So we're going to get started. Out of respect for everyone's time, I want to start by saying welcome, and also thank you for taking the time to tune in to our presentation today. We are very lucky to have special guest speakers Shawn McIntaggart joining us from Ottawa today. And Shawn is a Senior Vise President with the investment firm, Capital Group.

And I think most of you have probably heard of Capital Group. But for those of you who haven't, it is one of the most successful and reputable investment firms in the world today. And they manage a little over $2 trillion of client assets, and they have a 90 year track record that's basically unmatched in the industry.

And the thing that I've always liked about or admired, I guess, about Capital Group is their ability to look out into the future and identify innovative trends and life changing developments that are coming. And they're able to spot these trends because of their deep bench of researchers and analysts who work in offices all over the world. And that's really the focus of Shawn's presentation today.

Instead of talking about all the obvious stuff that everyone's been talking about every day right now, we thought it would be fun and more interesting to have Sean talk about some of these big secular trends that are changing the world and how his firm is positioned to take advantage of those trends. So Shawn, Thanks so much for taking the time to be with us today. We're very excited for you to share your insights with us. And with that in mind, I will pass it over to you, Shawn, and the floor is yours.

John Arch, thank you so much. And again, I echo your comments about thanking everyone for the opportunity to share some thoughts and ideas with you today. As I was preparing for this call, I was thinking back to one of my colleagues Bill Hurt, who passed away last year at 93 or 94. And a gentleman that spent over 60 years in the investment industry.

And in 2008, he had a quote and it was this quote, "The world's never been in better shape, yet felt worse." And he shared that in 2008 and I thought about it for our call today, because I think it's really relevant. We look around the world today, we've all had to deal with COVID, and it's been terrible. It's been brutal. And yet from that, we can look out and there's some really great opportunities that are in front of us.

And actually just to make that point a little bit more concrete, it was over 80 years, almost 80 years ago, in a couple of months that the US was drawn into World War II. And then at that time, it was Pearl Harbor that caused them to do that. And when Pearl Harbor happened, believe it or not, 75% of the US artillery were driven or drawn by horses.

Let me say that again. The most powerful army in the world, the US Army, 80 years ago in 1941, 3/4 or 75% of their army was or their artillery were drawn by horses. And yet, five years later at the end of that war, they moved into the atomic age. And that unleashed a huge amount of innovation and productivity. Up until now, the likes we've never seen before.

And I reference that because, it's during these big world events that cause us to evaluate what we go forward in terms of how we do things. And more importantly, companies and businesses as they look to say OK, here's a pause. How do we force to look at ourselves? What do we do different? And that's what I want to share with you today.

It was very difficult as market participants to understand what's going to happen in the markets in the next three months or two weeks for two hours for that matter. But we do have some really great insights when we can take a look at some of these larger trends and say, OK, here are things that are going to happen. How do we invest in those companies? And that's what we've been doing as John Arch mentioned, for over 90 years.

And just to punch out one other point, you mentioned that we do have folks on the ground. We actually have 440 investment professionals all around the world from Shanghai, Tokyo, London, New York, Toronto, LA. And so the comments that I'm going to share with you today come from my colleagues who are scattered all around the world.

And so let me walk through this with you today. And what I'm going to try to do to put some color around it is share what are the big takeaways, and then some of the companies that are in the portfolio that you have exposure to just to make that point. So health care innovation will reach warp Speed. This is absolutely critical point.

Over the last couple of years, one thing that governments around the world have increased the stimulus to be able to help those that needed it the most and think gosh they did that. But that has left governments with a lot of debt. We're entering society. The world is aging, in particular, in the developed world. And there's a social contract that's written for all of us to be able to walk into our hospitals here in Canada to be served.

Well, aging population, high debt levels, hospitalization. That's not a really good combination. And in fact, something's going to have to give. And so one of the ways that governments and industry participants are really encouraged by is this the innovation that has been coming out within hospital, within the health services to build to reduce hospitalization.

I want to share two things right now, and then another one on the next page. Telemedicine is something that all of us, maybe I shouldn't say all of us. But maybe a lot of us have experience. I myself, I used it during this period. Again, S as the call we're doing today, what a wonderful way to be able to react out and reach out to your health care provider?

