Investment Manager's Review
Simon Gergel, Richard Knight, Andrew Koch
Steve Travelguide / Shutterstock.com
Malcolm Park / Alamy
This has been my twentieth year as lead manager of The Merchants Trust and it has been a fantastic privilege and a great pleasure to work on behalf of shareholders and the Board. I have taken the opportunity below to talk about this in more detail. Despite the market ups and downs, returns have been healthy and Merchants has continued the long tradition of paying rising dividends, now for 44 years.
However, I am also very conscious that, whilst the last three years have seen strong total returns and continued steady dividend growth, those returns have lagged the even stronger gains of the UK stock market. In this report I look back at the last year in detail, describe the broader environment and explain why we have lagged behind our benchmark. I also explain why we remain excited about the huge opportunities in a highly unusual and polarised UK equity market, and why we believe that the portfolio can continue to deliver further significant gains and a strong income profile for shareholders for many years.
It is only in an investment trust with 137 years of history that we can consider the last 20 years as the recent period. It has been eventful, and included the Great Financial Crisis (GFC), a long period of austerity, the Covid pandemic and the war in Ukraine, to name but a few events.
Time provides some perspective. The share price was 451p at the end of January 2006. Over the last 20 years, Merchants has paid 498.5p per share in dividends, so someone buying shares back then would have received all their money back and more, whilst they would have shares worth 628p this January. The dividend per share has risen progressively from 18.9p to a proposed 29.5p, despite two periods of sharp income contraction within the portfolio during the GFC and the Covid pandemic.
Also, the average cost of debt has come down from around 8.5% in 2006 to just over 5% today. One other aspect has increased materially. The format and length of the annual report. Today’s report is far more extensive, and provides much more detailed, and hopefully welcome commentary, as well as increased mandatory reporting. In 2006, the annual report had just 47 pages, in 2025 it had 118. In a separate comment we have also looked at the evolution of the stock market over the last 20 years. The market today is very different to that in the early 2000’s. It provides a different set of challenges but also opportunities for the future.
This was a remarkable year, in terms of geopolitical developments and financial markets. Donald Trump became US president for the second time in January 2025 and wasted no time in making an impact. He has fundamentally changed the US approach to international relations, security, and trade. His tariff announcements on so-called “Liberation Day” on 2nd April, since judged illegal by the US Supreme Court, rocked financial markets and threatened major disruption to world trading relationships. However, after considerable volatility and spiralling threats from China in particular, the US rowed back on the more aggressive tariffs. President Trump was also active in securing the hostage releases in Gaza and a fragile peace treaty, the abduction of the Venezuelan president Maduoro, and made threats to take over Greenland. His administration was interventionist in the corporate sphere, seeking and securing agreements with pharmaceutical companies, as well as receiving commitments from many other large companies to make substantial investments in the USA.
Outside of politics, the dominant theme in the year was the explosive growth of generative AI and the race by the so called “hyperscalers” including Google parent Alphabet and Microsoft, to spend hundreds of billions of dollars building vast data centres to exploit this potential opportunity. This is creating massive demand for semiconductors, electricity, copper and other equipment. The impact of AI was a powerful theme during the year. It is clear, that AI will have a profound impact on society and many businesses, though it can be hard to separate the potential winners from losers, particularly amongst the giant technology companies.
In the UK there was a sense of déjà vu, as we spent most of the year waiting for the (later than normal) budget in November. There was considerable uncertainty about how the Chancellor, Rachel Reeves, would balance the books. Various potential policy options, including tax rises, were floated over the summer, and almost certainly constrained activity and investment in the economy. The UK economy grew faster in 2025 than 2024, but growth was still muted and slowed in the second half of the year. As inflationary pressures reduced, the Bank of England cut interest rates four times, after two cuts in the previous year. Interest rates ended January at 3.75%. This fall in the cost of borrowing should gradually feed into the corporate and consumer sector and help to stimulate activity.
In the USA, there was a so-called “K-Shaped” economy. More affluent consumers, who had benefitted from rising financial asset prices, and were less impacted by food and energy cost inflation, were robust spenders. However, many less affluent consumers struggled to deal with inflationary pressures and had to restrict their spending. This created a tough demand environment for food and other basic consumer products. In the UK the housing market is central to consumer sentiment, especially among more affluent consumers, and recovery here has been sluggish.
