian also has a data set on individuals around the world, and particularly in the United States. It has data on individuals that no other company possesses and no other company could possess. And it means, and you know, you can see it in the company's strategy today, you can see it in the company's business performance today, it means that Experian is absolutely a global leader in the application of AI to banking.
When you look at pretty much every capital marketplace around the world, those marketplaces are becoming more digital. They are electronifying, if that's a word, and a marketplace that is becoming more digital is maritime, the global shipping industry. And if there is a company that can accelerate and benefit from that increased digitization of that maritime marketplace, it is the world's biggest ship broker. We have an investment in Clarkson's, which by a nautical mile is the biggest ship broker in the world. The chief executive of Clarkson describes the company as, quote, the Bloomberg of global shipping. In other words, creating a digital platform for ship owners, people who need to charter ships to transact, and building data services around that platform. Clarkson, it's a unique business with a unique opportunity that, as far as we can tell, no other global company could begin to match.
Again, it just catches my eye, and it's been a disappointment for us over the last two to three years, but I think that investors underestimate what's been achieved by Fever-Tree. Fever-Tree has effectively created a new global beverage category in premium mixers. I think it's a remarkable achievement that the company has not only been able to dominate its domestic UK market, but that the brand has been successful globally. It's true today that Fever-Tree's biggest market in the world is now the United States, where Fever-Tree is the number one brand in tonic and in ginger beer. It's also true to say that as a result of the distribution agreement that Fever-Tree signed with Molson Coors earlier this year, there is a real chance, in our opinion, that Fever-Tree's revenues in the United States could rise very, very materially indeed over the next five years. And yeah, if that happens, that to us is an unanticipated, unexpected at the current valuation, source of value creation. So I think we own some very, very interesting companies. Maybe you disagree. Let's see questions later.
So in the current circumstances that I find myself in, in terms of performance, I thought that perhaps the most candid and maybe the most useful thing that I could do next in this session, and it'll probably be the bulk of my comments, is to focus in on the two big holdings that have really negatively impacted, of course, our performance in 2025, and to give you an account of why we've retained our investment in these two companies, and I hope reassure myself and give you confidence that that choice to retain Diageo first and London Stock Exchange Group second, why we've retained these two as strategic holdings. So first of all, I want to talk a bit about Diageo.
I know this slide is not a slide showing Diageo as such, but you'll recognize that Guinness is an important asset, very important asset within DGE. And we love this slide. The heritage, the history, the two centuries of upward trajectory in volumes of Guinness, and if anything, that volume growth of Guinness accelerating over the last couple of years is kind of close to being our ideal investment. Anyway, I'm just using this as a backdrop for a discussion about Diageo today. I think I've got two perspectives on Diageo. The first is to say that a fortnight ago we met with Drastic Dave, Sir Dave Lewis, who I know that you know is the CEO designate for Diageo. He commences that job in January, and Lewis wanted to meet us and other long-standing institutional shareholders in the company to introduce himself. And you know, we were interested to understand why someone like Sir Dave Lewis, with a tremendously successful pedigree, he doesn't have to do this. Why might he have taken this role on that some people would regard today as a poison chalice? And although you might have expected him to say this, it was at least comforting to us to hear that Lewis believes that the global spirits industry remains a dynamic industry with the potential for long-term growth. He also believes that Diageo is very well strategically positioned to participate in that growth over time. He acknowledges that particularly over the last four or five years there have been missteps made by the company that have presented challenges. But in his view, his track record makes him peculiarly suitable to step in and help rectify those issues. Let's hope that's right.
In particular, we asked Lewis, wasn't he worried about the, it's still debated, but clearly there are changes, but about the extent to which consumers' relationship with alcohol is changing. You know, are just fundamentally people drinking less and going to continue to drink less. And I thought that his answer was interesting and it's definitely worth relaying to you. As part of his due diligence, Lewis had been to the US, which is DGE's biggest profit generator, and had met with both the company but also with independent industry observers and consultants. And the single fact of what's going on in the US liquor market currently that Lewis wanted to convey to us was this. He said that what he had learned was that the current Gen Z in the United States is the first in American history that is drinking more spirits than beer. And he said to him that did signal a significant change in behavior, that in his opinion beer as a commoditized product that's fattening is now at a strategic disadvantage to premium spirits that offer an experience that is drunk during celebrations. His view is that that is a confirmation of the core investment proposition for Diageo, which is that consumers are indeed drinking less, but when they do drink, they're drinking higher quality, more heritage-rich products, and that plays to the strengths of DGE. So that was his perspective. Let's hope he's right.
