Investment manager Pinnacle generated a net profit after tax (NPAT) for financial year 2019 of $30.5 million, up by 32 per cent from the prior year, with its chair promising shareholders the company has safeguarded itself against changes in the market forced by large super funds.
The group’s revenue was $21.1 million, increasing by 27 per cent. Aggregate revenue with the company’s affiliates, fund managers it co-owns and operates, was $236.8 million, up by 40 per cent.
Funds under management (FUM) with Pinnacle affiliates for the year came to $54.3 billion, surging from $38 billion in FY18.
Net fund inflows totalled $6.5 billion, including $2.9 billion of retail net inflows.
Pinnacle chair Alan Watson noted “challenges confronting Australian institutional fund managers, driven by continuing amalgamations of Australian superannuation funds, the insourcing of fund management functions by some of those funds, some increased adoption of index funds, and ongoing pressure for reductions in the fees paid to fund managers.”
“Indeed, during the 2019 financial year a number of Australian fund managers have ‘closed their doors,’ with these trends partly blamed for the failure of some of those firms,” Mr Watson wrote in his letter to shareholders.
“While these trends do impact us to some degree, we believe it is important that shareholders see these in perspective and recognise that their impact on Pinnacle is likely to be modest over the foreseeable future.”
He added the company would continue to evolve in response to market developments, with a diversified client base, growing retail FUM, increasing aggregate fees and its affiliates restricting capacity wherever appropriate – leaving them better placed to place higher fees in capacity-constrained strategies.
“Large superannuation funds continue to be willing to pay substantial fees for investment strategies and managers that produce attractive investment performance,” Mr Watson said.
He also commented the company would continue to diversify its asset class offerings as well as the markets it branches into.
Pinnacle is aiming to grow its affiliates with increase investment in distribution channels and infrastructure.
The two newest affiliates, Riparian Capital Partners and Longwave Capital Management, commenced this year.
Earnings per share for FY19 were 18.3 cents, up by 28 per cent from 14.3 cents the year before. The board declared a fully franked final dividend of 9.3 cents a share.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
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