1 00:00:00,000 --> 00:00:14,400 Welcome back to the Rate of Change with York Wealth Management. 2 00:00:14,400 --> 00:00:19,400 The Rate of Change is a podcast which explores the ever shifting momentum of financial markets 3 00:00:19,400 --> 00:00:23,120 through the eyes of some of the brightest minds in wealth management. 4 00:00:23,120 --> 00:00:27,720 I'm your host Murdoch Gaddi and in today's podcast, we're speaking with Cullen Gunn, 5 00:00:27,720 --> 00:00:31,680 CEO and a Director of Kilter Rural. 6 00:00:31,680 --> 00:00:36,200 Kilter Rural operates four funds in agriculture and the water space. 7 00:00:36,200 --> 00:00:40,920 But today we're talking to Cullen about investing in water and water rights, 8 00:00:40,920 --> 00:00:48,080 in particular, the Kilter Water Fund, which has an annualized return of 14.58% since inception 9 00:00:48,080 --> 00:00:56,680 and the Murray-Dulling Balanced Water Fund, which has an annualized return of 13.29% since inception. 10 00:00:56,680 --> 00:00:59,240 We dive into detail about all things water. 11 00:00:59,240 --> 00:01:02,560 Cullen covers how they go about investing in water. 12 00:01:02,560 --> 00:01:11,960 What are the main factors that impact water and water markets and how to think about investing in water as an asset class? 13 00:01:11,960 --> 00:01:17,640 For me, I found the conversation on the weather for once to be the most interesting of topics. 14 00:01:17,640 --> 00:01:24,720 And I was also very intrigued by just how little correlation these water funds actually have 15 00:01:24,720 --> 00:01:28,520 on other asset classes like the Australian share market, 16 00:01:28,520 --> 00:01:35,520 especially with the inflation pressures we're seeing in the market right now and rising interest rate environment. 17 00:01:35,520 --> 00:01:45,360 So before we get into the podcast, I would also encourage you to listen to the disclaimer at the end of the rockcast and to keep your feedback coming. 18 00:01:45,360 --> 00:01:51,320 You can reach me at mgaddi at ywm.com.au. 19 00:01:51,320 --> 00:01:56,520 So with that being said, I hope you enjoyed this conversation as much as I did. 20 00:01:56,520 --> 00:01:58,720 So sit back, relax and enjoy it. 21 00:02:09,320 --> 00:02:14,360 Cullen Garn, welcome to the Rated Change with the Orkworth measuring. 22 00:02:14,360 --> 00:02:17,120 Thanks, Murdoch. Terrific to be here. 23 00:02:17,120 --> 00:02:19,320 Look forward to the discussion. 24 00:02:19,320 --> 00:02:27,480 Why don't we kick things off by telling us a little bit about yourself, your formulae and how you got into financial markets? 25 00:02:27,480 --> 00:02:34,800 Ah, yeah. Well, my history is a long association, really, with natural resource management. 26 00:02:34,800 --> 00:02:41,120 So coming into financial markets, I came to a back door in some respects. 27 00:02:41,120 --> 00:02:48,120 So I was working for a period in government back in the early 90s. 28 00:02:48,120 --> 00:02:51,920 And, you know, it was really about sustainable farmland and water management. 29 00:02:51,920 --> 00:03:01,320 I guess through that period. What really struck me was just how limited the government purse was to deal with, you know, many of these issues. 30 00:03:01,320 --> 00:03:09,320 You know, they sort of were moving from a doing organization to, I guess, a policy, more policy driven way. 31 00:03:09,320 --> 00:03:14,000 They were setting up frameworks like water markets, for instance. 32 00:03:14,000 --> 00:03:21,000 And through that process, you know, when I was there, they put a cap on water extractions and all that was really interesting. 33 00:03:21,000 --> 00:03:29,520 But I guess, you know, I just felt the government purse was never going to be and deliver enough money to make the change 34 00:03:29,520 --> 00:03:34,760 it was required in rural, you know, rural areas and rural environments. 35 00:03:34,760 --> 00:03:43,840 And, you know, we sort of, I guess, were looking for ways we could enter a broader marketplace and capital pull. 36 00:03:43,840 --> 00:03:48,800 And deploy that capital pull to sustainable land and water management. 37 00:03:48,800 --> 00:03:55,600 And that that's sort of the genesis of, you know, it sort of leads on to how to kill to start. 38 00:03:55,600 --> 00:04:04,920 I was very lucky, I guess, in a way, we were just sitting in a meeting with a bloke called Bob Welsh, who was head of one of the local super funds. 39 00:04:04,920 --> 00:04:09,120 Terrific guy and miles ahead of his time, you know, he was the CEO. 40 00:04:09,120 --> 00:04:15,040 And he sat there at a meeting one day and said, look, I run a big Victorian super fund. 41 00:04:15,040 --> 00:04:19,680 I want to invest in Victoria and I want to do that sustainably. 42 00:04:19,680 --> 00:04:24,960 And I want to deliver good outcomes, both environmentally and financially to our members. 43 00:04:24,960 --> 00:04:29,120 And, you know, we were sitting there and we're cracking and pretty unusual. 44 00:04:29,120 --> 00:04:35,080 You don't have somebody who was running a three billion fund at the time sort of just come into a meeting and say that anyway, 45 00:04:35,080 --> 00:04:39,440 we left that meeting and thought somebody else would address it and then we went to a similar meeting six months later. 46 00:04:39,440 --> 00:04:43,640 He said exactly the same thing. And so I went up to him with a mate. 47 00:04:43,640 --> 00:04:46,600 We weren't working together. We had worked together previously. 48 00:04:46,600 --> 00:04:50,320 And I said to Bob, Bob, what if we came up with something for you? 49 00:04:50,320 --> 00:04:54,560 You know, we we've come up with an investment proposal for you. 50 00:04:54,560 --> 00:04:57,720 And and he was terrific. He said, well, look, I'll listen. 51 00:04:57,720 --> 00:05:05,040 I can't guarantee we'll do anything YouTube buffoons, but, you know, let's let's see what you can come up with. 52 00:05:05,040 --> 00:05:08,480 And that really was that was the genesis of KILTA. 53 00:05:08,480 --> 00:05:20,280 Really, we we then took two years and we worked pretty closely with Vic Super to develop an investment program for farmland and water and environmental protection. 54 00:05:20,280 --> 00:05:24,760 And that kicked us off in that started in 2004. 55 00:05:24,760 --> 00:05:30,640 And we sort of been delivering against those themes now as an organization for close enough to 19 years. 56 00:05:30,640 --> 00:05:35,920 So, you know, a fortunate sort of occurrence. 57 00:05:35,920 --> 00:05:40,840 But, you know, you've got to take those take those opportunities when they're in front of you. 58 00:05:40,840 --> 00:05:46,400 Yeah. So can you give a bit of an insight into the approach? 59 00:05:46,400 --> 00:05:48,600 Because you're talking about, you know, how it came to be. 60 00:05:48,600 --> 00:05:53,840 But what's the actual philosophy of what you guys do? 61 00:05:53,840 --> 00:06:00,400 Well, I guess our philosophy really is based around an inherent belief that, you know, 62 00:06:00,400 --> 00:06:04,480 if you want to produce food and five are sustainably into the future, 63 00:06:04,480 --> 00:06:09,240 you actually have to protect the natural capital assets on which you're allowed to produce that stuff. 64 00:06:09,240 --> 00:06:15,400 So if your environment or your ecosystem collapses, you're really just degrading your assets. 65 00:06:15,400 --> 00:06:17,920 You're decreasing the value of those assets. 66 00:06:17,920 --> 00:06:22,680 You're not building value. And it's hard to sustain production. 67 00:06:22,680 --> 00:06:27,600 And certainly through, you know, if you went back in time, even to the 50s, you know, 68 00:06:27,600 --> 00:06:33,680 there's a thing called the Soil Conservation Authority in Victoria, because we cleared so much vegetation. 69 00:06:33,680 --> 00:06:37,000 You had all these degradation and salinity issues happening. 70 00:06:37,000 --> 00:06:47,880 And then in the 80s and 90s, when irrigation water was basically sort of it was a use it or lose it sort of paradigm, 71 00:06:47,880 --> 00:06:51,960 people would use it every year or get socialized back into the system. 72 00:06:51,960 --> 00:06:54,920 And they just poured it on. It was a sort of proselygate use. 73 00:06:54,920 --> 00:07:00,960 It caused massive environmental degradation. So, you know, the state was actually holding inquiries 74 00:07:00,960 --> 00:07:09,480 because it was worried about losing access to its irrigation farmland due to irrigation or water induced salinity. 75 00:07:09,480 --> 00:07:15,960 So, you know, you look at all those things and you go, well, there's better ways to do this. 76 00:07:15,960 --> 00:07:19,640 If you've got access to capital, you know, that is a that is a key constraint. 77 00:07:19,640 --> 00:07:23,080 There's lots of great, great farmers out there. 78 00:07:23,080 --> 00:07:27,200 But, you know, you need access to capital, you need patience, you need to be able to change things. 79 00:07:27,200 --> 00:07:32,040 So that really drove certainly my working life. 80 00:07:32,040 --> 00:07:36,080 You know, how do we do this farming activity more sustainably? 81 00:07:36,080 --> 00:07:42,240 You know, how do we work with people, invest in landscape to generate more money, 82 00:07:42,240 --> 00:07:44,880 but protect the environment at the same time? 83 00:07:44,880 --> 00:07:50,840 And on the back of that sort of protection of the environment, we've now got, you know, of course, climate change mitigation. 84 00:07:50,840 --> 00:07:58,440 So, you know, we know if you're looking at levers we can pull at the moment to actually take carbon out of the atmosphere, 85 00:07:58,440 --> 00:08:02,680 planting trees and managing croplands in terrestrial landscapes is bloody it. 86 00:08:02,680 --> 00:08:07,000 You know, the rest of it's all still hocus pocus. We know that works. 