And what's interesting is this is having huge impact for companies like UnitedHealthcare. It's a top 10 holding within the global equity fund. And this company provides insurance and employers. And so essentially it helps by reducing the hospitalization, because hospitalization and doctor care is very expensive. And so there's one way or one area that we continue to see continuing to grow and truly impacting companies that are benefiting from that.

The more interesting side is the other side, which is the devices. My mother actually has type 2 diabetes and it's a growing concern for a lot of the world. And traditionally, what you have to do for type two is to prick to build to get your blood sugar in the insulin levels. Well, right now there's companies like Dexcom, that actually you can use a patch and through Wi-Fi, actually have constant monitoring and actually deliver the insulin when needed.

And as we can see here on the page, the expectation is over the next four years, a huge amount of growth. Because now we're finding that our phones are actually becoming the devices that we can use to track. But you might have noticed actually if you have an Apple product, I have an Apple solution, that they're asking and tracking more health care, using wearables to help understand your heart rate to monitor that.

And these are only going to increase because, again, the bigger issue is if we don't do something, we're going to have to make decisions when it comes to the social contract for delivering health care. And so you could see a huge need for governments and individuals and providers around the world to look for cost effective ways to be able to reduce that hospitalization. And those are just two. But the bigger opportunity is this one right here.

And I just want to pause because this is a pretty bold statement here, isn't? It a cure for cancer maybe around the corner. Now, I'm always a little hesitant to talk about this because I know all of us are affected by it. Personally, my family has been affected by it, my wife, she's fine. And but again this is something that we're all dealing with. And as again, we have an aging population, it continues to become just a terrible disease.

The good news is this, that 20 years ago, we broke down the human genome. And as a result of it, biotech firms pharmaceutical and companies around the world are getting really good at understanding the different diseases like cancer, and therefore, coming up with alternatives or ways to be able to cure it, as an example. It took 42 years for the world to come up with a cure for chickenpox. And yet last year, it took 44 days for Moderna to come up with a cure or a vaccine for COVID. 44 days versus 42 years.

It's the impact of the ability to be able to look at the human genome, understand what you're trying to solve for. And then using AI and big data and technology to be able to run multiple tests, to be able to do that. In fact, DNA used to be when it first was mapped out in 2001, 2000 area. It was billions of dollars. Now, it's less than $1,000 and pretty soon will be less than $100 to get a DNA mapped. And this is really exciting.

The other element is, you have more money going into research. So you could see here the US has been the dominant driver of research for the longest time. But now, we're starting to see China spend enormously. In actual fact, there's some really positive change coming from there. You see in China, they have gone through this huge growth rate over the last number of years and there's a lot of folks now that are moved up into the middle class, and that's great. And so they have options and the ability to be able to pay for health care.

Secondly, China as you look around, a lot of things have been built in China. Sadly though, that has meant a lot of pollution. And so right now in China, they have the highest percentage of cancer patients. And so there's a big time need for China to figure out to help their own citizens how do we do this? And that's all and what's great about that is the more money that's researching and trying to identify gives greater opportunity for all of us to learn and live from it.

And so some of the companies were investing in this area are company like [INAUDIBLE] which is a Danish based company. And in another company I'm going to share with you. And by the way, when I say companies, I'm using these. I have to share with you the companies I'm using just as an example, just to share or to make a point. I'm not advocating at any point that these individual stocks.

And in fact, we could be in the process of buying and selling or getting rid of them today. Again, just as an example. But a great example of how we're able to produce great results over the long term is sometimes individual company investments. Actually, most of the time when you're making an individual company investment, usually you know it's going to be a good one the more difficult it is. In other words, all great investments start in discomfort. Because you have to believe something that the market doesn't. If not the markets, would already have priced up everything.

And so an example here is a company that we own, actually is as a shareholder over, we the largest shareholder close to 20%, 21%, I believe. And that's AbCellera. And I mention it because it's a Canadian based company and they make therapeutics and they're making proteins and monoculture. So I messed that up for anyone who has a physician. But essentially, they're making the actual building blocks for biotech and pharmaceuticals to be able to build drugs on.

