Proprietary Data - Strategic AI Advantage

Insync Fund Managers

December 2024

Proprietary data sets provide businesses with competitive advantages due to their uniqueness, quality and relevance. They are often more specific, accurate, and tailored to a company's particular needs or industry, providing a rich data source for AI algorithms.

RELX Plc is a global provider of information-based analytics and decision tools providing products that help researchers advance scientific knowledge across medical, legal, financial services, and government sectors.

They recently showcased their Legal division's advancements highlighting cutting-edge AI-enabled tools like Lexis+ and its next-generation AI assistant, Protégé. This division underwent a remarkable transformation, shifting from print and basic electronic reference services to advanced analytics and decision-making platforms. Growth rates have accelerated by 14%, with the division now targeting an 8% growth rate by 2025.

RELX's competitive advantage lies in its extensive proprietary datasets, leading brands, and a robust installed user base. Analysts increasingly recognize RELX as an AI beneficiary.

By integrating RELX's vast 100+ billion document datasets with clients' internal knowledge, their AI assistant addresses legal professionals' top demands, enhancing productivity. This unlocks a 20% total addressable market (TAM) expansion.

At Insync, we see RELX as a prime example of technology driving structural growth. The company's accelerating growth and discounted valuation relative to peers underscore our conviction, making RELX one of our key holdings.

Funds operated by this manager:

Insync Global Capital Aware Fund, Insync Global Quality Equity Fund

Disclaimer
Equity Trustees Limited ("EQT") (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the Insync Global Quality Fund and the Insync Global Capital Aware Fund. EQT is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). This information has been prepared by Insync Funds Management Pty Ltd (ABN 29 125 092 677, AFSL 322891) ("Insync"), to provide you with general information only. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither Insync, EQT nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product.

Hedge Clippings | 13 December 2024

As soon as Governor Michele Bullock had given the first indications of a softening of the RBA Board's stance on inflation, and with it the possibility of a rate cut, markets responded by factoring in 2 cuts prior to the election. Of course she still cautioned that inflation remained too high, and the outlook remains uncertain - standard fare for post board meeting comments.

How much of that softening in tone has been as a result of pressure from your boss, The Treasurer, will probably never be known. And for those who think the RBA Governor's role is independent, just consider who appoints them to the role. If you're dependent on that, you're not independent, and they're the boss!

However, market enthusiasm was dampened pretty quickly by Thursday, with the ABS announcing that the November unemployment rate had fallen to just 3.9%. The RBA has previously indicated unemployment would need to be 4.5% or above to dampen demand, and hopefully inflation. So back to the uncertain outlook, and with the Board not sure to meet again until the third week in February, when at least they'll have CPI data for November and December to chew on.

Of course, the other additional information they'll have by then is almost a month of Donald Trump's presidency, an issue that Deputy Governor Andrew Hauser focused on in a speech this week, particularly referring to the potential for a tit-for-tat trade war between the US and China, and for that matter other countries, and the effects on Australia. While noting that nothing can be ruled in or out (particularly true when it comes to Trump) Hauser did emphasise that among a long list of 35 world economies, Australia is the least exposed to the negative effect on GDP of a 10% additional US import tariff.

This is also reinforced by this week's article from PinPoint Economics, Part 2 of Risks and Issues for 2025 which is included below. PinPoint are suggesting we shouldn't look for a rate cut any time soon - in spite of other central banks cutting theirs.

One interesting chart in PinPoint's analysis is titled "Measures of Misery", a term we hadn't been introduced to before - at least not in stark economic statistical terms. PinPoint's growth scenario depends on consumers opening their wallets again, however noting one certainty - at the end of 2024 consumers are miserable, and that the Enhanced Misery Index (based on a mix of CPI, unemployment, debt, and rents) is at the high end of the range over the past 30 years!

Bank Hybrids and Franking Credits:

Meanwhile back to the Treasurer's wish for influence on the RBA. Certainly no such independence across at APRA, in spite of protestations from head honcho John Lonsdale that this week's decision announcing the phasing out of Bank Hybrids by 2032 was to protect retail investors and ensure stability of the banking sector in times of stress.

The decision was clearly a result of a directorate from Treasury (and presumably the Treasurer) with the intention of removing the $1bn per year in franking credit benefits from retail investors. To add insult to injury, APRA claimed that the submissions they invited from those in the industry were broadly supportive of APRA's move.

Nicholas Chaplin, Senior Portfolio Manager at Seed Funds Management, whose Hybrid Income Fund has returned 8.52% over the past 12 months, noted that that the move also significantly reduces direct access to listed fixed income opportunities for Australian retail investors, and that professionally managed funds will no doubt benefit.

Bill Shorten tried unsuccessfully to abolish franking credits on equities for mum and dad investors and pensioners, and in doing so lost the 2019 election, and his tilt at the Lodge. At the time, Hedge Clippings penned a poem warning "Wee Willy Short-One" that those investors and pensioners would vote - as they did - and also that Albo was breathing down his neck - as he was!

The net result is that potentially the $43 billion in hybrids will now be forced into riskier bank equity, with potentially lower returns. That's great for the stability of the banking system in a crisis, but also an indication that when it comes to franking credits on equities, the government - or this government - still has its eyes on them.

News & Insights

How Trump will impact equity markets | Magellan Asset Management

Mixed market sentiment for 2025 driven by global geopolitics and central bank easing cycles
| Bennelong Funds Management

Risks & Issues in 2025 - Part 2 | PinPoint Macro Analytics

November 2024 Performance News

Skerryvore Global Emerging Markets All-Cap Equity Fund

Airlie Australian Share Fund

Bennelong Concentrated Australian Equities Fund

Altor AltFi Income Fund

Bennelong Twenty20 Australian Equities Fund

Argonaut Natural Resources Fund

4D Global Infrastructure Fund (Unhedged)

Bennelong Emerging Companies Fund

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Trump trade 2.0 - Who is going to buy all this stuff?

Challenger Investment Management

November 2024

Funds operated by this manager:

Challenger IM Credit Income Fund, Challenger IM Multi-Sector Private Lending Fund

For Adviser & Investors Only

Disclaimer: The information contained in this publication has been prepared solely for solely for the addressee. The information has been prepared on the basis that the Client is a wholesale client within the meaning of the Corporations Act 2001 (Cth), is general in nature and is not intended to constitute advice or a securities recommendation. It should be regarded as general information only rather than advice. Because of that, the Client should, before acting on any such information, consider its appropriateness, having regard to the Client's objectives, financial situation and needs. Any information provided or conclusions made in this report, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of the Client. Past performance is not a guide to future performance. Neither Fidante Partners Limited ABN 94 002 895 592 AFSL 234 668 (Fidante Partners) nor any other person guarantees the repayment of capital or any particular rate of return of the Client portfolio. Except to the extent prohibited by statute, Fidante Partners or any director, officer, employee or agent of Fidante Partners, do not accept any liability (whether in negligence or otherwise) for any errors or omissions contained in this report.