Pinnacle has seen funds under management (FUM) grow 20 per cent in the 12 months to June 2024, closing the last financial year at a record $110.1 billion.
In an announcement to the ASX on Thursday, the firm confirmed FUM grew $18.2 billion during FY23–24, comprising $3.9 billion in retail net inflows and $7 billion in international net inflows, and $8.3 billion from market movements and investment performance.
It recorded a net profit after tax (NPAT) attributable to shareholders of $90.4 million, up 18 per cent from the prior financial year.
Pinnacle’s share of affiliates’ NPAT was $90.8 million, up 35 per cent from $67 million in FY22–23.
Pinnacle chair Alan Watson highlighted that these results came against the backdrop of prolonged geopolitical tensions and deferred prospects for interest rate reductions over the course of the year.
“This produced challenging conditions in many asset markets that are important to us,” he said; however “the affiliates continued to respond well to these pressures”.
Some 85 per cent of Pinnacle’s affiliate managers have outperformed their benchmarks over a five-year period, he observed, with Hyperion Asset Management, Resolution Capital, Spheria Asset Management, and Longwave Capital emerging among the top performers.
Looking at the firm’s FUM over the year, retail FUM stood at $28.8 billion, up 27 per cent, while international FUM saw a considerable 77 per cent uplift to hit $18.4 billion.
Pinnacle noted net flows of $7 billion from international investors represented 70 per cent of total net flows in FY23–24.
The largest inflows were seen to be from the UK, North America, Europe, and Japan towards asset classes like global emerging market equities, private credit, private equity, private real assets, and global small caps.
“We have been deliberately investing in our international distribution capability and internationally relevant product development over the past 10 years,” the firm said in its latest results, adding this is now delivering “meaningful flow success” and establishes a strong platform for future growth.
Continued growth in private markets and other alternatives strategies, too, contributed to the latest results, it said.
Private markets FUM represented $22.8 billion or 21 per cent of total FUM at 30 June 2024 and marked an 18 per cent increase from the previous financial year.
Institutional outlook
However, the firm noted domestic institutional net outflows of $900 million amid “well known” challenges in the domestic market.
“Over the period under review, macroeconomic and geopolitical events continued to cause uncertainty in investment markets, with challenging conditions for generating new business persisting for much of the year, particularly in the Australian market,” it said.
It conceded institutional investor consolidation continues to weigh on net inflows as medium-sized superannuation funds embrace passive strategies instead for parts of their public markets portfolios “as a survival mechanism to mitigate performance risk and eviscerate cost”.
The largest super funds, however, remain committed to active management, with a combination of internal and external managers. The most notable inflows were into Australian small caps, high grade public credit, private equity, and private credit, Pinnacle said.
“Outgoing institutional investor consolidation in Australia across super, wealth, and insurance sector [is] a ‘double-edged sword,” Pinnacle said, “creating an opportunity and risk for flows”.
Looking ahead, it identified global demand for private credit “remains robust”, given risk-adjusted returns remain attractive in absolute and relative terms, while sovereign bond and high-grade active credit also remain attractive.
It added that energy transition portfolio solutions looks to be a high priority with investors in major markets across the globe, across both public and private markets.