87 00:08:07,000 --> 00:08:10,480 So there's sort of some key drivers behind the organisation. 88 00:08:10,480 --> 00:08:15,920 The other key thing Murdoch, I would point out, is it's a really aligned organisation. 89 00:08:15,920 --> 00:08:21,920 Like we have people that absolutely love Australian landscapes and love what they do. 90 00:08:21,920 --> 00:08:29,600 So, you know, our sort of philosophy is really, you know, profit with impact in improving Australian landscapes and ecosystems. 91 00:08:29,600 --> 00:08:35,320 You know, that's what we're about. That's what we've been doing for, you know, close enough to 19 years. 92 00:08:35,320 --> 00:08:43,160 We don't go out into other things and, you know, run become carbon aggregators or, you know, renewable energy providers or whatever. 93 00:08:43,160 --> 00:08:52,160 That's our game. We're in the real assets, natural capital space and we want to improve the natural capital of Australia. 94 00:08:52,160 --> 00:08:55,080 Well, let's jump into the politics. 95 00:08:55,080 --> 00:09:05,480 And the reason I wouldn't want to jump into politics is probably everyone's on people's mind with water rights. 96 00:09:05,480 --> 00:09:09,960 I'll give an example. I've got a lot of family over in Western Australia, all farmers. 97 00:09:09,960 --> 00:09:14,080 My father, four or five generations worth of farming. I went to boarding school. 98 00:09:14,080 --> 00:09:19,520 You know, a number of farmers out that particular way. I've got a number of clients that actually live on the Murray. 99 00:09:19,520 --> 00:09:24,320 So we all hear the particular stories of essentially. 100 00:09:24,320 --> 00:09:30,360 Some people believe they're selling off the land and the water rights for internationals to come in and access it. 101 00:09:30,360 --> 00:09:33,920 Other people think it's a good thing. Other people think it's a bad, bad thing. 102 00:09:33,920 --> 00:09:39,880 So what's your thoughts on the politics of water rights? 103 00:09:39,880 --> 00:09:47,800 Yeah, look, it's a great question. And it's it's a big topic. 104 00:09:47,800 --> 00:09:53,320 I guess the first sort of thing that occurs to me is that without international capital, 105 00:09:53,320 --> 00:10:00,320 you know, there wouldn't be lots of things in Australia. 106 00:10:00,320 --> 00:10:02,800 It's just one of the functions of our society. 107 00:10:02,800 --> 00:10:07,800 Certainly, the European society is pretty much based on European money and was when it started. 108 00:10:07,800 --> 00:10:12,520 So to say we don't want international investment is difficult, I think, you know, 109 00:10:12,520 --> 00:10:16,760 to have to come back from that across a range of range of activities. 110 00:10:16,760 --> 00:10:23,520 I mean, we're talking about real assets. This isn't stuff internationals can take home. 111 00:10:23,520 --> 00:10:30,400 You know, that we have a government here that is, you know, 112 00:10:30,400 --> 00:10:37,760 very stable considering in the relative context of the rest of the world, very stable government and politics. 113 00:10:37,760 --> 00:10:41,120 And acutely aware of looking after Australia's interests. 114 00:10:41,120 --> 00:10:47,880 So I don't hold necessarily the fears around international engagement in real assets here. 115 00:10:47,880 --> 00:10:55,720 You know, and it's actually, you know, if you look at the biggest investors in farmland in Australia over the last, 116 00:10:55,720 --> 00:11:01,200 you know, probably series of years, they're not institutions from Australia. 117 00:11:01,200 --> 00:11:04,120 They're all international institutions. 118 00:11:04,120 --> 00:11:12,120 So, you know, some of the Canadian pension funds have done billions of dollars over the last five years. 119 00:11:12,120 --> 00:11:18,920 And, you know, they come into the communities, they work with local communities, investing heavily in those areas. 120 00:11:18,920 --> 00:11:21,200 They employing lots of people. 121 00:11:21,200 --> 00:11:26,200 And, you know, it's difficult, frankly, to get Australian super funds to do the same thing. 122 00:11:26,200 --> 00:11:31,000 So, you know, that international capital, I think, is really important. 123 00:11:31,000 --> 00:11:40,680 At a sort of more specific level around water and water rights and the tradeability of all that and markets, I certainly get it. 124 00:11:40,680 --> 00:11:43,880 You know, I can understand the angst. 125 00:11:43,880 --> 00:11:46,960 If you think about how this sort of market evolved, you know, 126 00:11:46,960 --> 00:11:50,880 you had periods where the government supported development, the building of dams, 127 00:11:50,880 --> 00:11:58,680 the allocation of water to farmers to, you know, get productive activity happening and all great initiatives. 128 00:11:58,680 --> 00:12:01,600 But not without cost, you know, not without environmental cost. 129 00:12:01,600 --> 00:12:07,840 And as we become better resource managers and understand more about these systems, you know, 130 00:12:07,840 --> 00:12:10,640 we know that you just can't throw water out. 131 00:12:10,640 --> 00:12:18,320 It's a valuable resource, you know, having no value attached to that water and encouraging people just to use it, 132 00:12:18,320 --> 00:12:23,280 whether they needed to or not, did not end well in an environmental sense. 133 00:12:23,280 --> 00:12:29,120 I mean, we really had some significant problems driven by overuse of irrigation water. 134 00:12:29,120 --> 00:12:35,240 So actually creating a market for those entitlements, putting a value on that resource. 135 00:12:35,240 --> 00:12:40,520 And you've got to remember, Murdoch, we are in the driest inhabited continent on earth. 136 00:12:40,520 --> 00:12:42,640 Water is about as important as it gets. 137 00:12:42,640 --> 00:12:46,200 So there's sort of two ways you can deal with that. 138 00:12:46,200 --> 00:12:50,480 One is you let the government decide who gets the water. 139 00:12:50,480 --> 00:12:58,840 And that's sort of pretty much how it was run until 2000, sort of 2007 really had significantly changed. 140 00:12:58,840 --> 00:13:03,760 Post that, you know, individuals have options about how they deal with their water. 141 00:13:03,760 --> 00:13:11,560 So prior to 2007, you could sort of trade water, you know, over certain areas. 142 00:13:11,560 --> 00:13:13,520 But before that, it was really quite restricted. 143 00:13:13,520 --> 00:13:15,520 So you could give it to your neighbor sort of thing. 144 00:13:15,520 --> 00:13:21,360 But, you know, it was hard to transfer across states, for instance, as you can now. 145 00:13:21,360 --> 00:13:24,800 Less easy, let's put it that way. 146 00:13:24,800 --> 00:13:32,120 And, you know, it's just in drought times, if you're in a market, you've got an extra asset you can sell. 147 00:13:32,120 --> 00:13:36,000 You know, the government has set it up now so that that water entitlement, you know, 148 00:13:36,000 --> 00:13:44,840 it's a title held in the state titles office, its property, it's as rigorously protected for the individual as a land title. 149 00:13:44,840 --> 00:13:52,320 And I think that's an important evolution to the individual, you know, it just permits individual choice. 150 00:13:52,320 --> 00:13:55,040 Having said that, there are issues with it. 151 00:13:55,040 --> 00:13:59,360 You know, if you think about the average age of farmers, they're 55 to 65. 152 00:13:59,360 --> 00:14:07,240 All this happens on computers, you know, so some of them are quite a fay with it, but there are lots that aren't, you know, and they fall through the cracks. 153 00:14:07,240 --> 00:14:11,480 I don't think the government's done the best job of bringing everybody up to speed. 154 00:14:11,480 --> 00:14:15,920 So they have the same access to information and ability to deal in this market. 155 00:14:15,920 --> 00:14:21,640 I think that is an issue. And I can see why people, you know, that didn't have to think about water was just there every year. 156 00:14:21,640 --> 00:14:25,280 I get it, I use it, bang, that's it. I run my dairy farm. 157 00:14:25,280 --> 00:14:31,200 To now, they've got to consider all sorts of things, got to deal with a water breaker to access water. 158 00:14:31,200 --> 00:14:38,720 You know, it's a significant change in operating environment that I understand really does upset some people. 159 00:14:38,720 --> 00:14:55,160 But, you know, ultimately, I think it's much better the individual has the choice about how they deal with that scarce asset than leaving it in the hands of the government to decide for them, which is pretty much the other option. 160 00:14:55,160 --> 00:15:01,360 So, you know, in drought periods, if you look what happens, water just keeps trading up the value chain. 161 00:15:01,360 --> 00:15:08,440 So, you know, in the millennium drought, we had a 70 per cent reduction in water availability. 162 00:15:08,440 --> 00:15:11,800 We only had a 30 per cent drop in productive output. 163 00:15:11,800 --> 00:15:19,880 So that water just moved up the value chain, you know, moved from mixed farming through rice, through cotton and right up just to horticultural crops. 164 00:15:19,880 --> 00:15:26,840 And I think when you're talking about the scarcest resource we've got in the country, that's a pretty sensible way to deal with it. 165 00:15:26,840 --> 00:15:31,680 You know, you're supporting those things that really need support in dry times and in wet times. 166 00:15:31,680 --> 00:15:36,040 Everybody's got access like at the moment. So it's a long winded answer. 167 00:15:36,040 --> 00:15:39,800 I don't think there's, you know, there's lots of people that won't agree with it. 168 00:15:39,800 --> 00:15:48,200 But I think markets have been important, the ability to trade and the opportunity that provides to individuals, I think, is important. 