And right now, they have 114 relationships or partnerships with companies around the world. And so they are absolutely involved with this process. But I mentioned them in the beginning because that stock price has gone down over the course of the year. And as it has gone down, as Capital, we've continued to invest our conviction. And the reason for that is the markets tend to be short term, and that just makes that point that John Arch was making that for us entitled and trusted to look after your business, your wealth, your life savings. It's a very serious business and we need to take a longer term approach in order to continue to do that. And so I'll share that with you.

Moving along here, cash. Cash will become a distant memory. COVID has taught us a lot of things and cash in our pocket is one thing we really don't need. There's so much interaction now that are happening through e-commerce. E-commerce today globally only represents around 20% of all commerce around the world. So there's a lot of opportunities to grow. We're also finding the cash people thinking, OK, I don't want to transact with that dirt on my. And that's a little--

We have a lot of options here because we can use in Canada, we can use our debit card, we can use our credit card to tap and no big deal. But what are you doing in countries in areas like in Latin America in Argentina, Brazil? Now, becomes a little more challenging. There's a lot more, mom and pop shops. There's not as many established sort of big box stores, even though they are there. And so you start to look at companies that can provide that type of coverage.

And so one of the companies we've been investing with for a while is [INAUDIBLE]. They are a couple of Argentinean Stanford graduates who lived during a time where they saw the growth of Amazon. And they thought, heck, why don't we do this in Latin America? And that's what they've done. So they've been able to provide e-commerce, which again, is allowing for more transactions and less cash payment.

There's another company in Brazil called Peggy Chiu. I'm sure I'm mispronouncing it. But essentially with this Peg, we'll just call it Peg, this company there's a lot of unbanked people around the world that simply didn't have the access as we do to go to their neighborhood bank like RBC, to be able to get our first checking account. They are providing online banking for the unthinkable. And this is a trend we continue to see happening around the world. And that's why you're starting to see bigger growth in terms of getting rid of cash in places like Asia, the Pacific, and the rest of the world are growing faster than that of North America. And we'll continue to see that trend, let alone we haven't even talked about cryptocurrency what impact that could have.

Moving along, semiconductors. Now, when we think of semiconductors, semiconductors are really the oil of the new business. Think about everything that we do. I was just talking to Allan before, this and we talked about both our kids are going to Queens, and how it's sad to see your kid go away. It's also happy to see them go away to school. But the fact is that on a weekly basis, I have a face call with my daughter using this type of technology.

Well, reality is, everything that we have from cars as we're finding, to toasters to household to everything, there is a chip going into it and that's driving enormous amount of opportunities. And so one of the ways that we think about investing in this type of area is really to take a look at becoming owning the picks and the action of shovel so to speak using a reference to the prospector days the. Person that got rich was not the person prospecting for gold, but the person selling the shovels and the axe and all the tools that are necessary.

If we take a look at the fund that you guys are invested in with the Global Equity, that mandate today the two largest holdings are a company called Taiwan Semiconductor, and ASML. Taiwan Semiconductors one of three of the world's major fabricators or the printers of the makers of semiconductors. In fact, 20 years ago, there was well over 20 fabrication semiconductors around the world. And then what happened is over the last 21 years, those companies went out. And in fact so we're left with only three companies today that are the major fabricators of semiconductors around the world.

Taiwan Semiconductors Samsung, which basically eats a lot of their own cooking so to speak. And third, Intel which Intel incidentally, outsources to Taiwan Semiconductor for more the advanced semiconductors. And so that gives you an example. But just a further punch up this area, because semiconductors are the new oil, so to speak and the reason is cloud technology. We are able to host this type of call today and be able to operate without losing a beat, because of cloud technology.

Well, cloud technology is only in the mid-teens. And if there's any questions, we can certainly follow up with this. But one of the greatest outcomes that's coming from this is cloud technology is the new railway that allowed him multiple new businesses to be able to attach to and to grow. And we would expect more companies to be created using cloud technology.

