Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Wilsons Sydney Rapid Insights Conference 2019
64 slides from Pinnacle Investment Management's conference presentation, Nov 14, 2019
Slide 1: Rapid Insights Presentation ASX lodgement
14 November 2019 For personal use only By electronic lodgement The Manager Company Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Rapid Insights Presentation Pinnacle Investment Management Group Limited is pleased to attach a copy of a presentation that will be given to investors and
Slide 2: Investor Presentation – Wilsons Sydney Rapid Insights Conference, Nov 2019
For personal use only PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) Investor Presentation – Wilsons Sydney Rapid Insights Conference, Nov 2019 Ian Macoun – Managing Director Alan Watson – Chairman Adrian Whittingham – Executive Director
Slide 3: Disclaimer
Disclaimer • This presentation has been prepared by Pinnacle Investment Management Group Limited (PNI). The information in this presentation is current as at 20 November 2019. For personal use only • This presentation is not an offer or invitation for subscription or purchase of securities or a reco
Slide 4: Latest Update
Latest Update FUM at 31 October 2019 of $57.3 billion, compared with $54.3 billion at 30 June 2019 For personal use only • • S&P/ASX 300 index up 0.8%; MSCI World index up 2.1% in the four months to 31 October 2019 • MOT raise of $45m • Zenith Fund Awards success with Pinnacle awarded Distributor of
Slide 5: Agenda
Agenda For personal use only • Chairman’s address – Alan Watson • Managing Director’s Address – Ian Macoun • Secular Trends Facing Our Industry – Impact on Distribution – Ramsin Jajoo • Q&A
Slide 6: Chairman's Address
For personal use only CHAIRMAN’S ADDRESS Alan Watson, Chairman
Slide 7: Chairman's address
Chairman’s address For personal use only • Building a resilient, diversified business • Diversity of asset classes under management • Diversity of sources of Funds Under Management • Medium term track record • Review of progress since becoming a ‘pure play’ Funds Management Group in 2016 • Future gr
Slide 8: Building a resilient, diversified business
Building a resilient, diversified business For personal use only Resilience has been enhanced by: 1. Diversity of asset classes 2. Diversity of sources of FUM 3. Percentage of FUM exposed to performance fees 6
Slide 9: Diversity of Asset Classes under management
Diversity of Asset Classes under management CONTINUING TO INVEST IN A DIVERSIFIED PLATFORM TO STRENGTHEN FUTURE GROWTH • Executives of both Pinnacle and Pinnacle Affiliates have For personal use only significant equity interests • Equity ownership enhances alignment with shareholders Seed FUM and wo
Slide 10: Adding quality affiliates
Adding quality affiliates For personal use only A specialist debt fund manager, offering investors actively managed access to attractive risk-adjusted returns in private debt markets Smart beta, factor investing and client solutions (including ESG) capabilities High conviction investment manager of
Slide 11: Diversity of Sources of Funds Under Management
Diversity of Sources of Funds Under Management For personal use only 1. Institutional – Domestic 2. Institutional – Offshore 3. Retail – Intermediated 4. Retail - Direct 9
Slide 12: Australian Institutional Funds Market – Challenges and Mitigants
Australian Institutional Funds Market – Challenges and Mitigants For personal use only • Trends – Amalgamation, ‘Insourcing’ and some increase in ‘passive’ (index) funds • Pinnacle response: • Client base diversity (78 institutional separate accounts, 95 institutional separate accounts; the largest
Slide 13: An Unusual Year in the Retail Market
An Unusual Year in the Retail Market For personal use only • Royal Commission • Federal election • Geo-political concerns • US-China Trade Conflict • Brexit • Hong Kong • Consequence: Too early to predict medium term effects, but lower inflows short term • Pinnacle response: We have a diversified sk
Slide 14: Growth in Retail FUM
Growth in Retail FUM For personal use only Retail FUM evolution Total FUM 30 Jun 13: $10.8bn Total FUM 30 Jun 19: $54.3bn Retail: $0.9bn Retail: $11.6bn Retail Retail 8% 21% $10.8bn $54.3bn Institutional 92% Institutional 79% • Pinnacle has invested significantly in retail distribution and has gener