169 00:15:48,200 --> 00:15:53,120 And the property right that's been built around those entitlements is really fundamental. 170 00:15:53,120 --> 00:16:00,480 So, you know, if you looked at most farmers and they own, you know, most of the water still in the southern Murray-Darling Basin, 171 00:16:00,480 --> 00:16:09,320 you know, it's a key part of their asset now when, you know, at one point, you know, 70s, 80s probably didn't have much value at all. 172 00:16:09,320 --> 00:16:14,200 So I was going to pivot into asking about the environment because climate change is on everyone's minds. 173 00:16:14,200 --> 00:16:19,080 But I will get that to my second. But you said something quite interesting how. 174 00:16:19,080 --> 00:16:25,200 I'll phrase it as a question. What actually is the Australian water rights universe? 175 00:16:25,200 --> 00:16:28,520 And what I mean by that is I've got a very, very close family member that works in Sydney Water. 176 00:16:28,520 --> 00:16:32,280 So a lot of people are like, you know, that's government and then you have the private market. 177 00:16:32,280 --> 00:16:36,120 And when I was speaking to a couple of colleagues, I had no idea. 178 00:16:36,120 --> 00:16:44,440 I thought I knew quite a bit about this space that I thought you could potentially purchase water and say the Murray-Darling Basin and then essentially sell it in Western Australia. 179 00:16:44,440 --> 00:16:49,880 But it appears that each particular state has their own restrictions and what they can and can't do. 180 00:16:49,880 --> 00:16:53,560 So can you please give everyone a bit of color around. 181 00:16:53,560 --> 00:16:59,840 What is the Australian water rights universe and how does it differ state to state? 182 00:16:59,840 --> 00:17:02,360 Yep, I can. Yeah, it's a good question. 183 00:17:02,360 --> 00:17:08,120 Look, it's I don't know what it will be capitalized at now, but if you look nationally, 184 00:17:08,120 --> 00:17:10,400 I don't know, that's probably 50 or 60 billion. 185 00:17:10,400 --> 00:17:12,840 You know, maybe if you're looking at water markets everywhere. 186 00:17:12,840 --> 00:17:18,560 But I mean, the key thing to remember here, and this is an important element in the market. 187 00:17:18,560 --> 00:17:22,160 And when people talk about investors investing in water, it does upset them. 188 00:17:22,160 --> 00:17:25,360 They think they're just making money out of arbitrage and all that sort of stuff. 189 00:17:25,360 --> 00:17:32,160 Well, ultimately, somebody absolutely has to use the water to generate a return. 190 00:17:32,160 --> 00:17:35,520 You know, somebody's got to use it. Somebody's got to use it to grow something. 191 00:17:35,520 --> 00:17:38,720 So it must end up at that point. 192 00:17:38,720 --> 00:17:46,440 Now, you can't do that unless you can physically ultimately get the water from one one spot to another. 193 00:17:46,440 --> 00:17:54,760 So the reason you can't just buy water here and trade it in ways is there's no hydrologic connection that allows you to do that. 194 00:17:54,760 --> 00:18:01,800 If you look at what happens in the southern Murray-Darling Basin, we've got one river that transcends three states. 195 00:18:01,800 --> 00:18:11,560 So it starts up in the Alps, New South Wales, Victoria, and then runs as the border across those states right out through South Australia. 196 00:18:11,560 --> 00:18:21,960 And that river permits government and government related authorities to actually transfer water around in an accounting sense 197 00:18:21,960 --> 00:18:28,280 that actually allows the delivery of real water to areas across that whole region. 198 00:18:28,280 --> 00:18:33,280 So you need a hydrologic function that allows the water to be delivered. 199 00:18:33,280 --> 00:18:37,720 Now, you can't, for instance, do that to Western Australia. There's no connection. 200 00:18:37,720 --> 00:18:41,640 We couldn't sell it into the Northern Territory. 201 00:18:41,640 --> 00:18:46,400 And similarly, you can't sort of do it up into the Northern Basin. 202 00:18:46,400 --> 00:18:56,320 The Northern Basin sort of disconnects. It is connected, of course, but it's disconnected in that you don't get that hydrologic all the time connection through those systems. 203 00:18:56,320 --> 00:19:02,000 So the southern Murray-Darling Basin is the area where we have the most transferability of water. 204 00:19:02,000 --> 00:19:10,560 It's the biggest trading market. I think it's around 35 billion, capitalised at 35 billion. 205 00:19:10,560 --> 00:19:16,480 And it's got somewhere between 700 and a billion in trade each year across allocation and entitlement. 206 00:19:16,480 --> 00:19:25,440 So it's really that ability to transfer water that makes this market work and then having the rules around it that are pretty stable. 207 00:19:25,440 --> 00:19:28,400 I'm not saying the rules don't change. They do. 208 00:19:28,400 --> 00:19:32,680 But it's a bit like doing property development, you know, from one council to an ex. 209 00:19:32,680 --> 00:19:36,680 The basics are the same, but each council has got their own little way of dealing with stuff. 210 00:19:36,680 --> 00:19:46,320 So, you know, when you're talking across states, you've got to deal with three different state organisations and then a series of water authorities under that. 211 00:19:46,320 --> 00:19:49,840 So that's it. In a transfer sense, that's one thing. 212 00:19:49,840 --> 00:19:54,880 The other thing to just consider here is we're talking about water for agriculture. 213 00:19:54,880 --> 00:20:01,640 OK, there's a series of bulk entitlements. So water for human consumption, consumption completely different. 214 00:20:01,640 --> 00:20:05,280 You know, and that's what Sydney Water is doing. You know, it's a completely different thing. 215 00:20:05,280 --> 00:20:09,600 It's run by state organisations. We have nothing to do with that. 216 00:20:09,600 --> 00:20:15,840 We're just dealing in that market that has been put aside for generating agricultural outcomes. 217 00:20:15,840 --> 00:20:22,200 And similarly, they've now got another, you know, well, it's not a market so much, but another bulk entitlement, 218 00:20:22,200 --> 00:20:25,920 which they've always sort of had, but they're building up for the environment, you know, 219 00:20:25,920 --> 00:20:30,160 because the environment underpins basically all the irrigation system. 220 00:20:30,160 --> 00:20:35,760 So the environmental side of it collapses. We've got no irrigation system up. 221 00:20:35,760 --> 00:20:39,680 So, you know, balancing those sort of three things is a challenge. 222 00:20:39,680 --> 00:20:44,240 But we really we just work in that agricultural part of it. 223 00:20:44,240 --> 00:20:48,040 OK, so in the agricultural part of it, let's use an example. 224 00:20:48,040 --> 00:20:54,880 So you said the North Basin, right? So what commodities or farmers are in the North Basin? 225 00:20:54,880 --> 00:20:57,320 And then, as you said, the South Basin is the majority. 226 00:20:57,320 --> 00:21:00,360 So let's use the almond farmer as an example. Right. 227 00:21:00,360 --> 00:21:06,160 So how would that contract work? Like, say, I don't know, that I want to go open an almond farm. 228 00:21:06,160 --> 00:21:11,480 You know, yeah. What's the spot rate? Do I forward by contracts? 229 00:21:11,480 --> 00:21:13,080 Like, you know, how do I protect myself? 230 00:21:13,080 --> 00:21:17,120 Like, how does it actually work start to finish if I'm an almond farmer? 231 00:21:17,120 --> 00:21:19,400 Yeah. OK. Well, it's a really good question. 232 00:21:19,400 --> 00:21:25,000 Generally, the Northern Basin, it's got a bit more of that sort of permanent horticulture happening, 233 00:21:25,000 --> 00:21:28,200 but not nearly as much as the Southern Basin. 234 00:21:28,200 --> 00:21:32,840 Historically, the Northern Basin focused on mixed farming, cotton and rice. 235 00:21:32,840 --> 00:21:40,280 There's been lots of those big areas doing covering that, and they really work when water is there. 236 00:21:40,280 --> 00:21:43,600 So, you know, if it's really wet, you get lots of cotton going in. 237 00:21:43,600 --> 00:21:48,560 I think Cubby Station, for instance, at the moment, has put in the largest cotton crop it's ever put in. 238 00:21:48,560 --> 00:21:55,200 You know, I might not have that quite right, but it's massive compared to what's been going on for the last decade. 239 00:21:55,200 --> 00:21:59,040 So and that's all the response to water availability. 240 00:21:59,040 --> 00:22:04,880 So there's there's some big industries up there, but numerically not heaps. 241 00:22:04,880 --> 00:22:09,640 If you look at the Southern Basin, it's got everything, almost every crop you can think of, you know, 242 00:22:09,640 --> 00:22:16,880 from just growing grass to feed animals right through to, you know, almonds, olives, citrus, 243 00:22:16,880 --> 00:22:19,680 almost pistachios, almost everything you can think of. 244 00:22:19,680 --> 00:22:25,240 So for us, when we're looking at risk management, we like a diversity of industry, you know, 245 00:22:25,240 --> 00:22:27,800 a diversity of industry exposure. 246 00:22:27,800 --> 00:22:35,240 And then even within those industries, you really want a diversity of clients, you know, some at the high end, some at the low end. 247 00:22:35,240 --> 00:22:40,160 You know, you want the best sort of mix of exposure you can get across both those things. 248 00:22:40,160 --> 00:22:46,840 So that's that's really important for us when we're talking about the Basin. 249 00:22:46,840 --> 00:22:51,880 If you were an almond grower, for instance, and they are still planting almonds down, 250 00:22:51,880 --> 00:22:58,960 down sort of much tends to be in the in the area or sun rays year around Mildura. 