Despite the geopolitical events and the economic uncertainty, equity markets had a strong year, even with a major pull-back in April. Stock markets became increasingly resilient to policy and political announcements from the US president, although the uncertainty weighed on the currency with the US dollar falling nearly 10% against sterling. The FTSE All-Share Index produced a total return, including dividends, of approximately 21%, well ahead of the US market’s return of around 6% in sterling terms. This was also ahead of the Eurostoxx 600 index of European shares which rose around 17%. The standout performers were precious metals, with gold, and particularly silver, benefitting from safe haven buying. Copper also rallied strongly on the back of tight supply and rising demand for power and electrification.
There was also a sense of déjà vu within the UK stock market last year. Investors in general rewarded companies with positive “earnings momentum”, ie. seeing profits expectations rise, whilst companies seeing downgraded expectations were heavily penalised, almost irrespective of valuation. Large companies outperformed medium sized companies. The latter tend to be more domestically oriented and cyclical, with fortunes tied more closely to the UK economy, although there are plenty of internationally spread, or economically defensive, mid-caps too. Performance varied enormously between sectors, which gave the stock market a K-shape too. On the upwards arm of the K, the aerospace & defence sector was up 80%, following a gain of over 30% in the prior year, on the back of continued geopolitical tensions and an imperative for NATO nations to increase defence spending. The banks sector return of 65%, was even more remarkable as it followed a 60% return last year, as the industry saw robust profits growth and cash generation. Other strong sectors included metals & mining, electricity, life insurance and tobacco, which all returned 40% or more.
On the contrary, on the downward leg of the K, there was a savage sell off in the software and computer services sector, down 33%, on fears that AI might disrupt those business models. A number of other sectors fell by more than 10%, which represents a sharp underperformance of the broader market. Finance & credit services, consumer services and media were all impacted, as some of their constituents were seen as potentially vulnerable to AI disruption fears. The beverages sector also fell on the back of poor trading and tariff concerns at Diageo, in particular.
The portfolio produced a total return of 18.3%. Whilst this was a very healthy absolute return, and there were many positive factors that we detail below, performance was behind the 21.1% return of the FTSE All-Share Index, which is Merchants’ benchmark. It is not unusual to have periods when our investment approach is out of favour, particularly when markets are driven by strong narratives and themes, as has been the case in the last two or three years. Sector and stock volatility are actually healthy as they create the very mis-pricing opportunities that we aim to exploit, by taking a longer-term view. Merchants’ portfolio is very different from the benchmark composition. The focus on buying sound companies which are trading below their intrinsic value, and offering an attractive income stream, inevitably leads us to a different, somewhat contrarian positioning.
The table below shows the largest positive or negative stock contributors to relative performance. These, in turn, can be broken down to stocks where Merchants has a large portfolio position, “overweight” relative to the benchmark position, and stocks that are not owned or which are “underweight” relative to the benchmark.
A few things stand out from the table. There have been quite extreme moves in a number of large companies or big holdings, in either direction. The K shaped market is evident. The banks sector features on both the positive side, with Lloyds up over 80%, and on the negative side, with HSBC (not owned) up 60%. We did not own HSBC, as we had a preference for domestic banks on valuation grounds and due to HSBC’s different risk profile. Because HSBC is such a big stock, not owning it had the largest single negative impact on relative performance. This was partly offset by owning Lloyds, and two banks not shown in the table, Barclays and OneSavingsBank. Other major sector moves are also evident with the strong performance from aerospace & defence companies, and weakness in software, media and data services businesses, as well as more idiosyncratic moves.
Looking at the negative contributors in more detail. In addition to HSBC, not owning aerospace & defence stocks Rolls Royce and BAE Systems held back relative performance. Tate & Lyle was the largest individual negative contributor and we explain the background to this, and why we retain high conviction, in a separate case study here:
WPP was also a major detractor from performance. As we explained in the interim report, this media business had continued to underperform its industry peers, despite a comprehensive turnaround strategy under the previous Chief Executive Officer. We took the difficult decision to exit the shares in July, recognising that our previous investment case had not worked and that the road ahead was challenging. WPP shares continued to decline after our sale.