Slide 15: Growth in Performance Fee FUM
Growth in Performance Fee FUM For personal use only FUM subject to performance fees Total FUM 30 Jun 16: $19.8bn Total FUM 30 Jun 19: $54.3bn Subject to performance fees: $3.3bn Subject to performance fees: $16.3bn Perf fees Perf fees 17% 30% Subject to Subject to Performance Fees: Performance Fees:
Slide 16: Progress since 2016
Progress since 2016 For personal use only Pinnacle is a multi affiliate investment management firm with a mission to establish, grow and support a diverse stable of world-class fund managers Goals and strategy stated in 2016 Progress Continue to provide high quality distribution, 7 Affiliates, now 1
Slide 17: 2019 Financial Highlights
2019 Financial Highlights For personal use only • NPAT from continuing operations attributable to shareholders of $30.5 million, up 32% from $23.1 million in the prior year • Earnings per share from continuing operations of 18.3 cents, up 33% from 14.3 cents in the prior year • Share of NPAT from Pi
Slide 18: Fully franked dividend yield AND earnings growth
Fully franked dividend yield AND earnings growth For personal use only • 15.4 cents per share Fully Franked dividends FY19 • Up 67% pa from 3.3 cents in FY16 • Ample franking credits ($28.8m at 30 June 2019) • Shareholders appreciate dividend income (in addition to earnings growth) • Earnings have g
Slide 19: Future Growth – Measured
Future Growth – Measured For personal use only • Investment in distribution platform • Grow ahead of our Affiliates • Listen to clients and move quickly to meet their evolving needs • Do not become the market – be ahead of it • Investment in new affiliates adds diversification • Global equities (dev
Slide 20: Future Growth – Ready for Opportunities
Future Growth – Ready for Opportunities For personal use only • $51.2m of cash and principal investments at 30 June 2019 • Includes $23.2m invested in strategies managed by Pinnacle Affiliates • Excludes nearly $6m of cash applied for Affiliate equity recycling loans, working capital loans (Two Tree
Slide 21: Managing Director's Address
For personal use only MANAGING DIRECTOR’S ADDRESS Ian Macoun, Managing Director
Slide 22: Managing Director's Address
Managing Director’s Address For personal use only • Group financial summary • Enhancing the platform – strength, stability and reputation • Diversified platform • Enhanced opportunities for growth • Pinnacle affiliates continue to win major industry awards • Continuing strong investment performance
Slide 23: Group financial summary
Group financial summary For personal use only • Group NPAT from continuing operations of $30.5m, compared to $23.1m in FY18, an increase of 32.0% FY2019 ($M) FY2018 ($M) YoY change • EPS from continuing operations of 18.3 cents per share, PINNACLE compared to FY18 EPS of 14.3 cents per share Revenue
Slide 24: Significant components of FY 2019 results
Significant components of FY 2019 results For personal use only • Continuing growth in ‘Pinnacle Parent’ revenues and costs • Significant ‘P&L’ investment in support of Horizon 2 initiatives (including Offshore distribution, ETF, Direct to retail consumers, new Affiliates) • Net gains on principal i
Slide 25: PNI balance sheet
PNI balance sheet For personal use only FY2019 ($M) FY2018 ($M) YoY change CURRENT ASSETS Cash and cash equivalents 26.7 9.3 187.1% Financial assets 24.5 22.1 10.7% Total cash and financial assets 51.2 31.4 62.9% • Cash and Principal Investments of $51.2 million Other current assets 18.3 12.6 • Incl
Slide 26: Enhancing the platform - strength, stability and reputation
Enhancing the platform - strength, stability and reputation For personal use only • Stable & diversified platform • Continuing investment excellence • Widespread industry recognition and support • ‘Article of faith’ reputation • Further investment in distribution capability • Direct to retail • Inte
Slide 27: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 2019 Zenith Fund Awards: 2018 Lonsec/Money Management Fund Manager of the Year: For personal use only • Pinnacle – Distributor of the Year (fourth consecutive year) • Resolution Capital – Global REIT Category Finalist • Resolution Capital – G