251 00:22:58,960 --> 00:23:02,400 So, you know, around that sort of that satellite city. 252 00:23:02,400 --> 00:23:07,600 So, you know, New South Wales, South Australia, there's a riverland with all the grapes and then, you know, 253 00:23:07,600 --> 00:23:10,640 Victoria down to boundary bend, there's olives and almonds. 254 00:23:10,640 --> 00:23:14,680 So massive, massive planting programs down there. 255 00:23:14,680 --> 00:23:18,520 If you ever take a drive down there, it's just it's it's to the horizon. 256 00:23:18,520 --> 00:23:24,520 You know, you just see these these massive groves of trees, which it's amazing to look at. 257 00:23:24,520 --> 00:23:28,440 Each one of those operations will treat water differently. 258 00:23:28,440 --> 00:23:34,640 But on the whole, they treat it as another input to their business. 259 00:23:34,640 --> 00:23:43,360 So their almond producers, you know, they want nuts and they will produce nuts the most efficient way they can. 260 00:23:43,360 --> 00:23:47,080 We certainly have clients down there that sort of run a third, a third, a third. 261 00:23:47,080 --> 00:23:54,440 So they'll put in an almond crop and they cost around 60 grand a hectare to put in somewhere between 40 and 60 grand a hectare. 262 00:23:54,440 --> 00:24:02,960 And then at. Sort of when they're planted, they use around two to three mega litres per hectare water. 263 00:24:02,960 --> 00:24:08,040 Once they're at full production, that can increase to between 12 and 14 mega litres per hectare. 264 00:24:08,040 --> 00:24:13,280 So there's a big jump as the growths mature. 265 00:24:13,280 --> 00:24:19,400 Some of our clients will do things like they'll own a third of the entitlement, no need for their growth. 266 00:24:19,400 --> 00:24:28,600 They'll play in the spot market for a third of it, so annually just enter the allocation market and buy water, you know, if or as they need it. 267 00:24:28,600 --> 00:24:32,840 And then, you know, they might use groups like us to provide them with a lease. 268 00:24:32,840 --> 00:24:44,120 So most of our income, the vast majority of it is generated in our funds by leasing water to long term clients. 269 00:24:44,120 --> 00:24:52,000 And in almost all cases, it's rarely the full quota of their water need. 270 00:24:52,000 --> 00:24:56,480 They'll supplement it with other things, either stuff they own or in the spot market. 271 00:24:56,480 --> 00:25:02,640 So that's how many deal with it. Some actually don't own any water at all. 272 00:25:02,640 --> 00:25:10,600 There are some massive bloomin' plantings out there that don't own any water rights and they will just enter the spot market. 273 00:25:10,600 --> 00:25:14,720 So, you know, I reckon that's an interesting strategy, certainly, you know, less capital. 274 00:25:14,720 --> 00:25:18,640 You mentioned the spot market just quickly. What actually is the spot price of water? 275 00:25:18,640 --> 00:25:29,720 And to give that lesson is a bit of an idea. In the past, say, I suppose, seven years, what's been the high, what's been the low and where's water been forecasted to go? 276 00:25:29,720 --> 00:25:36,800 And the reason why this is interesting is just to I think there's some other competitors out there that physically trade water. 277 00:25:36,800 --> 00:25:40,680 And my understanding, what Rural does is you don't physically trade water. 278 00:25:40,680 --> 00:25:47,600 You're looking for essentially to purchase the asset, generate income off that asset and then the growth of that asset. 279 00:25:47,600 --> 00:25:56,000 Right. So I think that might give a better understanding when looking at these farmers, you know, that there is this cycle and they're trying to forecast and hedge against this cycle. 280 00:25:56,000 --> 00:25:58,480 So that'd be great if you could give a bit of an overview. 281 00:25:58,480 --> 00:26:06,280 That's exactly what they're trying to do, Murdoch. It's about, you know, it's about risk management and protecting, you know, the future. 282 00:26:06,280 --> 00:26:14,640 You know, what's going to happen in an uncertain future. So look, I think that's the best way to answer that. 283 00:26:14,640 --> 00:26:23,280 So our water products, you're right. We, as I said, generate most of our income by leasing water to people. 284 00:26:23,280 --> 00:26:30,920 Now, when we invest in water, what we're investing in primarily is something called a water entitlement or a watershed. 285 00:26:30,920 --> 00:26:37,560 OK, and that's a perpetual right to access real water available in a system. 286 00:26:37,560 --> 00:26:43,200 It's a bit like owning a glass in a dam. You know, you've always got that glass there. That's it. It's yours forever. 287 00:26:43,200 --> 00:26:50,720 It's like your house block. And then each year, depending on how much it rains, that glass gets filled with water. 288 00:26:50,720 --> 00:26:55,360 And both those things are tradable. So the entitlement, we don't trade very often. 289 00:26:55,360 --> 00:27:00,760 Sometimes we sell down to rebalance portfolio and things, but that's our long term investment. 290 00:27:00,760 --> 00:27:06,720 The water that comes into the entitlement or the glass each year, that's the sort of spot water or allocation water. 291 00:27:06,720 --> 00:27:11,320 And that's traded quite readily by people, by farmers, each year. 292 00:27:11,320 --> 00:27:16,360 You know, a farmer will get their water and they'll say, all right, do I want to use it to grow a crop this year or will I trade it? 293 00:27:16,360 --> 00:27:22,400 You know, and there's, you know, that's a much more active trading market and similarly much more volatile. 294 00:27:22,400 --> 00:27:28,960 So going to your question about how what's the variability in that spot market, it's quite variable. 295 00:27:28,960 --> 00:27:36,560 So at the moment, I think last week or two weeks ago, the allocation or spot price for real water, 296 00:27:36,560 --> 00:27:41,800 if you wanted to go into the market and buy it to grow something, was about five dollars a megaliter. 297 00:27:41,800 --> 00:27:45,880 Now, that's fine at the moment because it's really wet. 298 00:27:45,880 --> 00:27:52,960 You know, we've had three very wet years in a row, three La Nina events, you know, so well above average. 299 00:27:52,960 --> 00:28:00,600 In fact, last October was the wettest, I think, October ever in history or European history, for sure. 300 00:28:00,600 --> 00:28:06,280 So, you know, water is really cheap. A lot of it around keeps raining or has been. 301 00:28:06,280 --> 00:28:09,960 So it's been down as low as five bucks for most of this year. 302 00:28:09,960 --> 00:28:15,880 It's been in that 50 or probably less than that, actually, really on average, probably 30 to 50 range. 303 00:28:15,880 --> 00:28:21,880 Earlier in the season, it was it was 70 dollars, you know, when it was not quite as wet before October or all that sort of stuff. 304 00:28:21,880 --> 00:28:29,800 So it does vary in drought times. We have seen that get up to nine hundred dollars a megaliter. 305 00:28:29,800 --> 00:28:39,480 So it's an enormous variation in the value of that allocation water or that spot water can occur each year, you know, 306 00:28:39,480 --> 00:28:42,560 just depending on how much water is available. 307 00:28:42,560 --> 00:28:46,320 The entitlements, on the other hand, are not quite as volatile. 308 00:28:46,320 --> 00:28:50,520 But to remove the volatility altogether, you know, we could have huge volatility 309 00:28:50,520 --> 00:28:54,040 if we just held entitlement and were trading in the spot market all year. 310 00:28:54,040 --> 00:29:01,640 If that was our process for generating returns, we'd be getting smashed to pieces in a year like this 311 00:29:01,640 --> 00:29:05,080 because you're getting five dollars a megaliter for the water. 312 00:29:05,080 --> 00:29:11,080 And, you know, the entitlements can cost you between, I don't know, seven and eleven thousand dollars. 313 00:29:11,080 --> 00:29:14,360 You know, that's the primary asset you're investing in. 314 00:29:14,360 --> 00:29:19,760 So, as I said before, you know, we've been doing this for a long time and we prefer to 315 00:29:19,760 --> 00:29:26,000 generate our returns by leasing that water through long term sort of multi years, 316 00:29:26,000 --> 00:29:31,920 up to five, but generally three years to, you know, to clients, a client base of now, 317 00:29:31,920 --> 00:29:35,280 I think we've probably got over five, five hundred different clients on the books. 318 00:29:35,280 --> 00:29:38,640 And, you know, we just we just write these leases long term. 319 00:29:38,640 --> 00:29:41,280 And what that gives us is stable income. 320 00:29:41,280 --> 00:29:44,880 So the farmer will lease that entitlement from us. 321 00:29:44,880 --> 00:29:49,280 They take the risk on how much allocation comes in, you know, so whether it's wet or dry, 322 00:29:49,280 --> 00:29:54,400 that's their risk. But that risk doesn't change whether they own the entitlement or lease it from us. 323 00:29:54,400 --> 00:29:59,120 Exactly the same risk profile, you know, whether they own it. 324 00:29:59,120 --> 00:30:02,560 And it's a really low allocation year, they get a low allocation. 325 00:30:02,560 --> 00:30:06,640 They lease it from us to lower allocation year, they get a low allocation. 326 00:30:06,640 --> 00:30:12,800 But we just get a stable rental offered, I guess is the key thing rather than relying on the spot market. 327 00:30:12,800 --> 00:30:17,760 So how does that transcend into the performance of the fund? 328 00:30:17,760 --> 00:30:22,080 So I suppose what's actually been the performance? 