00:00The key question now is really whether we're getting that return on investment and all the
00:03expenditure. That would be the key question in the tech sector. In terms of value, I mean,
00:09I wouldn't say you can see value in the tech sector at this point. There's evidence of quite
00:12a lot of froth in the AI supply chain, which is really what's driven, I think, this sell-off
00:17in semiconductors in recent weeks. It's just too much froth in the system. We actually see better
00:23value. Obviously, value stocks, if one's looking for diversification from AI, value's a good
00:27strategy. But interestingly, quality is also looking cheap. It's quite unusual to get what
00:31I call the eclipse between quality and value. Why are those quality stocks cheap? As in many
00:36cases, they've been caught up with this AI disruption story. So again, it's the other side of the
00:41AI trade. But that is unusual and an opportunity, I think.
00:45So what do you do with AI stocks or AI-adjacent stocks right now?
00:50Well, we are looking at it. I mean, we've been advocating for a long time that you need to
00:53look at it stock by stock. We still believe in the AI story. The question is the valuation.
01:00And what we're concerned about is particularly the frostiness in the supply chain. Yeah.
01:05So when you look at, I mean, do you have to stress test any other industries that you're looking at?
01:09Or again, is it too soon? I don't know what kind of timeline we should be looking at.
01:12I think the challenge now with the AI story, so if you think about it, a couple of years ago,
01:16it's really a US mega cap tech story. And really what we've seen in the last year is it's extending
01:20into Korea, Taiwan. So you don't get the same geographical diversification you used to get.
01:26And of course, it's now increasing as a percentage of the investment grade universe as well.
01:30It's prevalent also in the private asset world. So actually, when you try and do sort of,
01:35you can't diversify away from it in asset class terms. I think you really need to think through
01:40the portfolio construction on the equity side now. And it's the first time we've really been
01:44talking about that. We've been quite happy to ride a lot of these trends in recent years. But I think
01:49that now we need to start managing that risk. And so equity portfolio construction is top of mind.
01:54Okay. So how do you do it differently?
01:56I think we need to think about leaning back from some of the frothier areas,
02:00looking for opportunities in the quality side. As I said, exploiting this overlap between quality
02:04and value, which, as I said, is quite unusual.
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