Slide 28: Continuing strong investment performance of Affiliates
Continuing strong investment performance of Affiliates 5Y 10Y Incepti on Incepti on da te PINNACLE INVESTMENT MANAGEMENT For personal use only Hyperion Asset Management - Gross P erformanc e Hyperion Australian Growth Companies Fund 11.59% 11.12% 12.72% 01 Oct 2002 Outperformance 3.04% 2.88% 3.27% H
Slide 29: Affiliates' investment performance – October 2019
Affiliates’ investment performance – 31 October 2019 1Y 3Y 5Y 10Y Incepti on Incepti on da te PINNACLE INVESTMENT MANAGEMENT For personal use only Hyperion Asset Management - Gross P erformanc e Hyperion Australian Growth Companies Fund 24.59% 13.67% 11.59% 11.12% 12.72% 01 Oct 2002 Outperformance 5
Slide 30: Affiliates' investment performance – October 2019
Affiliates’ investment performance – 31 October 2019 1Y 3Y 5Y 10Y Incepti on Incepti on da te PINNACLE INVESTMENT MANAGEMENT For personal use only Spheria Asset Management - Gross P erformanc e Microcap Fund 11.08% 10.42% 13.67% 16 May 2016 Outperformance -3.33% 0.04% 3.68% Smaller Companies Fund 10
Slide 31: FY19 funds under management
FY19 funds under management For personal use only Gross FUM growth ($bn)1 Gross FUM growth ($bn) • FUM of $54.3bn as at 30 June 2019 (increased to $57.3bn as at 31 October 2019) • FUM has grown at a CAGR of 34.6% p.a. over the last ten years (31.0% excluding $6.8bn ‘acquired’ in July 2018) • Increas
Slide 32: Pinnacle Affiliates financial highlights
Pinnacle Affiliates financial highlights For personal use only Strong FUM and revenue growth in Pinnacle Aggregate affiliate revenues ($m)1 Affiliates: • Total affiliates’ revenues of $236.8m, including $15.3m (6.5%) in performance fees. In FY18, total affiliates’ revenues of $168.4m included $17.2m
Slide 33: Pinnacle Charitable Foundation
Pinnacle Charitable Foundation For personal use only • Pinnacle is passionate about enabling better lives through investment excellence. This belief is strongly demonstrated through Pinnacle’s commitment – together with the Affiliates – to the Pinnacle Charitable Foundation to drive positive, long t
Slide 34: Recap on Horizon Criteria – What could we acquire?
Recap on Horizon 3 Criteria – What could we acquire? For personal use only Criteria • Must not place the Company at risk • Only consider if low risk and high return on capital • Exercise great care and careful due diligence • Must be synergistic with existing core • Few will meet this test Status •
Slide 35: Secular Trends Facing Our Industry
For personal use only SECULAR TRENDS FACING OUR INDUSTRY Ramsin Jajoo, Head of Retail Distribution
Slide 36: Australian market – who moved my super?
Australian market – who moved my super? For personal use only Investment Management • $3.6 trillion • #7 largest in the world • #1 Asia Pacific Superannuation • $2.8 trillion • #4 largest in the world Source: ABS & APRA as at 31st March 2019 34
Slide 37: Australian market segmentation
Australian market segmentation For personal use only Self directed 28% • $749 billion • 600,206 SMSF’s Engaged (Intermediated) 44% • $1.2 trillion • 187 superfunds Disengaged (Institutional) 28% • $747 billion • 187 superfunds Source: ABS & APRA as at 31st March 2019, Pinnacle Estimates 35
Slide 38: Consolidation of the Australian market
Consolidation of the Australian market For personal use only Corporate Superfunds Source: ABS & APRA as at 31st March 2019 36
Slide 39: Institutional – consolidation and convergence
Institutional – consolidation and convergence For personal use only Retail Superfunds Industry Superfunds Public Sector Source: ABS & APRA as at 31st March 2019 37
Slide 40: Fragmentation of the Australian market
Fragmentation of the Australian market For personal use only Self Managed Superfunds Source: ABS & APRA as at 31st March 2019 38
Slide 41: Fragmentation of the Australian market
Fragmentation of the Australian market For personal use only $250 billion • Accountants Self directed $250 billion 28% • $749 billion • Advisers • 600,206 SMSF’s $249 billion • Individual (DIY) Source: ABS & APRA as at 31st March 2019, Pinnacle Estimates 39
Slide 42: Fragmentation of the Australian market