329 00:30:22,080 --> 00:30:25,360 Well, we've got two open funds at the moment. 330 00:30:25,360 --> 00:30:29,920 There's the Kildare Water Fund, which was established in 2014, 331 00:30:29,920 --> 00:30:35,200 and that's done over 14 percent since inception. 332 00:30:35,200 --> 00:30:40,560 And it's a fund that just does, you know, it's charged with doing two main things, really. 333 00:30:40,560 --> 00:30:46,160 One is investing in the entitlements and generating return from those entitlements. 334 00:30:46,160 --> 00:30:51,840 And the second thing is we do that by working with really good clients, long term clients, 335 00:30:51,840 --> 00:30:55,360 and delivering them lease products and other water products. 336 00:30:55,360 --> 00:30:57,840 We do have some other things, but the lease is the main one. 337 00:30:57,840 --> 00:31:03,520 So, you know, it's just delivered a really stable return profile. 338 00:31:03,520 --> 00:31:07,440 And as I said, it's 14.1 percent since inception. 339 00:31:07,440 --> 00:31:10,720 The other fund is something called the Balanced Water Fund. 340 00:31:10,720 --> 00:31:14,800 And it's a collaboration between us and the Nature Conservancy. 341 00:31:14,800 --> 00:31:19,120 The Nature Conservancy is one of the largest environmental organisations in the world, 342 00:31:19,120 --> 00:31:23,040 based in the US, but we work with their Australian arm on this fund. 343 00:31:23,040 --> 00:31:26,080 And it does exactly the same thing as the Kildare Water Fund. 344 00:31:26,080 --> 00:31:34,080 It invests in entitlements and generates the vast majority of its returns through leasing water to irrigators. 345 00:31:34,080 --> 00:31:38,640 So both these funds are about keeping irrigators and getting them access to water. 346 00:31:38,640 --> 00:31:44,000 But the Balanced Water Fund is really quite novel in that it's trying to avoid 347 00:31:44,000 --> 00:31:49,920 that complete contrasting argument that's always going on about you can either have water for the 348 00:31:49,920 --> 00:31:53,600 environment or water for agriculture. You can't do both. 349 00:31:53,600 --> 00:32:00,160 It delivers 60 percent of its water is in lease and actually can be up to 70 or 80 percent in lease with farmers. 350 00:32:00,160 --> 00:32:06,800 But every year it also makes a donation of water for environmental and cultural watering outcomes. 351 00:32:06,800 --> 00:32:09,680 So there's no other fund like it in the world. 352 00:32:09,680 --> 00:32:15,920 KILTA is responsible for generating the return from leasing the water and managing the water portfolio. 353 00:32:15,920 --> 00:32:24,560 Each year against unambiguous rules, we have to make a donation of water to the Nature Conservancy, 354 00:32:24,560 --> 00:32:28,480 who then work with another group called the Wetlands Working Group, and they deliver 355 00:32:28,480 --> 00:32:34,240 that water into important wetlands and rivers in the southern Murray-Darling Basin. 356 00:32:34,240 --> 00:32:41,760 So it's a really novel fund. It's delivered over, well, close enough to 13 percent, 12.7 percent since inception. 357 00:32:41,760 --> 00:32:47,920 So if you're looking for something that delivers really solid returns and is delivering also those impact outcomes, 358 00:32:47,920 --> 00:32:57,440 it is an amazing fund. We like them both, of course, but it depends on where people sit. 359 00:32:57,440 --> 00:33:03,920 So essentially one's an ethical fund and one's for the capitalists. 360 00:33:03,920 --> 00:33:10,480 I know I'm saying that a bit cheekily, but the reason why I'm phrasing in that particular way is, 361 00:33:10,480 --> 00:33:18,400 can you please give some clarity on with the metrics, like how they're different? 362 00:33:18,400 --> 00:33:23,440 There's a difference in the return component. Is it a difference? And why is that difference? 363 00:33:23,440 --> 00:33:26,560 Is it because the fees that are being charged in the structure? 364 00:33:26,560 --> 00:33:32,240 I suppose my question is there's two very similar mandates. How are they structured differently? 365 00:33:32,240 --> 00:33:36,720 I understand one gives water back to the conservationists, but are the funds' fees different? 366 00:33:37,680 --> 00:33:47,600 So there are operating costs associated with that allocation of water to the environment each year. 367 00:33:47,600 --> 00:33:52,800 So if you look at the Kildare Water Fund, it has a distribution profile and target of four. 368 00:33:52,800 --> 00:33:59,680 I think it did six percent last year in association with the capital growth, 369 00:33:59,680 --> 00:34:04,560 whereas the Balanced Water Fund has a target distribution of two. So that's really the gap. 370 00:34:04,560 --> 00:34:09,200 You've got to make that environmental water allocation for environmental watering, 371 00:34:09,200 --> 00:34:14,800 but it also, much of the watering they do requires pumping. I mean our systems are 372 00:34:14,800 --> 00:34:20,000 quite disconnected nowadays, so it's not easy just opening a sluice and away the water goes. 373 00:34:20,000 --> 00:34:26,800 Often you have to pump it from one area to a wetland that can be some distance away from the main 374 00:34:26,800 --> 00:34:33,440 water source and it's dry. So there are pumping costs involved and we have to support the nature 375 00:34:33,440 --> 00:34:39,120 conservancy in the wetlands working group with a cash allocation as well to get those operating 376 00:34:39,120 --> 00:34:43,520 costs covered. So that's really the difference in the return profile. 377 00:34:44,960 --> 00:34:50,560 Okay, so that makes a lot of sense. How much money is currently in both funds at the moment? 378 00:34:50,560 --> 00:34:57,760 The Kildare Water Fund is about to tick over to 50 million in May with a good allocation coming in 379 00:34:57,760 --> 00:35:06,560 later this month and the Balanced Water Fund is around 90 million and I think that'll probably 380 00:35:06,560 --> 00:35:11,200 get up over 100 over the next month or so too. How big's the team? 381 00:35:11,200 --> 00:35:19,040 Our team, the Kildare team in total is around 20. So in addition to the two water funds, we've got 382 00:35:19,760 --> 00:35:27,440 a water mandate with a big US institutional investor which is fully deployed and we've also 383 00:35:27,440 --> 00:35:40,240 got two agriculture and water funds. So across those four funds and the mandate, there's 20 of 384 00:35:40,240 --> 00:35:46,560 us servicing that and this sort of farm team sort of flex a bit depending on what's going on but 385 00:35:46,560 --> 00:35:54,560 yeah, around 20. Is it just Kildare or are you under an umbrella of another fund manager? 386 00:35:56,320 --> 00:36:01,120 We are nowadays. It was just Kildare for a long period. Then in 2018, 387 00:36:01,120 --> 00:36:10,160 when we were initiating one of our other agriculture funds, we came in contact with a guy 388 00:36:10,160 --> 00:36:16,400 called two gentlemen, Phil and Andrew King, who were looking to invest in real assets and were 389 00:36:16,400 --> 00:36:21,360 looking for a manager to invest with and they took a position, an early position in one of those 390 00:36:21,360 --> 00:36:26,720 funds and from that, they like what we do. They love the water story, they love the sustainability 391 00:36:26,720 --> 00:36:32,960 story and they invested in the company through Regal, Regal funds management. So Regal in 2018 392 00:36:34,080 --> 00:36:40,720 bought 50% of the organisation and they've increased that stake more recently to around 61. 393 00:36:41,680 --> 00:36:48,320 So Regal Proprietary Limited, the majority owner of the company now, myself and one of the other 394 00:36:48,320 --> 00:36:55,360 co-founders own the rest of it. Yeah right. So with alignment, this is a great question. 395 00:36:55,360 --> 00:36:59,280 The reason why we like asking this particular question is we've learned over time that different 396 00:36:59,280 --> 00:37:04,320 ways how fund managers structure, how they get remunerated essentially dictates behaviour on how 397 00:37:04,320 --> 00:37:10,080 they look to invest in assets. And as you said correctly, you just had a very, very well-respected 398 00:37:10,080 --> 00:37:15,360 fund manager by 50% of the business and then now you're managing yourself. So how is the 399 00:37:16,400 --> 00:37:22,560 remuneration structured within the firm and how are you aligned to investors? Thank you. 400 00:37:22,560 --> 00:37:30,160 Yeah, well, I mean, we've always had a, I'd say a really responsible attitude to fees. 401 00:37:31,680 --> 00:37:37,440 I'm not saying others are irresponsible, but we started with a large institutional investor, 402 00:37:38,880 --> 00:37:45,840 a not-for-profit or a profit to member investor and boy did they push us hard on fees. So 403 00:37:45,840 --> 00:37:54,640 we've always been, I guess, very open about our fee base and saying it's a cost plus model, 404 00:37:55,200 --> 00:38:01,280 cost plus 10% on the base fee really to deliver these things. We want to get rewarded 405 00:38:01,280 --> 00:38:06,160 through the performance side. So when we perform, that's when we start making some money. So 406 00:38:06,160 --> 00:38:11,760 there are performance hurdles across our funds that we've got to reach. That's one element to it. 407 00:38:11,760 --> 00:38:16,640 And we've always had... What are those hurdles? 