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228. Bull, Bear & Beyond – The Law Debenture Corporation: executive interview
1 Plays2 seconds ago
In this interview, Denis Jackson, CEO of The Law Debenture Corporation (LWDB), and Laura Foll, from Janus Henderson, co-manager of the investment portfolio with James Henderson, discuss the investment trust’s differentiated structure, how this has delivered consistent outperformance and its expected resilience in more uncertain economic and market conditions. We recently reviewed LWDB’s 2025 financial performance, a year in which it built on its long-term record of outperformance versus its broad UK equity market benchmark and peers in the AIC Equity Income sector, which extends to multiple time periods. As Denis notes, the trust has outperformed its benchmark in 21 of the last 26 years. We believe LWDB’s unique combination of a UK investment trust and a cash-generative professional services operating business is core to this performance, with resilience built around diversification and active management. Detailed performance data is shown in the April 2026 factsheet.
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About ‘Bull, Bear & Beyond’
Bull, Bear & Beyond': features candid conversations with senior executives and from our own team of experts from across industries, exploring strategy, innovation, and the opportunities shaping their markets and 60-second pieces are a compressed summary of content designed to convey our message in a single, easily shareable hit.
About Edison:
Edison is a content-led IR business. We believe quality investment content should inform all investors, not just brokers. Our mission: engage and build bigger, better-informed investor audiences for our clients.
Edison covers 50+ investment trusts, read about them here: https://www.edisongroup.com/equities/investment-companies/
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Transcript
Introduction and Guest Overview
00:00:07
Speaker
I'm Martin King, financials analyst at Edison Investment Research, and I'm joined today by Dennis Jackson, who is chief executive of Law DeBenture and Laura Foll from Janus Henderson, who, in along with James Henderson, manages the portfolio of the trust.
00:00:21
Speaker
Welcome both.
Law DeBenture's Structure and Strategy
00:00:22
Speaker
Dennis, perhaps for those who are less familiar with Law DeBenture, could we just start with you you explaining what Law DeBenture is, what it's trying to achieve and how it does differ from those other trusts?
00:00:35
Speaker
So, Lorde Benchia consists of two distinct but complementary parts. The largest part is managed by Janice Henderson. That consists of 84% of the net asset value.
00:00:46
Speaker
um And that's a ah tradition traditional, but you'll understand from Laura White's differentiated portfolio of of mostly ah equities, entirely of equities, but mostly yeah UK equities.
00:00:58
Speaker
We also have 16% of our net asset value in our professional services business. So that's a private investment, that's that's not listed. And that's the bit that we believe makes us unique.
00:01:10
Speaker
From an investment perspective, which I believe is your question, the IPS business has one objective. That one objective, that one single objective is to underpin the dividend of the total proposition.
00:01:24
Speaker
So if you look at the last eight years of Lorde Ventures earnings we paid out or dividends, we paid out 294 million pounds worth dividends and 98.6 million pounds of that has been the after-tax profits of the IPS business. So if if we can produce those real cash profits in the IPS business, that's about a third that's covered about a third of the dividend over the over the last eight years. And that's our goal, to maintain and underpin the dividend of the business.
Investment Strategy and Portfolio Diversification
00:01:58
Speaker
And Laura, from from managing the the investment portfolio, what are you aiming to achieve? and And how does this flexibility impact your ability to do that? Sure, so what we're aiming to achieve is it's a simple objective, is to grow the capital and to grow the income over time.
00:02:13
Speaker
And how IPS, the independent professional services business, helps in terms of running the 84% of the NAV that's the equities portfolio is that it expands our investable universe.
00:02:25
Speaker
So what I mean by that is in any given year, we at Janus Henderson know that we've got roughly a third of the income for the trust in the bag, if you like, from the professional services business.
00:02:36
Speaker
And what that means in terms of running the portfolio and investing it is that we know we've got that income, so our investable universe is bigger because we don't need to go after the higher dividend yield shares if we don't think there's an attractive total return there.
00:02:51
Speaker
Now, if we do, we absolutely can. And I'm always keen to point out that some of the high-yielding stocks like the Tesco's of the world, the HSBC's, have been really good performers. So it's not that we ignore those areas at all. They will always be the core of the portfolio.
00:03:04
Speaker
But it's that we can also invest in much more unusual areas for an income fund. So whether that's a turnaround story like a Rolls Royce, whether it's a company at an earlier stage of their life cycle that isn't paying a dividend right now and frankly shouldn't, but might at some point in the future So it's just about having that longer list of
Global Adaptation and IPS Business Overview
00:03:24
Speaker
available stocks. And we can show that over time, that's definitely been additive to the performance.