The other negative contributors reflect stock specific challenges, but we continue to see significant upside in each. B&M is a discount retailer that we bought earlier in the year, seeing substantial recovery potential. Decisive action by a new chief executive to reposition the business has impacted short-term profitability, and the shares were also hit by cost accounting issues when implementing a new IT system. DCC, which is refocusing the group on its energy business, saw its shares underperform. The sale of DCC’s healthcare division achieved a lower price than had been expected and the shares have also derated materially. Marshalls and Barratt Redrow both fell back on trading disappointments and concern about the weaker than expected housing and building markets. Finally, student accommodation provider Unite fell heavily as the company achieved lower than expected room occupancy for the current academic year. The sharp share price fall looks like an over-reaction, in what has historically been a very reliable business, but we continue to monitor industry trends and company performance.
In terms of the positive contributors, the largest individual stock was the information services company Relx, which was not owned but represented a large part of the benchmark. The shares fell by over 30% as investors worried about the risks from AI disruption to the business. The extent of the fall partly reflected the elevated valuation of the stock a year ago. A similar theme also affected other large data stocks that were not owned, specifically London Stock Exchange Group and Experian, and to a lesser extent the catering company Compass.
Atalaya Mining was the strongest stock that was owned in the portfolio, with the shares up an astonishing 200%. We talked about the stock in a case study in last year’s report and accounts. The company has clearly benefitted from a buoyant copper price as industry supply and demand conditions have been very favourable. But it has also materially improved its own operations, both by lowering its energy costs and by bringing on developments of existing and new projects. Serco was another strong performer, with the shares nearly doubling since our purchase earlier in the year. Like Atalaya the shares benefitted from a low starting valuation, solid operational performance and investor enthusiasm for its end market exposure; in this case the defence industry. You can read our separate case study on Serco here.
Elsewhere, the electricity distribution and renewable generator company SSE rose by over 50%, as investors welcomed a fund raising to support rapid growth in the electricity network business over the next five years. Finally, among the top ten positive contributors, there were two consumer brands companies. Diageo, which was not owned, fell heavily on the back of difficult trading conditions especially in the USA, exacerbated by the impact of tariffs. Unilever, where the portfolio has an underweight position, underperformed modestly, despite demerging its ice cream business.
The highly polarised, K-shaped stock market led to considerable changes in company valuations both upwards and downwards. This provided numerous opportunities to take profits or sell strongly performing shares that approached our assessment of fair value. It also created opportunities to make new investments in strong companies that were undervalued, and to increase positions in other holdings at attractive levels.
In total there were 12 new additions to the portfolio, and we exited 12 holdings, leaving the portfolio at 53 holdings at the year end. This is a higher level of portfolio activity than we have seen in recent years, reflecting the extreme rotation in the market.
Eight of the new purchases were made in the first half of the year and we explained the rationale for these in the interim report. In the second half, we bought Hikma and MONY, whilst we received shares in Primary Health Properties and Magnum Ice Cream Company following corporate actions.
Hikma is a manufacturer and distributor of branded and generic pharmaceuticals, and we have explained the investment case in a separate case study here.
MONY Group, is the company which owns the MoneySuperMarket and MoneySavingExpert websites, amongst others. MONY is one of four major UK groups offering price comparisons on insurance, financial services, energy and other services. The business has faced several headwinds in recent years, such as energy price caps, which have impacted growth and led to the shares being heavily de-rated. We believe the company is an attractive business, with future growth and efficiency opportunities. It is backed by a strong balance sheet, healthy cash generation and had a 6% dividend yield at the time of purchase.
Primary Health Properties (PHP) bought Assura plc in a contested takeover. These were similar companies, both with a core portfolio of GP surgeries. GP surgeries benefit from attractive dynamics, including structural demand growth for community healthcare, as well as an element of inflation linkage in rents. These are effectively paid by the NHS, meaning there is little credit risk. Initially Assura was bid for by a private equity consortium. Whilst the bid price reflected a decent premium to the prevailing share price, we believed that it significantly undervalued the business on a medium term view. We were delighted when PHP made a counter offer, which we supported, as it allows Merchants’ shareholders to retain exposure to this real estate sub-sector. The new group also has greater scale, providing cost synergies and greater liquidity for investors.
The Magnum Ice Cream Company demerged from Unilever, which is focusing on its other businesses. Magnum is the clear world leader in ice cream as well as the biggest company in most of the large individual markets. It owns four of the top 5 global brands – Walls, Magnum, Ben & Jerrys and Cornetto.