408 00:38:18,320 --> 00:38:25,520 Oh, they vary. But look, a standard sort of approach would be 15% over 8% 409 00:38:27,200 --> 00:38:31,120 for these sorts of assets, which is pretty standard. I think you'll find across, 410 00:38:31,120 --> 00:38:38,160 you know, much of our industry. But just more specifically at a staffing level, 411 00:38:38,160 --> 00:38:46,160 we've always had an employee share trust as an organisation. Merging with Regal actually allowed 412 00:38:46,160 --> 00:38:51,280 us to, I think, make that a much better opportunity for our staff. So they actually get a small 413 00:38:51,280 --> 00:38:56,320 portion of ownership in Regal over, you know, after three years in the organisation, which I think is 414 00:38:56,320 --> 00:39:01,920 a great outcome. And then, you know, annually the organisation, Kilter itself, has its own bonus 415 00:39:01,920 --> 00:39:10,160 pool. So if the company makes a profit, 10% of that is available for staff involved in delivering 416 00:39:10,160 --> 00:39:16,480 the activity. So it's been a pretty good sort of aligned process there, I think, at all levels 417 00:39:16,480 --> 00:39:24,640 across various teams and successful at this point. And I think the Regal alignment or relationship 418 00:39:24,640 --> 00:39:34,160 is really helpful for that too. Let's pivot into beta. Not many people are familiar with beta, 419 00:39:34,160 --> 00:39:38,640 but it's essentially the correlation between a fund and how it behaves towards a specific market, 420 00:39:38,640 --> 00:39:42,960 right? Zero to one. So the one thing I always found very interesting about the water space, 421 00:39:42,960 --> 00:39:49,120 it's kind of like correlated to not much. It's like its own little unique ecosystem, right? So, 422 00:39:49,120 --> 00:39:54,240 you know, it's very turbulent times out there, we have, you know, a tightening environment. So if 423 00:39:54,240 --> 00:40:01,520 you don't mind covering, you know, how does inflation impact the portfolio? And then secondly, 424 00:40:01,520 --> 00:40:08,320 why does the fund have such a low beta? Yeah, well, I think if you're looking at either of the funds, 425 00:40:08,320 --> 00:40:14,000 you know, the sort of correlation is, it's close to, as you said, zero, you know, I mean, you could 426 00:40:14,000 --> 00:40:22,400 argue it's 0.01 or 0.02, I guess, you know, you can model that way. But it's really, you know, 427 00:40:22,400 --> 00:40:29,600 in the context of other things, if you look at ASX, REITs, Gold, that's top 300, S&P 500, 428 00:40:29,600 --> 00:40:37,600 the volatility is a lot less, you know, it's around that sort of 6, 7%, generally. And you're 429 00:40:37,600 --> 00:40:41,120 getting a good return, you know, in our funds anyway, you know, you're getting between that 12 430 00:40:41,120 --> 00:40:48,720 and 14% return. So what it's really correlated with is the blooming weather, you know, that's it. 431 00:40:48,720 --> 00:40:53,680 You know, it doesn't really matter what's going on in the rest of the world. If people are producing 432 00:40:53,680 --> 00:40:59,280 food, which is the key driver in all this, you know, it's this water is used to grow stuff. 433 00:41:00,160 --> 00:41:06,000 If they continue to produce food, well, it's really correlation with the weather that generates, 434 00:41:06,000 --> 00:41:10,640 you know, and moves the market. And that's where we are at the moment. As I explained before, 435 00:41:10,640 --> 00:41:16,240 you know, that there's been so much water, the spot price is $5 or $10 a megalitre, you know, 436 00:41:16,240 --> 00:41:21,760 it's as low as I've seen it for a very long time, actually beyond my memory, but my memory is 437 00:41:21,760 --> 00:41:28,480 shocking. So, you know, let's get into this. Let's let's get into this. I was talking to you 438 00:41:28,480 --> 00:41:33,280 off air and I said, on a funny note, in polite society, they always say never discuss the 439 00:41:33,280 --> 00:41:37,680 weather in small talk, but turns out it's probably the most important topic of this conversation. 440 00:41:38,880 --> 00:41:43,920 It is it is really important. And it's not something we've got control over, which is 441 00:41:43,920 --> 00:41:50,880 a nuisance. So, you know, what do we do? We just all we can do is arm ourselves with the best 442 00:41:50,880 --> 00:41:58,000 available information. So, you know, the water team look at, you know, they don't do it themselves, 443 00:41:58,000 --> 00:42:02,480 but obviously review all the climate models that are coming in and the BOM outlooks. And, 444 00:42:03,360 --> 00:42:08,640 you know, there's eight or 10 different models used across the world to try and determine, 445 00:42:08,640 --> 00:42:13,760 determine and predict, predict the future. I mean, it is it's a bit like listening to economists. 446 00:42:13,760 --> 00:42:21,760 I find Murdoch, you know, I'm like, look, on the one hand, we are heading into a massive recession, 447 00:42:22,240 --> 00:42:27,280 or on the other hand, we could be looking at a period of extended growth. You do get a lot 448 00:42:27,280 --> 00:42:30,960 of that sort of stuff. So, you know, it's going to be really wet. It's going to be really dry. 449 00:42:30,960 --> 00:42:36,720 I think I was reading this morning, actually, the latest BOM outlook, which is suggesting we 450 00:42:36,720 --> 00:42:43,520 may be going into an extreme El Nino. So, an extreme drought period or dry period, 451 00:42:44,400 --> 00:42:48,000 which is pretty amazing having just come out of a, you know, what would be described as an 452 00:42:48,000 --> 00:42:53,440 extreme wet period. But then it goes on to say, but this is not a guarantee, and it may not happen. 453 00:42:53,440 --> 00:42:59,680 If we get the right westerly wind, it will blow this El Nino away. You know, so it's difficult 454 00:42:59,680 --> 00:43:05,520 to say, but all we can do is use the best available information. Each year we put, we you know, 455 00:43:05,520 --> 00:43:10,640 we're obviously looking at that every month, but each year we look at the storages, we look at the 456 00:43:10,640 --> 00:43:15,760 available outlook, and then determine how we're going to manage the portfolio for the coming year. 457 00:43:15,760 --> 00:43:19,440 But that gets reviewed every month just based on, you know, because weather can change very 458 00:43:19,440 --> 00:43:25,840 quickly and the outlook can change very quickly. Let's keep going on this weather topic, because 459 00:43:25,840 --> 00:43:29,760 there's one thing that I found very interesting. I don't know if any of our listeners or yourself 460 00:43:29,760 --> 00:43:36,560 saw the Netflix series with Graham Hancock. He's been featured on Joe Rogan quite a bit, 461 00:43:36,560 --> 00:43:41,040 discussing the Yunga Dryas, essentially the comet that hit like 12 and a half thousand years ago. 462 00:43:41,040 --> 00:43:44,640 And then one thing I found very interesting about that comment, he essentially created a 463 00:43:44,640 --> 00:43:55,040 scientific case discussing how when a comet hits, a volcanic eruption pushes a plume of 464 00:43:55,040 --> 00:43:59,760 material into the stratosphere and then drops into the ionosphere. And then essentially, 465 00:44:00,400 --> 00:44:04,800 what he's saying about three months, there was just so much of it, it essentially changed the 466 00:44:04,800 --> 00:44:10,720 entire climate of the globe into this cold and brought on the deep freeze, right? You know, 467 00:44:10,720 --> 00:44:14,720 the frozen years, woolly mammoths, all that type of jazz. And the reason why I'm bringing this up 468 00:44:15,520 --> 00:44:21,840 is, and we're just discussing it off and I sent you the article. In 2022, there was a very, very 469 00:44:21,840 --> 00:44:29,360 unfortunate event of Tonga's volcano disaster. And essentially another plume got shot into the 470 00:44:29,360 --> 00:44:35,120 atmosphere. And I think I was reading articles from ABC and also Sky News essentially saying, 471 00:44:35,120 --> 00:44:40,160 I think there was a couple of geologists even saying that that particular event may disrupt 472 00:44:40,160 --> 00:44:44,400 or impact Australia's weather patterns for potentially up to eight years. And there was 473 00:44:44,400 --> 00:44:50,160 another article that even said that this particular event made this summer a very, very 474 00:44:50,160 --> 00:44:56,320 event made this summer one of the wetter summers of all time. Right. So as you said, you're in the 475 00:44:56,320 --> 00:45:01,520 business of weather and weather is the main correlation. So have you done, what are your 476 00:45:01,520 --> 00:45:06,400 thoughts on that? And do you want, and if you want to give a bit of an understanding on the 477 00:45:06,400 --> 00:45:13,280 science behind that as well? Yeah, well, look, I mean, it's happened before. So if you go back to 478 00:45:13,280 --> 00:45:18,320 the 1880s and I only just was interested in you put that article, brought that to my attention 479 00:45:18,320 --> 00:45:23,920 because I did read this book on Krakatoa not that long ago, but 1883 when that thing went off and 480 00:45:23,920 --> 00:45:30,320 much bigger than that recent volcanic, this thing, the noise went around the world, I think seven 481 00:45:30,320 --> 00:45:36,480 times, you know, when it exploded, just a massive event. And it did, it created a volcanic winter 482 00:45:36,480 --> 00:45:45,680 that lasted four years. How long did it last? About four years. Four years. Yeah, yeah, 483 00:45:45,680 --> 00:45:51,280 significantly blocked out light, made things colder, lizards, all that sort of stuff. It did have a 484 00:45:51,280 --> 00:45:56,400 did have a massive impact. And even if you look at art that was done through that period, paintings 485 00:45:56,400 --> 00:46:00,320 that were done through that period, they've all got quite a different light because of all the 486 00:46:00,320 --> 00:46:05,600 particulate matter in the atmosphere. You know, it just made the light quite different to any other 487 00:46:05,600 --> 00:46:12,640 period. So look, it has happened. I think the event you're talking about is probably not big enough 488 00:46:12,640 --> 00:46:16,480 to have, you know, it will have an effect, but it's probably going to be at the margins. 