Pinnacle has seen the total funds under management of its affiliate investment managers increase 43 per cent to $54 billion over the 12 months to 30 June 2019.
Excluding acquisitions, affiliate funds under management (FUM) increased 25 per cent over the year. The group’s net retail inflows included $1 billion raised in listed investment companies and trusts.
On Friday Pinnacle Investment Management Group posted its financial year 2019 financial results, announcing a net profit after tax (NPAT) of $30 million, up 32 per cent from FY18.
“Pinnacle’s focus remained on continuing to support each of our affiliates and assisting them to grow their business and profitability, as well as expanding our distribution and infrastructure capabilities to support future growth,” Pinnacle managing director Ian Macoun said.
“We continue to diversify the business with new, high-quality affiliates.”
Pinnacle chairman Alan Watson noted that Spheria and Firetrail have both grown rapidly since inception, with Spheria, a small cap manager, having grown to FUM of $1.2 billion (up 70 per cent during the FY19) and Firetrail having achieved FUM of $4.4 billion from just $74 million at the beginning of the financial year.
“All of our longer established affiliates have also experienced FUM growth during the year, assisted by equities markets, both domestic and global, which finished the year significantly higher than they began the year, notwithstanding the substantial drop during the September – December 2018 period,” Mr Watson said.
“Firetrail and Spheria were both profitable during the year and now pay Pinnacle for the Pinnacle services of which they avail themselves.”
In August 2018 Pinnacle acquired a 35 per cent interest credit fund manager Metrics Credit Partners and 40 per cent of Omega Global Investors in July.
Metrics raised $845 million in LIT funds over the FY19.
Pinnacle’s aggregate affiliate revenues grew 41 per cent to $236.8 million and performance fees represented 6.5 per cent of affiliates revenues.
Pinnacle currently consists of 13 investment affiliates. It provides them with equity, seed capital and working capital, distribution services, business support and responsible entity services to allow investment managers to focus on delivering investment outperformance.
“There has been substantial media comment this year on challenges confronting Australian institutional fund managers, driven by continuing amalgamations of large Australian superannuation funds, the ‘insourcing’ of funds 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,” Mr Watson said.
“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,” he said.
“It is reasonable for shareholders to ask whether these represent serious problems for Pinnacle and Pinnacle Affiliates. 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.
“That is not to say that we are complacent or oblivious to them – on the contrary, we have for some years been vigilant in relation to them, and we continue to be very keen observers of (indeed, participants in) those markets, and our strategies have been designed with these trends in mind.”
Mr Watson noted that large superannuation funds continue to be willing to pay substantial fees for investment strategies and managers that produce attractive investment performance.