There were nine sales from the portfolio which were explained in the interim report. In the second half we sold two companies Aena and Close Brothers, and Assura was taken over, as explained above.
Aena is the owner of most Spanish airports and others in several countries, including 50% of Luton. Aena has benefitted from a tourism recovery in Spain and its favourable regulatory structure. The shares had been strong performers since our purchase and had also paid a high dividend yield. This took the shares closer to fair value. In 2025, Aena announced a major increase in capital spending to fund long term growth at several of its airports. Whilst these investments are positive for the long term, they will reduce cash flow in the medium term. We decided to exit the position at this point.
As we explained in a case study last year, the specialist bank Close Brothers had been a disappointing investment, weighed down by several problems, including compensation claims over historic motor finance commission payments. However, we believed the shares were heavily oversold a year ago and we had added to the position at depressed share prices in 2024. Subsequently, the shares more than doubled from the low point, in response to a proposed compensation ruling from the Financial Conduct Authority. At that point, we believed the Close Brothers investment case was more finely balanced so we sold the position.
As well as these new holdings and total sales, we added and reduced many other positions, in response to changing circumstances, our assessments of value and our level of confidence. The biggest additions included Tate & Lyle, DCC, Marshalls, Whitbread and Unite. We reduced British American Tobacco, taking the tobacco exposure down materially, after selling out of Imperial Brands earlier in the year. Other large reductions included GSK, IG, SCOR, SSE, Atalaya and Burberry.
In general company profitability and cash generation has been robust, although there have been exceptions, particularly in more cyclical industries. Total income generated increased to £50.2m (£48.5m), with earnings per share at 30.6p (29.4p). We have seen many companies prioritise returning surplus capital via share buy backs, rather than through additional ordinary or special dividends. This is a sensible capital allocation decision when share prices are depressed as companies are investing in cheap assets. However, where share prices have appreciated significantly, for example in industries like banking, we would expect company boards to review the balance of distributions between buybacks and dividends. We will be monitoring the trends through this financial year. It is interesting to note that Barclays recently announced that it plans to pay dividends of £2bn for the 2026 financial year, substantially more than the £1.2bn it declared for 2025.
The earnings per share fully covered the proposed full year dividends of 29.5p (29.1p), which represents the 44th consecutive year of dividend increases. Revenue reserves have increased to 20.3p (18.8p), representing approximately two thirds of a full year’s dividends.
Within the total income, approximately £1.2m (£0.9m) was received from writing covered call options on shares that we would be willing to sell at the strike price.
I have talked about the evolution in the stock market environment over the last twenty years, but there have been economic and geopolitical developments over that period, which are far more important. Twenty years ago, the Western world seemed like a reasonably peaceful place, with a broad consensus about the benefits of capitalism, democracy, the rule of law, independent central banks and supranational bodies like the UN, NATO and the EU. Political discourse generally took place in a narrow range around the centre, and globalisation seemed like an unstoppable force to drive efficiency and higher living standards. Since then, we have seen the Great Financial Crisis, the first and second Russian invasions of Ukraine, Brexit, Covid-19 and the first and second elections of Donald Trump, to name a few key events.
Now, according to Mark Carney, Canadian Prime Minister and former Bank of England Governor, speaking in Davos, we are in the midst of a rupture in the world order. Political debate is highly polarised, with the centre ground hollowed out. European governments, including the UK, are having difficulties implementing their policies. European peace is under very real threat and the USA is redefining its role in the world, with its new National Security Strategy, putting enormous strain on NATO. The independence of the US Central bank is being called into question. Globalisation has been put into sharp reverse with US tariffs being used as a political weapon, and there are rising trade tensions over products including Chinese electric vehicles, AI semiconductors, rare earth minerals and oil.
Against this background, it is extremely challenging to predict what is going to happen over the investment horizon. We can look at economic trends and developments in industries and markets, but we have to be prepared for events from left-field to challenge any predictions.
Our central view is that the UK economy should start to see the benefits from lower interest rates as the year progresses. After a long hiatus, the housing market, which drives a lot of activity in the UK, should start to recover, due to cheaper mortgage costs, pent up demand and government policies to ease planning constraints. However, broader economic confidence and employment trends remain critical and confidence is fragile. Political risk is also a factor with the government internally divided, even though Labour has a large majority. A change of prime minister could lead to a different policy agenda, although the high level of government borrowing means that the bond market tends to restrict more radical tax and spending plans.
