A Message from Mike‍

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A perennial bull’s view on the year that was, and the case for staying invested

Every year around this time, someone asks me the same question, usually with a half-smile that tells me they already know the answer: “So Mike, are you still bullish?” And every year I give them the same reply. Yes. I always am, and I make no apology for it.

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I have spent fifteen years watching money move through markets, and if there is one lesson that has earned its place at the front of my thinking, it is this: the long-term direction of good businesses, in good markets, run by capable people, is up. Not in a straight line. Not without stretches that test your patience and occasionally your stomach. But up. The person who bets against human progress, against innovation, against the sheer determination of well-run companies to grow and adapt, has a poor track record over any meaningful period. I have no intention of joining them.

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That is not blind optimism, and I want to be clear about the distinction, because the two get confused. Blind optimism ignores risk. What I do is the opposite. I spend a great deal of my time thinking about what could go wrong, precisely so that when it does, we are positioned to hold our nerve rather than reach for the sell button. Being a perennial bull is not about pretending the road is smooth. It is about knowing where the road leads, and refusing to be shaken off it by every pothole along the way.

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The year that tried to talk you out of it

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FY26 was, by any measure, a year designed to test that conviction. George covers the detail in the pages that follow, MICHAEL SMITH Portfolio Manager & CEO and he does it well, so I will not tread on his ground. But at a high level, we lived through a geopolitical flare-up in the Middle East, an oil price that spiked and then just as quickly reversed, a run of interest rate rises before a central bank finally paused,and a domestic share market that spent much of the year going sideways while sentiment lurched from one headline to the next.

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If you had watched only the news, you would have been forgiven for wanting to sit the whole thing out. And that, in a sentence, is the trap. Because the investors who did best through FY26 were not the ones who correctly predicted which headline would arrive next. Nobody did that. They were the ones who stayed in their seats. They were the ones who understood that volatility is the price of admission, not a reason to leave the theatre.

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I say this a lot, and I will keep saying it: my job, and the job of every adviser in this business, is to keep you invested and on track. That sounds simple. It is not. The hardest thing an investor ever does is nothing, especially when every instinct and every screen is screaming at them to act. A large part of the value we add is not in the clever trade. It is in the steadying hand at the exact moment that steadiness is least comfortable and most valuable. FY26 gave us plenty of those moments, and I am proud of how our clients came through them.

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What I actually spend my days doing

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Most of my working hours are given to our flagship strategy, the Global Growth portfolio. It is the strategy I know best, the one I think about in the shower and occasionally at three in the morning, and it is the clearest expression of how I believe long-term wealth is built. So let me pull back the curtain a little, because I think it helps to understand not just what we own, but why we own it and why we hold on when others let go.

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The first thing you would notice about the portfolio is that its largest single position, at a little over eleven per cent, is Taiwan Semiconductor. That is a deliberate statement, not an accident. Taiwan Semiconductor makes the most advanced chips on the planet, and very little of the technology that will define the next decade, from artificial intelligence to advanced computing, gets built without them. Yes, the company sits in one of the most geopolitically sensitive locations in the world, and no, I do not dismiss that risk. But I would rather own the best business in a difficult neighbourhood, sized sensibly and watched closely, than settle for a lesser company for the sake of an easier story. Conviction means owning the thing thatmatters, and understanding the risk you are taking to own it.

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Around that anchor sits what I think of as the engine room of the portfolio. Nvidia, Advanced Micro Devices, ASML, alongside the large platform businesses like Microsoft, Alphabet, Amazon and Meta. Together these represent our belief that the build- out of artificial intelligence and the infrastructure beneath it is ,not a passing enthusiasm but a genuine, multi-year shift in how the world computes. That is where a meaningful share of the portfolio’s growth potential lives, and it is the part that carried a great deal of the load this year while our home market marked time.

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But an engine without ballast is just a fast way to have an accident. So the portfolio is deliberately built as a barbell. On one side, the growth. On the other, a foundation of some of the most durable, cash-generative businesses in the world. Berkshire Hathaway, at seven and a half per cent, is our great stabiliser, a collection of quality assets with a fortress balance sheet and a culture of discipline I admire enormously. Costco, at seven per cent, is a business that people keep spending with in good times and bad. Procter and Gamble, McDonald’s, Visa. These are not the names that make headlines, and that is exactly the point. They are the keel that keeps the boat upright when the growth engine runs into weather.

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And then there is a quieter thread that ran right through this particular year. We hold RTX and Northrop Grumman, two of the world’s leading defence businesses. In a year defined by geopolitical tension, those holdings were a reminder that a well-built portfolio does not need to guess the next crisis to be prepared for it. It simply needs to be diversified across the forces actually shaping the world, so that when one part of the market is under pressure, another is doing its job. That is not luck. That is construction.

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I lay all of this out not to give you a shopping list, but to show you the thinking. Every position in the Global Growth portfolio earns its place. When markets wobble, and they will, I want you to know that behind the ticker symbols sits a deliberate architecture built to endure exactly the kind of year we just had.

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Why I stay in my seat, and why you should too

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Here is the uncomfortable truth about market timing: to get it right, you have to be right twice. You have to sell at the right moment and then buy back at the right moment, and you have to do both while every emotion you have is pulling you in the wrong direction. In fifteen years I have met very few people who can do this reliably, and I am not one of them. Neither, I would gently suggest, is anyone selling you a newsletter that promises they can.

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So we do the boring, unglamorous, deeply effective thing instead. We stay invested. We diversify across geographies, sectors and the structural forces shaping the decade ahead. We rebalance with discipline rather than emotion. And we let the extraordinary power of quality businesses compounding over time do the heavy lifting. It is not exciting. It is not clever. It just works, and it has worked for as long as markets have existed.

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If FY26 taught us anything, it is that the reward for patience is not always immediate, but it is real. The clients who stayed the course through a difficult, noisy year are the ones best placed to benefit from what comes next. And I remain, as ever, deeply optimistic about what comes next.

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Looking into FY27

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I will not pretend to know what the next twelve months hold. Nobody does. I can almost promise you there will be a scare or two, a headline that makes you want to reach for the phone, a stretch where the portfolio does not move the way we would like. That is not a bug in investing. It is the feature that makes the long-term returns possible in the first place.

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What I can promise is that we will not be talked out of a sound long-term plan by short-term noise. We will keep you invested. We will keep you diversified. We will keep watching the businesses we own with the seriousness they deserve. And when the moments of doubt arrive, as they always do, we will be here to remind you why we are positioned the way we are.

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I have been bullish for fifteen years, and the world has done its level best to talk me out of it more than once. It has never succeeded, because the evidence keeps landing on the side of the optimists. I see no reason for FY27 to be the exception.

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Thank you, as always, for your trust. It is the thing we value most, and the thing we work hardest to deserve.