Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Wilsons Rapid Insights Conference 2022
78 slides from Pinnacle Investment Management's conference presentation, May 24, 2022
Slide 1: Wilsons Rapid Insights Conference Presentation cover letter
24 May 2022 For personal use only By Electronic Lodgement Market Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, Wilsons Rapid Insights Conference Presentation Pinnacle Investment Management Group Limited is pleased to attach a copy of a presentation that will be given
Slide 2: Wilsons Rapid Insights Sydney
For personal use only Wilsons Rapid Insights Sydney PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) Ian Macoun – CEO/Managing Director Andrew Chambers – Executive Director, Head of Institutional and International Distribution Ramsin Jajoo – Director, Head of Retail 26 th May, 2022
Slide 3: Pinnacle Investment Management Group Limited (PNI)
Pinnacle Investment Management Group Limited (PNI) This presentation has been prepared by Pinnacle Investment Management Group Limited ABN 22 100 325 184 (PNI). The information in this presentation is current as at 25 May 2022. For personal use only PNI has prepared this presentation based on inform
Slide 4: Agenda
For personal use only Agenda 01 Latest Update 02 Growth Agenda 03 Introduction to Pinnacle 04 Business Model 05 Corporate Responsibility 06 Additional Information
Slide 5: Latest Update
For personal use only 01 Latest Update
Slide 6: Latest Update – FUM and flows
Latest Update – FUM and flows 5 • Total Affiliate FUM (at 100%) at 31 March 2022 of $91.4 billion • down $2.2 billion (2.4%) from $93.6 billion at 31 December 2021 For personal use only • up $2.0 billion (2.2%) from $89.4 billion at 30 June 2021 (up $5.9bn, or 6.6%, over the nine months to 31 March
Slide 7: Latest Update – FUM and flows
Latest Update – FUM and flows 6 • During the nine months to 31st March, there has been ‘recycling’ of institutional FUM, with the outflows skewed towards older, lower margin domestic business and the inflows into higher margin strategies including international markets, with the result that the For
Slide 8: Latest Update – Horizon
Latest Update – Horizon 2 7 • Capacity of the current strategies managed by Pinnacle Affiliates is in excess of $300bn (at 100%) • Pinnacle, and many of the Affiliates, continue to invest in initiatives that will provide further growth in the medium-term, recognizing that For personal use only these
Slide 9: Latest Update – Horizon
Latest Update – Horizon 3 8 • Whilst we remain ready and prepared to take advantage of Horizon 3 opportunities as they arise, there is a high bar; we will only consider For personal use only such opportunities if they are low risk and will provide a high return on invested capital • Pinnacle is the
Slide 10: Latest Update and Outlook – Institutional & International
Latest Update and Outlook – Institutional & International 9 • Global outlook for asset class valuations, inflation and rates driving institutional allocation behaviour For personal use only • Institutional search activity in equities encouraging in specific market segments • Consultants and asset ow
Slide 11: Latest Update and Outlook – Retail
Latest Update and Outlook – Retail 10 • Late in calendar 2021 retail investors generally lost confidence in market outlook • Increased allocation to cash For personal use only • Investors evaluating portfolios’ asset class and style mix • Strong interest in alternatives (e.g., private debt and priva
Slide 12: High business-generating activity continuing in Pinnacle Retail
For personal use only High business-generating activity continuing in Pinnacle Retail 11 • Successful execution of client events delivering increased activity and opportunities pipeline • The annual Insight Series event covering major asset classes (completed in February/March 2022) with record atte
Slide 13: High business-generating activity continuing in Pinnacle Retail
High business-generating activity continuing in Pinnacle Retail 12 • Pinnacle Affiliates’ continued commitment to listed / active ETFs – successful listing of the Resolution Capital Global Property Securities Fund (Managed Fund) (ETF - ASX:RCAP) on 22 February 2022 For personal use only • Pinnacle’s