489 00:46:17,440 --> 00:46:23,760 You know, much more, much more important, and I think much less predictable is how climate change, 490 00:46:23,760 --> 00:46:29,680 you know, changes everything. So what does it do to ocean currents? How does that change weather 491 00:46:29,680 --> 00:46:36,400 patterns? You know, they're probably a much more likely, I think, and somewhat unpredictable 492 00:46:36,400 --> 00:46:42,560 threat to climate systems everywhere. The only thing we're certain of at the moment, and, you 493 00:46:42,560 --> 00:46:51,360 know, we, we take and have done for many years, annually taken a presentation from the CSIRO or 494 00:46:51,360 --> 00:46:58,640 representative from on there, you know, and IPCC authors, representations from them on what the 495 00:46:58,640 --> 00:47:04,960 climate modelling suggesting and what the outlook is. And almost without fail every year, they say, 496 00:47:04,960 --> 00:47:10,720 it's moving faster than our models, the impacts and the changes, you know, the changes they predicted 497 00:47:10,720 --> 00:47:17,360 are pretty right, but it tends to be in front of the sort of average modelling. So, you know, I 498 00:47:17,360 --> 00:47:22,560 think that's, that's what we spend a lot of time looking at, much more so than the sort of black 499 00:47:22,560 --> 00:47:27,120 swan event, which is completely outside our control. We can't do much about that at all. 500 00:47:27,120 --> 00:47:29,920 You don't know when it's going to happen. You don't know if it's going to happen. You don't know how 501 00:47:29,920 --> 00:47:34,960 big it's going to be. Climate change, we know is happening. So we do build that into our risk 502 00:47:34,960 --> 00:47:40,400 management framework every year and almost every month, really, really looking at what's going on. 503 00:47:40,400 --> 00:47:48,240 But every year, you know, we do look at the risk management and response around either the outlook 504 00:47:48,240 --> 00:47:56,240 for dry or wet in the short term, but long term, you know, it is absolutely, I think, a fundamental 505 00:47:56,240 --> 00:48:01,520 truth. We are looking at more extremes. So you're going to have really big swings from dry to wet 506 00:48:01,520 --> 00:48:06,960 and wet to dry. And those events are going to be much bigger. You know, we've been through some just 507 00:48:06,960 --> 00:48:13,520 amazing climatic events in our farming history over 18 years. So one of the biggest floods we 508 00:48:13,520 --> 00:48:20,160 ever had, Murdoch, occurred in January and February, you know, in 2010-11, which is pretty 509 00:48:20,160 --> 00:48:27,440 unusual to get a flood in the middle of summer in, you know, what is ostensibly desert in Australia. 510 00:48:27,440 --> 00:48:33,040 You know, it's not unheard of, but, you know, it was the biggest flood that had been in that part of 511 00:48:33,840 --> 00:48:39,840 North West Victoria for many decades. So the climate, you know, I think that's the bigger risk. 512 00:48:39,840 --> 00:48:44,880 You know, that's what we've got to really prepare for and manage for. I think investing in an asset 513 00:48:44,880 --> 00:48:50,400 like water in that, you know, given that outlook's really important, we could almost consider it a 514 00:48:50,400 --> 00:48:55,360 climate change hedge because what they're suggesting is water is going to be scarcer in Australia. 515 00:48:55,360 --> 00:49:01,600 You're going to have much bigger events. So you will get massive rainfall events, but, you know, 516 00:49:01,600 --> 00:49:08,400 the long term trend will be dry. So in summary, what you're thinking the forecast might be is 517 00:49:08,400 --> 00:49:16,240 essentially a lot more volatile periods of potentially a lot of pre-longed wet environments 518 00:49:16,240 --> 00:49:19,840 followed by a very pre-long dry environment. Is that what you're thinking? 519 00:49:19,840 --> 00:49:27,440 Well, potentially, yeah. Yeah. I mean, you know, I've been around that long. I'm only 56 or something, 520 00:49:27,440 --> 00:49:33,360 but you've been through some wet things, so 73, 74, 75, you know, that was a pretty wet period. 521 00:49:33,360 --> 00:49:38,080 But if you'd ask me, Murdoch, what's the thing that could really sink our funds, 522 00:49:38,080 --> 00:49:44,640 you know, make it really challenging for us? I would have said three wet years in a row, 523 00:49:44,640 --> 00:49:49,600 you know, really wet years in a row. So three La Nina events in a row. You know, that's what we used 524 00:49:49,600 --> 00:49:54,000 to say five years ago. That's what would make it really challenging. We've just been through them 525 00:49:54,720 --> 00:50:02,000 and these funds did, one of them did 22% last year and the other one did 70% last year. 526 00:50:02,000 --> 00:50:09,600 And the other one did 17%. So what's that tell you? It tells you that the market is becoming 527 00:50:09,600 --> 00:50:14,400 much more sophisticated about the outlook. I don't think we'll get those sort of returns this year. 528 00:50:14,400 --> 00:50:19,360 I think last year, you know, people thought the wet would stop and we'd start moving on and it 529 00:50:19,360 --> 00:50:26,880 didn't. It got wetter. So that was a bit unusual. But, you know, I think what that tells you is the 530 00:50:26,880 --> 00:50:31,840 market and the water market and the operators and users in the market are taking a quite different 531 00:50:31,840 --> 00:50:38,320 outlook to the variability and the opportunities provided by water than they did say even back in 532 00:50:38,320 --> 00:50:48,080 2016, you know, 2010, 11 in that big flood period, water prices dropped 30 or 40%. Some entitlements 533 00:50:48,080 --> 00:50:55,600 2016, another wet period, they dropped, you know, eight to 12. This time when it started, they dropped 534 00:50:55,600 --> 00:51:00,400 about six or eight percent, but they bounced back, you know, they went up 16% some entitlements last 535 00:51:00,400 --> 00:51:06,560 year. So yeah, but you have to ask the question why. And then I think it's the markets that we've 536 00:51:06,560 --> 00:51:12,560 done. I believe it was part of the Labor's campaign that they essentially said that they'll come in and 537 00:51:12,560 --> 00:51:17,680 buy 6% of the water rights back, right? To essentially protect farmers, everything equivalent. And then 538 00:51:17,680 --> 00:51:21,760 there's a couple of my colleagues did some research and that's like $11 billion. I don't think the 539 00:51:21,760 --> 00:51:28,480 government has the funds available to even execute on that particular thing. So my question to you 540 00:51:28,480 --> 00:51:33,920 then, right, is do you think, as you say correctly, it's been three dry seasons, wet season, sorry, 541 00:51:33,920 --> 00:51:38,560 that essentially the government coming and making those comments is essentially put support or 542 00:51:38,560 --> 00:51:44,240 floor underneath these prices and essentially propped everything up. And if that's the case, 543 00:51:44,240 --> 00:51:49,280 do you think the government has the capacity to execute on purchasing that 6% worth of water 544 00:51:49,280 --> 00:51:56,320 rights? Is it sustainable or essentially has that run its course? Good question. Look, I think it's, 545 00:51:56,320 --> 00:51:59,680 I'll come back to the government question in more detail, but the other key thing you've got to 546 00:51:59,680 --> 00:52:04,240 remember in the change in the market, you know, people are more statistic about the outlook and 547 00:52:04,240 --> 00:52:10,000 they reckon it's going to get dry. So, you know, that's a fundamental truth. The other thing that 548 00:52:10,000 --> 00:52:16,560 has changed is the amount of permanent horticulture that's now in the system. So if you went back to 549 00:52:16,560 --> 00:52:22,720 the sort of 80s and 90s, the biggest water user, particularly in the South, was dairy, you know, 550 00:52:24,400 --> 00:52:29,440 and dairy farmers can choose to use water or buy and feed, you know, they could buy and feed and 551 00:52:29,440 --> 00:52:34,800 trade water, that's an option for them. But once you plant a horticultural plantation, there's no 552 00:52:34,800 --> 00:52:39,920 discretion, you know, you spend 40 or 60 grand a hectare, whatever it is to put them in the ground, 553 00:52:39,920 --> 00:52:47,120 you have to water them every year. And those trees have gone in since we began, I think there was 554 00:52:47,120 --> 00:52:53,040 probably less than 10,000 hectares of almonds, now there's close to 65,000 hectares of almonds, 555 00:52:53,040 --> 00:53:01,680 and they're predicting that will be 75 by 2030. That's a massive change at the top end of water 556 00:53:01,680 --> 00:53:06,640 use and that is driving market change and market sentiment. You know, people understand that those 557 00:53:06,640 --> 00:53:11,600 trees will always need water, same with olives, the olives are still being planted in the basin, 558 00:53:12,560 --> 00:53:18,400 citrus, wine grapes, all those sort of things, they need water all the time. So that horticultural 559 00:53:18,400 --> 00:53:24,400 component has completely transformed the demand side, you know, so you've got supply side issues 560 00:53:24,400 --> 00:53:29,360 with climate change, and you've got a demand side change, which is just extraordinary, you know, 561 00:53:29,360 --> 00:53:36,400 the outlook, there's still 20% of water in the system that almond trees will need to take out 562 00:53:36,400 --> 00:53:41,840 that they haven't accessed yet, as those trees mature. So trees already in the ground that go 563 00:53:41,840 --> 00:53:48,480 from two megs to 12 megs per hectare are so mature, that's locked in demand. So