Fragmentation of the Australian market For personal use only $750 billion • Advisers Engaged (Intermediated) 44% • $1.2 trillion • 187 superfunds $450 billion • Individual (DIY) Source: ABS & APRA as at 31st March 2019, Pinnacle Estimates 40
Slide 43: Fragmentation of the Australian market
Fragmentation of the Australian market For personal use only $250 billion $700 billion $1 trillion $747 billion Accountants Direct Investors Advisers Institutional Source: ABS & APRA as at 31st March 2019, Pinnacle Estimates 41
Slide 44: Megatrends
Megatrends For personal use only Digitalization Regulation Personalization 42
Slide 45: Megatrends
Megatrends For personal use only Digitalization Regulation Personalization 43
Slide 46: Artificial intelligence
Artificial intelligence For personal use only Data + Algorithm + Action = A.I. Memory Compute Storage 44
Slide 47: Then and NOW…
Then and NOW… For personal use only 1956 2013 5MB 4TB Capacity x 1 million times Source: TNW and Amazon 45
Slide 48: Digital eco-system: trends and technologies impacting investors
Digital eco-system: trends and technologies impacting investors For personal use only Trends Advanced Technologies • Active vs Passive • Multi-goal assessment • Artificial intelligence • Engaging millennials • Smart beta • Cognitive computing • Going global, going mobile • Business intelligence • In
Slide 49: Digital eco-system: So what?
Digital eco-system: So what? For personal use only How can technology help me do my job better? Which technology allows me today to do what I could never do before? 47
Slide 50: Megatrends
Megatrends For personal use only Digitalization Regulation Personalization 48
Slide 51: Global regulatory collaboration
Global regulatory collaboration For personal use only Switzerland (4) Canada (4) UK (8) Denmark (2) Poland (2) Lithuania (1) Japan (4) USA (1) South Korea (2) China (2) Hong Kong (7) Vietnam (1) India (1) Brunei (1) Singapore (16) France (2) Latin America (1) Malaysia (3) Lebanon (1) Kenya (2) Indon
Slide 52: Megatrends: Regulation
Megatrends For personal use only Regulation Fiduciary Transparency Differentiation 50
Slide 53: Megatrends
Megatrends For personal use only Digitalization Regulation Personalization 51
Slide 54: Megatrends: Personalization
Megatrends For personal use only Personalization Passive Goals-based Values aligned Value / low cost 52
Slide 55: Scrutiny of value – FREE?
Scrutiny of value – FREE? For personal use only 53
Slide 56: "Investor first" innovation
“Investor first” innovation For personal use only Solaris Core Australian Equity Fund (Performance Alignment) – Zero Management Fee NEW: Pinnacle aShares Dynamic Cash – Zero Fee (ASX Ticker: Z3RO) 54
Slide 57: Next gen – Asset Manager IP manufacturers
Next gen – Asset Manager IP manufacturers For personal use only App Store Model Marketplace Advisor / Investor Subscriptions* *STP implementation, execution and rebalancing (Morningstar Illustrative Concepts in the USA). 55
Slide 58: The rise of the machines
The rise of the machines For personal use only Fact sheets* Stock reports* *Illustrative purposes (sample reports sourced from Plato Investment Management and Morningstar research). 56
Slide 59: Instant investment plan based on your conversation
Instant investment plan based on your conversation For personal use only Hi Mary, your personalized investment plan based on your conversation today is ready. Shall we proceed? Yes Alexa Your personalized plan is ready for execution Source: GCN & Morningstar 57
Slide 60: Future proofing your business
Future proofing your business For personal use only “Loyalty today is nothing more than the absence of something better” Howard Tullman, Former CEO of 1871* * 58
Slide 61: Tomorrow's solutions
Tomorrow’s solutions For personal use only “FRICTION FREE” DATA + TRANSPARENCY + EFFICIENCY * *1871 is the Number 1 ranked University-Affiliated Tech Incubator in the World 59
Slide 62: Helping investors and advisors reduce friction
Helping investors and advisors reduce friction For personal use only 0009994 ACME Inc. http://pinnacleinvestment.com/ * 60
Slide 63: Conclusion
Conclusion For personal use only Technology Innovation Enabling better lives Accelerating change Survive and thrive Investment excellence * 61
Slide 64: Q&A
For personal use only Q&A
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