Again, I'll give you two examples that are Canadian. One of my hometown here in Ottawa, Shopify. Shopify has really helped small businesses turn from a storefront to having an online presence like that. And they're able to do that because Shopify is their system is really smart, it's able to attach the cloud. That's enabling a whole bunch of work.

Another company Lightspeed, I'm not sure if you've heard of this company. But this possibly could be the next Shopify here in Canada. They're are Montreal based company and they do POS, Point Of Sales. And so I first came involved with them, not in our portfolio, but trying to set up a golf game with some buddies and I used their site through the local golf course to book.

But again, all these different services have been created because of cloud. And the nice thing is it's actually leading to greater growth and opportunities outside of North America. And cloud is going to enable it. Again, and it's because there are more semiconductors going into everything. I'm going to skip over a couple of these, because I want to make sure that we make this. Brevity is a true point here. I can certainly go back and cover some others.

But the two others that I really wanted to make sure that I spent a couple of more minutes on, one is electric cars and the other one is renewables. Over the course of the next decade, we are going to see a transition and transformation from how we drive. Electric cars primarily driven right now by Tesla. If you go to anyone today, you say, hey, I want to get an electric car, most likely they're going to reference Tesla.

In fact, earlier this week it might still be today, Tesla is actually another trillion company. And they are the highly valued car company in the world today. And part of it is the fact that electric cars are becoming a lot more affordable. And so the cost of batteries have come down dramatically over the last number of years. And the expectation is by 2024, 2025 that batteries will get to a point where manufacturers can build a car for the price of a Camry, which is the most popular sold car in North America, believe it or not.

In my area, it seems to be F-150, but maybe I don't live in a Camry country. But Camrys and the reason is that if you can get a car for $30,000 that has a range of around 500 kilometers, you've got a winning formula. Electric cars simply are just more cost effective, because there's less moving parts. So therefore there's no oils and engines that go into. You get more acceleration if that's something you're into. And so there's a real mad rush right now to be able to figure out how do we invest into these areas.

One way is to think, OK it's this Tesla that we want to own. They've made it, let's sit back and just own them. And we do on a little bit of time within the portfolios. But it's really hard to go out and buy more Tesla today at the price of the valuation. Another way to think about it from us is this is the biggest opportunity we think. In actual fact with the largest shareholder of this company as well is GM.

Now, GM is a company that has changed and thought about how they're going to operate going forward. By 2035, they've committed to having no combustible engine cars sold or at least most of them are going to be on the way out. And part of the reason why GM, Apple, Google, Volkswagen, everyone wants to do this there's demand. But also, it's eyeballs. If we think about the growth of the phone in terms of our ability and company's ability to build and sell products and services because of this right now, this is fantastic.

But imagine if a person put you in a car for a five hour ride from here to Toronto for me, or maybe a 12 hour drive for me to Pei as I did in the summertime and had a fabulous time. Wow, what are the services could you sell? You would be able to sell insurance. You'd be able to understand and sell entertainment. That commitment, that connection to eyeballs is absolutely what's driving electric cars. And that's why companies from BMW to Volkswagen to Google to Amazon are all trying to get into a piece of this action.

So again, John Arch also mentioned about having-- talking about things that aren't obvious. Another area that we're also invested in here that's not an obvious is companies like Nidec. Nidec is a Japanese company that first off made little engines, little motors for computers. Then they moved into making motors and stuff for other devices. And now, they're making electric motors. It's companies like that. It's really thinking entertainment in terms of how we order it. And so this will continue to be a drive. And again, there's multiple ways in which we are investing in this from, again. GM through Nidec, through companies called Shipeng in China, to even having preferred shares of Volkswagen, which have done incredibly well this year.

And then just to keep with timing, the last thing I want to share with you is renewable. And I think this might be a little bit of a contentious type of conversation if we were having this in person, because it's a really interesting time. Here we are today, energy prices are the best producers this year. If you had a portfolio that had 100% energy, you're probably up close to 100% return in your portfolio, congratulations.