The evolving situation in the Middle East, following US and Israeli bombing in Iran, has been disrupting economic activity in the region and threatens significant disruption to the flow of oil, gas and other critical products globally. It is likely to lower economic growth forecasts and increase inflationary pressures, as well as raising interest rate expectations, at least in the short term. The duration and impact of the conflict are impossible to predict with any certainty. We continue to monitor the situation and assess the implications.
Although the portfolio would benefit from an improving macro-economic environment, our investment approach is predominantly “bottom up”, focusing on individual businesses and their valuations, rather than starting “top down” and constructing the portfolio around an economic view. Despite the rally in the UK stock market, we continue to find many compelling investment opportunities, particularly among, medium sized companies. These are now a larger part of the portfolio. The K-shaped stock market has left many sound businesses trading at attractive levels. Sectors where we have a high exposure to medium sized companies, include housebuilding and related industries, real estate, industrial services and retail. We also retain substantial investments in typically large cap sectors which still offer good value, like banks, oil & gas and pharmaceuticals. It is also important to remember that, whilst well over 90% of the portfolio is invested in UK listed companies, we estimate that nearly 60% of the underlying revenues and profits come from abroad.
Whilst the nature of the stock market has changed over the last twenty years, we believe that ultimately share prices will continue to reflect the fundamental qualities and intrinsic values of individual companies, even if over and under-valuation can persist for long periods. Merchants Trust owns a diversified portfolio of companies that trade far below our assessment of fair value and pay an above average dividend stream. We believe the portfolio is well positioned to deliver strong total returns, in line with Merchants’ objectives.
Contribution to investment performance relative to the benchmark
Shares in Lloyds Banking Group were up 80% over the year.
Atalaya Mining was the portfolio's strongest contributor to performance, up 200%.
Photo: Atalaya Mining
Largest net purchases and sales within the portfolio
Following the takeover of Assura plc, Primary Health Properties has a portfolio of over 1,100 properties across the UK and Ireland., with a combined value of £6bn.
Photo: Assura / PHP
We added to our investment in student accommodation specialist Unite Group.
Photo: Unite Group
There have been substantial changes in financial markets over the last twenty years: the rise in passive funds has been inexorable, with the Investment Association survey showing 35% of all UK managed assets were passive in 2024; the increase in computer driven trading and more recently, AI reading of results statements, leading to almost instant and sharp market reactions to news and events; the rise of Exchange Traded Funds (ETFs) and “basket” trading, where investors buy or sell a “basket” of, for example, “growth” stocks or UK consumer-exposed stocks; and, of course, the proliferation of information, including investor presentations, podcasts, videos, credit card spending trends, Google search data, consumer surveys, satellite data etc. Technology has also enabled much easier access for retail investors into stock markets, as can be seen with most shareholders in The Merchants Trust now owning shares via platforms.
In many ways, stock markets have become more efficient. They are quicker to absorb new company news, as well as any events affecting related peers or an industry. However, in other ways markets have become less efficient. The shift to passive and “basket” trading has left fewer investors thinking about the specific circumstances and attractiveness of individual companies. This is especially true at the smaller end of the market, under the radar of most global investors, and most impacted by flows out of the UK stock market in recent years. Investor, or perhaps more appropriately “trader”, attention has also generally become more short term, with a huge focus on whether quarterly results have “beaten” or “missed” consensus expectations, at the expense of considering a longer-term perspective.
These factors make it very hard to have an information edge in the short term, from reading and reacting to news as it comes out. This environment has also favoured “momentum” factors within an investment strategy, such as owning companies getting earnings upgrades or where the share price has already risen. Momentum factors have become widely used within active funds and particularly among systematic strategies. However, momentum can exaggerate any positive or negative share price movements, potentially leading to share prices moving further and further away from their intrinsic value.
There are two key implications from this. First, company share prices often deviate materially from a long-term measure of fundamental or intrinsic value, creating large valuation anomalies, particularly if the company is seeing persistent positive or negative earnings momentum. Second, exploiting these valuation anomalies requires patience and a disciplined investment process, as it can take a long time or a significant event for the consensual view on a stock to change. Or to put it more succinctly, valuation doesn’t matter in the short term. This can lead to wild swings in share prices as companies go from out of favour to in favour, or vice versa. Looking at the huge rally in defence stocks, banks and tobacco in the last two years shows what can happen when circumstances change.