I think there's, you 564 00:53:48,480 --> 00:53:52,480 know, just some fundamentals in the market that have changed. But coming back to the government, 565 00:53:57,120 --> 00:54:02,160 they have bought a lot of water in the past, and they did drive up prices in the past. So if you 566 00:54:02,160 --> 00:54:07,520 went back to eight, nine, 10, they were buying a lot of water back then, I can't actually remember 567 00:54:07,520 --> 00:54:14,960 Murdoch how many billions they spent, but it was billions of dollars. And they recovered around 568 00:54:14,960 --> 00:54:23,040 2100 megalitres through that and other avenues. The federal government, what they're saying is 569 00:54:23,040 --> 00:54:26,880 exactly what the Libs were saying in a different way, they all said we're committed to completing 570 00:54:26,880 --> 00:54:32,800 the plan. So, you know, whichever government was in, they both signed off on it. I think this 571 00:54:32,800 --> 00:54:37,520 government's just been more active since it arrived about saying we'll enter the market if we have to. 572 00:54:38,320 --> 00:54:43,520 Now, has that underpinned prices? I think there certainly is, they look like getting elected, 573 00:54:43,520 --> 00:54:46,960 there was probably a bit of a spike there, you know, people thought, crikey, they're going to 574 00:54:46,960 --> 00:54:52,480 come in and last time the government paid between 1.5 and 1.7 times the value of entitlement to get 575 00:54:52,480 --> 00:54:57,920 it. And maybe some people thought that would happen, you know, really quickly and, you know, 576 00:54:57,920 --> 00:55:03,200 so I think there might have been a short term little blip there, but not a long standing thing. 577 00:55:05,360 --> 00:55:10,640 Will it underpin prices? I think if they do start buying, it will absolutely certainly, you know, 578 00:55:10,640 --> 00:55:16,240 put a bit of a floor in the market. It's hard to know how they'll do it or how they'll do it quickly. 579 00:55:16,240 --> 00:55:22,480 The last time they did it, they basically, you know, had to set up a whole new section of the department 580 00:55:22,480 --> 00:55:27,360 with experienced people. Now all that's been dismantled since, so there's probably going to 581 00:55:27,360 --> 00:55:31,520 be a bit of a ramp up period while they get themselves back in order and actually understand 582 00:55:31,520 --> 00:55:36,240 how water markets work and who does what and how they'll get it. So I think there's probably 583 00:55:36,880 --> 00:55:40,880 some changes there. I know they're in the market now in the Northern Basin, 584 00:55:40,880 --> 00:55:45,840 buying entitlement or putting entitlement, offers for entitlement out there and there are willing 585 00:55:45,840 --> 00:55:49,680 sellers. I mean, that's the other thing. Everybody makes a lot of noise about it, but somebody's got 586 00:55:49,680 --> 00:55:56,720 to sell to them. So people are making decisions to do that. I don't know if they're the noisy ones or 587 00:55:56,720 --> 00:56:02,800 not, but you know, that's how it works. They're not forcing people to sell. They could, but I think 588 00:56:02,800 --> 00:56:07,200 it's a real vindication in the market that the government is protecting the property right of 589 00:56:07,200 --> 00:56:11,760 the individual and saying, if you want to sell it, we'll buy it rather than just walking into the 590 00:56:11,760 --> 00:56:17,760 market and taking it, which they could ostensibly do, but that no government has ever even suggested 591 00:56:17,760 --> 00:56:23,440 that. So I think in one sense, it's a good thing that they're protecting the property right, the 592 00:56:23,440 --> 00:56:31,360 individual, but look, 6% is a lot of water main. It is, it's huge. So if they actually, I mean, 593 00:56:31,360 --> 00:56:35,520 they're supposed to do it by next year. So I don't think that's going to happen. 594 00:56:35,520 --> 00:56:41,440 I don't think even if they had billions of dollars ready to invest in water entitlements to buy it 595 00:56:41,440 --> 00:56:47,920 back, I think it would still be a challenge to buy it back in that timeframe. There's a good portion 596 00:56:47,920 --> 00:56:54,560 of this water that was supposed to be recovered through state efficiency programs, works and 597 00:56:54,560 --> 00:56:59,280 measures programs where you have perhaps an engineering solution that delivers the same 598 00:56:59,280 --> 00:57:07,840 outcome, but saves a heap of water. And they had a series of those on the go, but they're expensive. 599 00:57:07,840 --> 00:57:14,160 They take a long time to enact. States have had a lot of trouble delivering on them. And I think at 600 00:57:14,160 --> 00:57:17,920 the moment, you're at a bit of a crossroad where the feds are saying, we've got to meet this target 601 00:57:17,920 --> 00:57:23,120 next year. The states are saying, well, we can do it through these efficiency measures, but we need 602 00:57:23,120 --> 00:57:27,200 more time. Will you give us more time? And there's just a bit of a stalemate at the moment. So 603 00:57:27,200 --> 00:57:32,960 look, I think it will put upward pressure on prices. Ultimately, if they're in the market, 604 00:57:32,960 --> 00:57:40,080 it seems a likely outcome to me. But when they're in the market, to what scale, how that plays out, 605 00:57:40,080 --> 00:57:45,120 I don't know. I don't know. I mean, it's not like the budget's full of ready cash at the moment, 606 00:57:45,120 --> 00:57:52,000 is it? Where do the billions come from is one question. So look, the intensity, and I think 607 00:57:52,000 --> 00:57:56,800 we're fully supportive of the Basin Plan. Don't get me wrong. We think it's really important. 608 00:57:56,800 --> 00:58:02,160 Without a functioning ecosystem and river system, we don't have irrigation. So we're absolutely 609 00:58:02,160 --> 00:58:07,360 supportive of the Basin Plan. I think they could have gone about it perhaps differently, but 610 00:58:07,360 --> 00:58:10,960 that's what the Balanced Water Fund is sort of there to show. There are other ways to do this, 611 00:58:10,960 --> 00:58:14,800 recover water and deliver it, deliver water to irrigators at the same time. 612 00:58:14,800 --> 00:58:20,400 So is there any thoughts you want to leave our listeners with? 613 00:58:22,320 --> 00:58:27,760 Look, I think as an asset class, real assets make sense. We're not here to argue that 614 00:58:27,760 --> 00:58:31,760 your whole portfolio needs to be in them. That just wouldn't make any sense at all. But 615 00:58:31,760 --> 00:58:37,760 if you're sort of thinking somewhere between 2% and 5% of a portfolio and real assets that 616 00:58:37,760 --> 00:58:43,440 are alternatives, they're uncorrelated, they're not going to be a good portfolio. 617 00:58:43,440 --> 00:58:49,440 They're uncorrelated generally to everything else that's going on in the market, particularly with 618 00:58:49,440 --> 00:58:54,560 ag assets. You do get inflation protection as well because commodity prices tend to go up. So 619 00:58:54,560 --> 00:58:59,200 you've got that inflation hedge. And if you're looking at water and you're thinking about 620 00:58:59,200 --> 00:59:04,880 climate change, well, water is a pretty good climate change too. You would expect with less 621 00:59:04,880 --> 00:59:14,480 of it around, it will go up in value. So I think we love what we do. We love working with clients 622 00:59:14,480 --> 00:59:21,680 that are philosophically aligned. So the more the merrier in that sense. But you do have to take a 623 00:59:21,680 --> 00:59:28,000 realistic view with this stuff. Farmland's not that liquid. Water's, well, excuse the pun, 624 00:59:28,000 --> 00:59:32,800 much more liquid. You can get in and out of that pretty quickly. But it's just an uncorrelated 625 00:59:32,800 --> 00:59:39,760 inflation protected asset class that, personally, I've got my superfund in it. And I reckon most 626 00:59:39,760 --> 00:59:46,560 people should have a portion of alternatives in their portfolio. If anyone wants to learn more 627 00:59:46,560 --> 00:59:54,080 about what you guys girls do, how can they reach you? I think the simplest thing would be, 628 00:59:54,080 --> 00:59:57,920 I was going to give out everyone's telephone number Murdoch, but they might get upset with me 629 00:59:57,920 --> 01:00:04,720 if I do that. So probably the simplest thing is just to go to the website, which is www.kilderrural.com. 630 01:00:04,720 --> 01:00:09,600 And there's just an information request form there. And we'll contact them if they want to 631 01:00:09,600 --> 01:00:13,920 be contacted or provide information. They can actually just request information if they want 632 01:00:13,920 --> 01:00:17,680 to go down that path or actually we'll give them a call and follow them up. 633 01:00:18,800 --> 01:00:22,640 All right, Colin, well, thank you very much for your time. I've really enjoyed this conversation. 634 01:00:22,640 --> 01:00:26,800 I hope everyone else has as well. Thanks, Murdoch. Terrific. Really 635 01:00:26,800 --> 01:00:29,840 appreciate the opportunity. Thank you, Colin. 636 01:00:43,520 --> 01:00:47,600 Any views expressed in this recording do not represent a view of any other third party 637 01:00:47,600 --> 01:00:51,920 and other sole personal opinions of the speaker. Any reference to financial product does not 638 01:00:51,920 --> 01:00:56,640 constitute advice or recommendation. And before any action, you should seek proper advice from 639 01:00:56,640 --> 01:01:03,600 your financial professional. Australian listeners should head to www.moneysmart.gov.au to find more 640 01:01:03,600 --> 01:01:08,320 information on obtaining financial advice. To get in touch with York, head to our website 641 01:01:08,320 --> 01:01:27,200 www.yorkwealth.com.au.