And they did so poorly last year because, again, people stop flying, they stopped driving. Yet if we look around the world today, there is a commitment and a realization that climate change is real. And there's a commitment from governments and businesses around the world to say, we need to make a change. Because if we can continue to operate as we are right now, we will increase the temperature, which will have dramatic impact in terms of weather patterns, crops, livelihoods, and so on and so forth. This is not a scare tactic, it's just reality.

And so when we think about it today, there's a trifecta that's happening. And the reason why as investors, we think this is going to be an opportunity over the next 20 to 30 years of worth investing. When it is you have falling renewable costs, you have energy policy changes, and you have economic stimulus that is happening. And all this is coming together what we call it the Green Trifecta, that are really forcing and helping and changing and focusing.

Renewable falling costs, I wrote this down here in a piece that just came out. Over the last eight years, from 2010 to 2018, the cost of offshore wind has gone down 21%. The cost of solar has gone down 77%. And according to our analysts, the amount of money that is being spent today on green hydrogen is indicating that over the next 5 to 10 years, not today, that green hydrogen once it comes on strong, could lead to further reduction.

The biggest-- you can ride a car, but how do you power that car? There's no way anyone's going to get into a plane today that's full of electric. What do you do, right? There's some industries and areas that you just simply need a better fuel source than what's available. And green hydrogen seems to be one of the areas that continues to come up as a viable option to be able to help solve the problems that we are chatting about. And at the same time, drive productivity.

Energy policy. Whether that's from governments, whether it's from pension funds. So a large Dutch pension fund just announced today or yesterday actually, that they are no longer to own fossil fuels. That that's a $15 billion euro drop that they're going to do. And we're starting to see that and have seen that from a lot of companies around the world or pension plans.

We're also finding countries and companies, I should say, that are being forced to change. Exxon had some board members that were evaluated to their board that have now said we're going to shift. So you're seeing them all that to say is over the next 10 years, the expectation is $3.7 trillion is being committed to actually energy policy.

Stimulus. We're seeing that from China to the US to Canada to Europe. A commitment from governments to say we need to build an infrastructure. We could see more electric cars, we need to make sure there's infrastructure there. And stimulus we can use that for new jobs. And so that's another $2 trillion. So essentially you have call it $6 trillion over the next 10 years that's being spent on renewables on different ways.

And so what I thought I'd share with you and end with on this side is, again, using John Arch's request, not to show the obvious. But if we think about it. How do we invest in these areas? Well, some of them are in the utility companies in Europe. Companies like Enel, companies like Engie, French company or Iberdrola from Spain, who are becoming leaders in using solar and different portfolios. Or it's companies like Orsted, who is the world's largest offshore wind farm operator. The stock has had a tough time this year. As an organization, Orsted we're up-- I had the numbers down here, I think we're up like five, six times on Orsted since we bought them.

But two other names that I-- three other names I want to share with you that or two other names that I think are really interesting, one is buildings. Everyone, you're in a building, everyone is in a building. Buildings represents, emit sort of like 25% to 30% emissions around the world. Well, obviously we can't crush down and rebuild buildings, it's impossible.

So what buildings are looking to do is how do they become more efficient? So another company we invest in is a company called Carrier Global, you're probably familiar with them, they're the HVAC, heating and exchange companies. And so what's interesting about them is they've come up with a more efficient way to be able to heat and cool buildings. And so as buildings again continue to look for more efficiencies, we feel that there's a huge opportunity for Carrier Global to be able to benefit from that.

And then lastly, copper. As we need to rewire and work with this, owning companies like Rio Tinto, owning copper manufacturing becomes really important to be able to help harness and to be able to participate in some of this.

So I talked for 32, less than 32 minutes but let me just close it off there but today we talked about again I started the conversation, said that the world has never been in better shape yet felt worse. I hope what I shared with you today is some really strong opportunities and trends that we see that are going to be evolving. That doesn't mean it's a straight line up, nothing is, but evolving over the next 10 years.

And the benefit to investors is by choosing any individual company you may be right but what's the benefit with owning the Capital is that what we've been able to do for the last three years is produce compounded returns of 16% versus the market of 11. Over five years of 15% versus 12 versus the market after fees.