Whilst these trends make following a value-driven investment process more challenging, they also make the potential rewards greater. Perhaps the one constant factor in investment markets over all of history has been that markets are ultimately driven by human nature, by fear and greed. People are fearful of losing money when asset prices are going down but they want to be fully involved when prices are going up. Even professional investors are not immune to behavioural pressures. It is not comfortable to explain why we may still hold in the portfolio a share that has fallen heavily in the last three years. But that, alone, is not a good reason for selling it, assuming it is still fundamentally sound and cheap.
Whilst passive investing should take away an investor’s need to worry about individual share price oscillations, it does not remove the risk of investors en-masse over-reacting to major trends. Investors might take their money out when the market is down 20%, say, and miss a long-term rally, or they might put more money in near a market top. Passive global investors today will typically have a very high concentration of their money in large US technology companies, which provides a correlated risk that they may not be fully aware of. If those companies were to fall back, selling pressure from passive investors could amplify the selling pressure of the many active strategies that are also highly exposed to this area. The combination of passive investing and the proliferation of momentum strategies is compounding potential volatility in the market.
Our core belief is that, ultimately, fundamental value will reassert itself in individual shares. I have heard valuation being likened to a brick tied to a piece of elastic, the harder you pull it, the more stretched the elastic, the faster and further the brick will travel once it starts moving. We are often asked if valuation still works as an investment factor? We believe it does, and that the opportunities for value driven strategies are greatest when dispersion in the market is highest. Valuation can influence share prices through different mechanisms. One of the strongest performing shares in the portfolio has been Barclays. The shares tripled in price (even before counting dividends) during 2024 and 2025. The valuation moved from a very depressed price of less than one third of book value, to a more normal level of close to book value today. Two years ago, it was hard to know when the shares would move or what might be the catalyst. Whilst conditions in the sector have improved somewhat, the reason for the tripling in the price was the very low starting valuation. We didn’t know when Barclays would perform but the magnitude of the move was determined largely by the undervaluation at the beginning.
Another way that valuation can work is when an outside view sees an opportunity to take advantage of a clear mispricing. Last year Merchants performance benefitted from two companies being bid for. Dowlais and Assura were both ultimately bought by industry peers, who could see the true value of the businesses.
Merchants has certain advantages to allow us to exploit the increasing long-term inefficiency of the stock market. Being an investment trust, Merchants has permanent capital that can look through the short-term noise. The trust is not forced to meet redemptions, so we can invest in companies without knowing precisely when the true value will come through. Also, the board and shareholder focus on dividend income is philosophically aligned with a value strategy. When a share price goes down, assuming there is no change in business fundamentals, the company offers better value and also a higher dividend yield. We like to enhance the portfolio income by buying more of attractive shares when they have fallen in value (with a higher yield) and selling some of the position as the shares rally (and the yield declines). This focus on the true value of businesses, and particularly their cash generation or asset value, helps us to stand back from the heightened day to day volatility of markets.
AllianzGI’s engagement activities include: monitoring strategic developments, providing feedback, challenging corporate practices and seeking change. Engagement can take various forms including correspondence; face-to-face meetings and conference calls; proxy voting and – in rare instances – public interventions through filing shareholder resolutions; speaking at shareholder meetings; and commenting in the media. In addition, AllianzGI sees value in collaborative engagement initiatives coordinated by investors, trade associations and other organisations, where these seek to address market or industry-wide concerns. As an active investment manager, AllianzGI sees engagement as a way to reduce investment risk, help improve corporate performance and better assure the long-term business prospects of investee companies.
1 February 2025 to 31 January 2026
In the year there were 60 shareholder meetings for companies in the portfolio and the manager voted on the company’s behalf at 59 of these. This represents a total of 1,099 resolutions and the company voted on 100% of these. Source: AllianzGI.
At the heart of our investment philosophy is a belief that stock markets are inefficient. By focusing on the fundamental qualities of businesses and identifying situations where those qualities are under-priced in the stock market, it is possible to deliver a high and rising income stream and superior long-term returns for investors.