00:03:28
Speaker
And it's a very different world today from how it looked at the start of the year and and the full impacts of the the war in the Middle East are yet to be seen. From the IPS perspective, what sort of challenges and and opportunities is that going to throw up for you?
00:03:46
Speaker
Well, I think to at a high level, one of the strengths of the IPS business is is its diversification. It's a portfolio. It's a mini portfolio business. It's just like Laura will talk about.
00:03:57
Speaker
We have quite a long list of stocks within the investment portfolio. The reality of the IPS business is we disclose three lines within the annual report. But if you actually look what underpins that, we've got between 25 30%. different revenue lines. And you're right, you talk about the world as a different place. We've also got ah a quite a geographical spread, mostly UK, but we have offices in the Americas, in Ireland and in Hong Kong as well, as and the Channel Islands. So we've got, and and if you look at our customer base last year, we billed just under 9,000 customers and 95% of those customers were for less than 50,000 pounds. So i think the point is we've got an incredibly well diversified portfolio. But to your point,
00:04:45
Speaker
different things weaken, different things strengthen. You mentioned the Middle East. It's fair to say that the Middle East, we've been managing that, if you like, on ah on a remotely, on a fly-in, fly-out basis, and that's been quite a rich vein for us. And and as you, over the last few years, we're doing, there's a ah good demand for the governance service products that we have in that region. We've done Sucuk financing out there for many years. we were seeing increased amounts of financings in that region and an increased demand for um providing company secretarial services and and even some of our safe call whistleblowing services.
00:05:23
Speaker
Clearly, we don't know, to your point, how this plays out over time, but in the short run, that's gone a little quiet. Interestingly, If you look at other parts of Central Asia, we've done a lot of work in Kazakhstan over the last few years, and now you're seeing Uzbekistan becoming increasingly investable. So we're actually doing other work there. So I think there's, if you take our UK pensions business, That would be largely from you know world geopolitics, other than if you were on the investment committee of a pension scheme, the biggest things that are and impacting our UK Pensions Business Amendment are the Pensions Act, which became law on the, um got royal assent on the 29th of April.
00:06:10
Speaker
so Long answer to your question, heavily diversified business, both geographically and by product. um i who you You mentioned that before we started filming, you'd never sit on January the 1st and think where we are on by the time it gets to the mid-year. 100% agree, but my eight years of Lord Adventure have taught me pretty much that every year. And we think of IPS as more of a speedboat than a supertanker. And it's got the ability to to move its its resources around and react to the the different pockets that are doing well and need increased allocation of of of capital and resource and potentially de-emphasize those that don't.
Market Resilience and Strategic Acquisitions
00:06:53
Speaker
And Laura, since the start of the year, interest rates are no longer going to come down. oil prices are much higher. Long bond yields of have have gone up quite a bit. And yet, you know equities have been very resilient indeed. What's going on?
00:07:09
Speaker
So I think resilience is the right word. and you're right, there there's two key debates in the market at the moment. The AI disintermediation. So before the war in the Middle East, that was the key market debate. And then you're right. So now we've had the war in the Middle East, spike in the oil price, and therefore inflation likely higher for longer, see depending on how how it resolves.
00:07:27
Speaker
And yet the market is is up comfortably in absolute terms. And at the time of filming, the trust would be ahead of that. So it comes back to diversity, exactly as Dennis was saying. So what has done well in the market would have been different than we would have maybe thought.
00:07:41
Speaker
There are obvious beneficiaries like the oil and gas producers. Some of the miners have benefited from the copper price going up. And then there have been less obvious ones like takeovers that have happened that have helped our performance in the market. So think names like Beasley and Schroder's, both of which we we held in this trust. And then further down the market cap scale, things like Senior, which was an aerospace components producer.
00:08:04
Speaker
So there are always different elements of the market doing well at different times. But I think the fact that the market is up quite comfortably in absolute terms when we're filming this is is a good demonstration of that diversity and that resilience of it.
00:08:17
Speaker
And the fact that we were starting the year and are still, the the UK market's on 12, 13 times earnings. know it would still be at a big discount to the rest of the world, whether on a sector-adjusted basis or not.
00:08:31
Speaker
And I think that's why we're seeing that takeoverber's takeover activity and also why we're seeing that resilience. And can you talk a little bit about what you're actually doing in the portfolio, the opportunities that you've seen thrown up?