I guess what I'm trying to say is we have a system of process that has been thinking long-term and investing accordingly. And that's exactly what we've done for the last five years and it's exactly what we'll do for the next five. And so we hope you find this helpful, and Allan, sir, I'll pass it back over to you unless there's any questions you'd like me to touch base on?

Thank you. Thank you, Shawn. And it's always wonderful to have you and giving us your time and the firm's perspective on how the future is looking. And obviously, some bigger, longer-term trends that are occurring as we speak and they're very exciting and it's the concept of research being done on cancer and coming up with cures is wonderfully exciting.

I'd like to just ask one question and we'll kind of conclude, and we ask this of all of our guests that we're speaking to over the last number of months, and it's really a very simple question, although I think it's a challenge for most investors today. And so there's a few things at work in the current environment, the current backdrop that we're living in today.

So the average investor that's listening in today is trying to generate an above-average return and grow their money or maintain the growth of their principal as they retire. So that's the general investor today is saying, hey, I must try to make a good return and you mentioned some of the returns of the past. So very good. I'd say so far so good, well done, Capital Group. Well done some of the people we're working with.

So as we reflect and we look today, interest rates have never been lower, I guess you could say six or eight months ago they were lower. But if you look at 1.6% 10-year Treasuries, similar in Canada, the interest rates have never been lower and it looks like we're hearing that it wouldn't be unlikely that they go up a bit over the next few years, even if it's modestly.

We have some of the major equity stock market indexes like the S&P 500 fully valued, and some would say even overvalued. So you have interest rates extraordinarily low, you have valuations on some of the major stock indexes that people think about being fully valued. And then, of course, we're hearing every day and we're living it every day, this thing called inflation.

So people going to buy butter that's $7, and we're hearing it gasoline at prices we've never seen in our lives. And of course, inflation is alive and well as the economy continues to recover from COVID at faster rates than normal. So the question really is with low interest rates and fully valued stock markets, inflation kind of biting at everybody's backside, how is Capital Group positioning portfolios today, and what are the key things that you and your teams are doing to ensure that the returns over the next one, three, and five years are much like we've seen in the past number of years?

Yeah, good question, Allan. And all those issues that I made that comment, it still feels world's never been in better shape, yet felt worse. You highlighted things that could feel worse. Like in terms of what price point and inflation, which we believe actually is going to be a little more sustainable going forward than what the markets are anticipating. So what we're doing is what we've always done, is individual research.

And the one thing I think that sometimes gets lost is a lot of these companies that we highlighted today really have profit margins that are high. We're not talking about people that are selling low-margin products that can't make any-- that there's not a lot of profit there. And so if we can identify and find these right companies we believe that we could continue to operate as we've had for the last 90 years.

But having said that, the major changes to answer your question pointedly, we have significantly reduced our US allocation. The US has been the best market for the last 12, 13 years. And so the market index I think is something around 60%. Currently Capital Group we have 40% of our portfolio-- of this portfolio invested in the US. So we're seeking out better value opportunities that are outside of North America. And if we look at the international markets to be quite honest, I think the US markets are up something like 300% since 2008 and the international markets are up 100% since 2008. So our fishing pond and pool that we're going to is an area that's not as competitive as it is in North America where again, the valuations you talk about are extremely high.

Well, I think that's what we here are doing with clients is we're ensuring that we're preparing for a potential wind that's going to blow into the faces of investors, be it bond investors, stock investors. We haven't seen interest rates go up in any meaningful way for any period of time in most of our investors' lives, as the last 40 years interest rates have dropped by from a 15% 10-year to all the way to 1.5%. So if interest rates do move forward and inflation does click along a little more than we would like, we here are ensuring that we have investors like the Capital Group's that are making sure they're focusing on companies that are not overpriced and that are continuing to grow, that can continue to grow forward even if we get a bit more wind in the face.

So with that, Shawn, listen, I'd like to thank you again for your time and your firm's perspective, very valuable. We wanted to keep this fairly short and concise. So thank you again for your time. As the screen mentions, we would not be here without you our very valued clients. So as always, thank you for your continued business and trust. We will continue to work diligently to earn it. So thank you all today for your time and we will all see you soon.

Thank you. Have a great day.

Take care, everybody.

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