The other thing I want to say, my second perspective on Diageo, and I think this has ramifications as well, more broadly than just for Diageo, particularly in the current quite febrile environment for stock markets worldwide. I think it is important, if you'll allow me to kind of cherry-pick, it is important to put a proposition. If in 1999 someone had offered you the choice between investing for the next 25 years with no possibility of selling at any point over the next 25 years, if someone had offered you the choice between investing in Nokia, riding high in 1999, or Diageo, many investors would have chosen Nokia. And okay, I've cherry-picked that, but of course that would have been the wrong decision. Technology obsolescence is sudden and highly damaging, particularly in hardware. In the meantime though, the brands that have driven Diageo over the last quarter of a century maintain their relevance for consumers. DGE was five pounds a share in 2000, 2001. I know because we were buying it then. It's more than trebled over the next quarter of a century. That's sort of okay. It just feels disappointing because at one point it had quadrupled. But I really do think it's an important proposition to put to investors. It is highly likely that Guinness, that Johnnie Walker, that Diageo's extraordinary selection, collection of single malt brands, that Tanqueray, that the Don Julio tequila brand, Diageo's partial ownership of Krug, it's highly likely that those products will be being consumed in another 25 years' time, maybe in higher volumes than today if the global economy grows over the next quarter of a century. And that durability, that longevity is rare in the context of equity markets and theoretically should be highly valuable. I think at the very least, whatever you think about that, that's the reason that we've retained the investment in DGE. Let's hope Lewis can remind investors about the power of that durability and the cash flows that the brands generate.
So, our second problematic holding, oh god, it's painful this year, has been London Stock Exchange Group. This is not an interesting slide. I really, I mean the thing listed on its own exchange back in 2001, we've owned it since 2002, done pretty well actually, except as you see for this horrendous fall, particularly in the second half of this year. I think two reasons why the share price has moved from a high of 120 in Q2 of this year to wherever it is today, 87, 88, I haven't actually seen it for the last hour. Two reasons why LSEG's price has fallen. The first is that the joint venture that LSEG announced with Microsoft two and a half years ago has not yet lived up to its potential. Some might say hasn't lived up to its hype. The second reason, and maybe even more fundamental, is that the advent of AI agents offering access to financial data and financial insights has raised concerns that London Stock Exchange Group won't be able to protect its incumbent position as the provider of data and data analytics to currently pretty much 90% plus of global financial institutions. So those are the two concerns.
To the extent that one can give comfort on the two, what I would note is last month London Stock Exchange Group had a capital markets day, an innovation capital markets day, and on the first question, the progress being made with the joint venture with Microsoft, it was reassuring that several Microsoft executives presented at that innovation day alongside LSEG's own technologists. And one of those Microsoft executives described the joint venture as a game-changer for Microsoft, at least in terms of its engagement with the global investment banking industry. And although this sounds simple, I believe it's powerful, and let's see what you think. The same Microsoft executive just said, look, there's four building blocks that Microsoft and LSEG can put together to create a formidable product offering. And those four building blocks, two from each company. From Microsoft, it's Teams plus Microsoft's Copilot, Microsoft's internal AI engine. When you combine those two assets with London Stock Exchange Group's proprietary data plus Workspace, LSEG's distribution mechanism to supply all of its services currently across the global financial services industry, that is a potent combination. And again, the Microsoft chief executive asserted that customers respond well to this combination of Microsoft's engineering prowess and the trustworthiness of London Stock Exchange Group's data. So let's hope that all of the good news from that joint venture is still to come.
Now to the other, even more fundamental question: is AI going to disintermediate London Stock Exchange Group? This is a crucial question for all investors, not just me. It's a question for all investors across a multiplicity of industries worldwide. And I'd like to share with you the perspective on that question that the chief executive of LSEG, David Schwimmer, shared with attendees at that innovation day last month, because he took that question head-on during his opening remarks. And from LSEG's perspective, it's important to understand that there are three interlocking component parts to the AI phenomenon. First of all, there is the requirement for unprecedented amounts of computing power. Second, there are the agents, the AI models which are striving all the time to become cleverer, with the hope, I guess, from the investment backers of these models that one day one of them may become the cleverest. Do you know what I mean? One of them becomes effectively the Google of this phase of innovation. But then the third component, the third component on top of the computing power and these agents, is the data, the data providers. And from LSEG's point of view, the data is absolute.
Where was I? Talking about the three component parts of AI: the computing power, the agents, and the data. The data being crucial for the agents to derive value from that data. And according to LSEG, the way they look at those three component parts is that the computing power is simply a question of capital. Who can afford to invest the most, hundreds of billions of dollars, ultimately that will commoditize. So far as the agents are concerned, they see the agents being in a perpetual battle between each other for efficacy and attention. And what, according to LSEG, that means is that the owners of proprietary data, the third component, owners of proprietary data, as long as it is proprietary, are in strategically a very strong position because the agents need that data.