00:08:41
Speaker
Yeah, so AI Disintermediation did, in our view, throw up some opportunities and we bought, with some of the takeover proceeds actually, because we'd sold the likes of Beasley after that was announced. So we bought two new holdings in the area, one being Relix and one being LSAT, the London Stock Exchange.
00:08:58
Speaker
In both cases, so those those purchases were both in February, which was really the height of that AI. debate and with things like Relics, it got to a point where the dividend yield was on a part of that of the market. So it got to a 3.5% dividend yield and it got to about a mid-teens price to earnings multiple. So really, um in our view, attractive valuation for that type of business where if you were to read their earnings releases, you wouldn't think anything had happened to that company. And it's it's our view that with things like LexisNexis that you know lawyers use and things, that that that is their data.
00:09:33
Speaker
So I think it will prove resilient. And this is just my opinion and time will have to tell. But that is their data. There's a moat around that. I think it will prove more resilient than the market was implying at that point in February when there was this huge debate happening. And and what they need to do to prove that is just to keep reporting the kind of results that they're reporting right now.
00:09:54
Speaker
But it will take time for the market to to feel comfortable about that. It is an uncertain world, but it always is every time I look at it. But it's particularly heightened at the
AI and Technology in Investment
00:10:04
Speaker
moment. um ah you've You've been through many challenging periods and and the company has performed well. Is there any, well, perhaps you could talk a bit about that performance, but also is there any reason why it should be different this time for you?
00:10:20
Speaker
Great question. And is there any reason why it should be different this time? I think you you you what i think what our excellent investment managers do every day is they look at their hand that they have every day and decide every single day if that's the right hand for them to have, and they adjust it accordingly. I think when we look at, when we think about managing our businesses, we're not complacent. You must never, ever be complacent. I think Laura's mentioned an interesting theme there, which is dominating every headline and every topic at the moment, which is, you know, the emergence of a new technology, artificial intelligence, and where that takes us.
00:10:58
Speaker
We think for Lorde Aventure that actually makes knowledge slightly cheaper. It's easier for many of us to access a broad spectrum of knowledge, but we think it actually puts ah a premium on experience and judgment and nuance and trust.
00:11:15
Speaker
I think those are key elements to Lord of Bench's journey over 137 years and we're very, very keen to make sure that we maintain and invest in those. It's not that we won't be adopting new technologies, we've we've always done that. On AI we're leaning into that where we where we believe that makes sense. There are certain um a highly repetitive low-level tasks that we're looking to to use the tool. we've We've had some success actually with respect to certain low-level coding, ah which you'll have read a lot about. We're not a software house, but like everybody, we have to knit together different systems. And we've we've found that some of the tools that we've we've been using have actually been able to achieve
00:11:58
Speaker
certain integration of systems for us much quicker than we would achieve without them. So that's encouraging. and that's But if your next question is, is how much efficiency do you gain from that? I don't know. It's like, how much efficiency gain do we get from all using emails as opposed to memos? We don't know the answer that question. We simply know that over time, if we lean into this sensibly and engage with it in and in a coordinated way, sensitive to the downsides, because you know there's a lot of data in here which you have to manage in accordance with the contractual obligations that you've got
Active vs. Passive Management
00:12:31
Speaker
around it. But there are certain things with respect to um
00:12:36
Speaker
So there's very, very definitely elements of the control infrastructure that we have to be extremely thoughtful with, and particularly when it comes to client data as well. But I think the broad answer to the question is it's that diversity play. And again, that is incredibly helpful More generally, don't want let you go without you talking about the longer term performance of the trust, which has been very good. And that, as say, has been through many different challenging periods. We've been around a long time. I mean, I like to think of it as probably this century is about as long as I go, which is now 26 years. And I think that there's a big debate out there about passive versus active management. I am an absolute evangelist for active management. My opportunities in my life I have a great set of opportunities, so I've been lucky to have some capital invests. And that has always, always been with active managers. If you look at the great work that Janice Henderson and predecessor firms have done since 2000, we've outperformed the index in 21 of those 26 years.
Closing Remarks and Future Outlook
00:13:36
Speaker
You know, that's a remarkable track record, 80% of the time. If we look at our track record over the last 10 years, and these numbers are precisely wrong, and obviously this is a moment in time, but broadly, over the last 10 years, if you'd have invested in the all share, you would have just over doubled your money. And if you'd invest in Lorde Bencher, you would have tripled your money.
00:13:57
Speaker
well Well, we'll add the performance figures to this video when it goes out and people can see that. But thank you for coming in. Interesting and insightful as usual. Thanks very much.
00:14:08
Speaker
You're welcome.