So as some corroboration, it's not conclusive yet, but as some corroboration for that framework, consider that the week that Claude for Finance launched was the week when LSEG's share price fell most in 2025. And Claude for Finance ostensibly is a competitive-looking service. But also consider that Claude is a customer of LSEG. Claude needs to pay to access LSEG's data for it to have a service. You may also have noted a couple of days ago now that LSEG has just announced a collaboration with OpenAI, the backer of course of ChatGPT, to provide, to sell data to that service. So ChatGPT can compete against Claude and others to become the most relevant location for people looking for financial information. LSEG's view is that it is simply in an advantaged position with 90% of its data being proprietary. It is in a very advantaged position to fuel the growth of agents and other institutions looking to consume data. So our proposition is that LSEG is a winner from developments in AI, not as the share price is currently implying, a loser.
And this is important. It's actually, as I said, it's important for global markets, but it's also important for Finsbury because we have deliberately built exposure to at least half a dozen London-listed companies with, we think, globally significant business propositions or data sets that we see as, again like LSEG, beneficiaries of the advent of AI tools and services. I just have put up here the most recent revenue and earnings performance of these companies because I think that at least to date it's reassuring because it demonstrates that these businesses are growing. The growth rates are accelerating, and the growth rates are accelerating because the companies are indeed executing credible strategies to deploy AI tools to create new value for their customers. That new value for their customers is feeding through into revenue growth, and revenue growth that is improving profit margins and returns to capital. I think this is a major opportunity for Finsbury. And a major opportunity, it's a major opportunity. I'm just going to pick one of these. You can ask me questions about individual stocks later. I'm just going to pick one of them. Very long-standing holding for us, Realex.
It's been such a well-run company. Wonderful value creation over time. What I want to say about Realex, let me couch it this way. It derives from a meeting we had with Eric Enstrom, the CEO of Realex, perhaps a couple of months ago now. And we said to Eric, you know, congratulations. Effectively since you were appointed, Realex has gone from being the 68th, 70th biggest company in the UK stock market to being today the 10th.
biggest company listed on the UK stock market. Um, you know, if the UK is essentially, you know, a Jurassic part of relatively low growth value companies, RELX definitely isn't. You know, um, the UK market hasn't generated very good returns. This company has, and it's allowed it to become a much much bigger company in the context of the UK stock market because it really is a fit for 21st century business. And we said partly to challenge and provoke a response from Eric Angstrom, we said, "Well, Eric, you've become the 10th biggest company in the UK. What would it take for RELX to become the number one company listed on the London stock market?" And yeah, you know, he took that in the spirit intended. I mean, who knows whether it could. I mean, actually, I don't think it's completely far-fetched, but there's a long way to go,
but I mean, this is what he said. Um, I mean, essentially two things he said that might make you think that there was a chance that RELX could continue to perform well as a business and continue to climb the rankings. He said, "Well, consider our risk division."
Um, back in 2004, RELX's risk division represented, in his opinion, only about 2% of the value of the company. Today, 20 years later, in his opinion, the risk division providing absolutely must-have machine-to-machine insights to the global insurance industry and providing cyber security risk to corporations all around the world. That risk division in his opinion is worth well over 50% of the current market value of RELX. And he said to us, "I can assure you that the growth rates in our risk division and the market opportunities opening up for that division are as great as they've ever been."
More generally, he noted that prior to COVID, RELX had been a steady grower, but the revenue growth had been, I don't know, 4% per annum maybe, um, feeding through to mid to high single-digit earnings progression. But he wanted to absolutely reinforce the fact that post-COVID, RELX's group revenue growth is now more like 8 to 9% per annum and continues to accelerate. And it continues to accelerate because the company has successfully utilized the AI tools and models that it's been working with for at least the last 10 years to create new products and services that make lawyers' jobs more efficient, that make the scientific research process more efficient, that helps insurance industry professionals. And that's exactly the sort of domain expertise plus the data, the proprietary data, that's been the stuff of a big bull market and we hope continues to be the stuff of a big bull market.
Um, I guess I'm going to get to the end of my prepared comments here. Uh, I'm going to say here's the portfolio. Um, it's a concentrated portfolio. Uh, I make a claim that it's a portfolio that's, um, relevant to likely industry trends in the 21st century. We own data businesses, platform businesses. We own a collection of companies that own brands that resonate with consumers around the world. Um, the disappointing performance of Finsbury has meant that the price earnings ratio for the portfolio has come down to roughly 23 times today. It was closer to 30 times in 2019, so there has been a derating, and yet the return on equity, the average returns being earned by the companies in this portfolio, are around 30%.
Probably double the rate of return for the UK stock market as an average. I don't know. But going back to Charlie Munger, I just hope that the caliber of these businesses as we see them will bring an improvement in Finsbury's NAV returns and fortunes.
I'm going to stop talking there. Um, thank you for your attention and let's have a look at, uh, some questions.