Slide 14: Affiliates' investment performance to 31 March 2022
13 5Y ( p.a.) 10Y ( p.a.) Inc epti on ( p.a.) Inc epti on date P innacle Inv est ment Management Hype r ion A s s e t Manage me nt - G r os s P e r f or manc e Hyperion Australian Growth Companies Fund 14.83% 14.93% 13.04% 1/ 10/ 2002 Outperformance 5.45% 4.82% 3.64% Hyperion Small Growth Companies
Slide 15: Affiliates' investment performance 31 March 2022
14 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p.a.) date Pinnacle Investment Management Hyperion A sset Management - Gross Performanc e Hyperion Australian Growth Companies Fund 5.19% 17.81% 14.83% 14.93% 13.04% 1/ 10/ 2002 Outperformance - 10.02% 6.95% 5.45% 4.82% 3.64% Hyperion Small G
Slide 16: Affiliates' investment performance 31 March 2022
15 Inception Inception 1Y 3Y (p.a.) 5Y (p.a.) 10Y (p.a.) (p a ) date Pinnacle Investment Management Firetrail Invest ments - Gross Performanc e Firetrail Australian High Conviction Fund 13.58% 11.95% 8.79% 14/ 03/ 2018 Outperformance - 1.39% 1.37% - 1.22% Affiliates’ investment Firetrail Absolute Re
Slide 17: Pinnacle Affiliates continue to win major industry awards
16 Pinnacle Affiliates continue to win major industry awards 2021 Australian Alternative Investment Awards: 2019 Zenith Fund Awards: Metrics – Best 2021 Private Debt Fund Pinnacle – Distributor of the Year Winner (fourth consecutive year) • Pinnacle – Best 2021 Investor Supporting Australian Alterna
Slide 18: Growth Agenda
For personal use only 02 Growth Agenda
Slide 19: Growth, Resilience, and an exceptional Platform for further Growth
Growth, Resilience, and an exceptional Platform for further Growth 18 • For several years, we have been consistently implementing our strategy: • A 'pure play' investment management firm comprising only the best investment professionals, focused on investment For personal use only excellence • Highl
Slide 20: Three Horizons of growth
Three Horizons of growth 19 Prepared for, and seeking, further expansion opportunities – committed to taking advantage of the significant offshore opportunity to evolve into a global multi-affiliate by ‘exporting our model’ For personal use only • Continue to build Pinnacle by taking a measured appr
Slide 21: Future growth drivers
Future growth drivers 20 An excellent platform in place to move ahead with sustained growth For personal use only Distribution Platform Operating Start-Up Affiliates Established Acquisitive Growth Platform Thriving Affiliates Expanding Growth • Investment in (and • Stable / robust, • Develop investm
Slide 22: Update on international expansion
Update on international expansion 21 • 1st incubation in North America • 1st half 2022 For personal use only • Global Small Companies and Canadian Equities • Opportunities generated from: Credit, Real Estate, Infrastructure, Global Equity, Quant Equity, High • Trusted industry experts Yield, US Smal
Slide 23: Delivering strategic objectives
Delivering strategic objectives 22 Clear evidence of strategy execution success - growth and resilience simultaneously delivered Objectives Then NOW For personal use only 30 June 2016: 31 December 2021: Growth in retail distribution – highly diversifying and higher fees $2.6bn, 13% of total $23.8bn,
Slide 24: Summary
23 Summary Pinnacle’s diverse Affiliate portfolio and extensive distribution channels provide stability whilst fostering growth opportunities For personal use only Fundamentals in place • Highly regarded Affiliates with strong local and international investment consultant ratings for sustained sales
Slide 25: Introduction to Pinnacle
For personal use only 03 Introduction to Pinnacle
Slide 26: Introduction to PNI
Introduction to PNI 25 • What PNI offers shareholders For personal use only • Highly diverse earnings stream, generated from multiple asset classes • High growth – 5-year compound NPAT growth in excess of 60% per annum • High growth in dividends – 5-year compound dividend growth of 54.1%1 per annum
Slide 27: Introduction to PNI
Introduction to PNI 26 • How we receive our profits • Our share of Affiliates’ profits – equity accounted (1H FY22 NPAT – our share $39.2m of $100.1m total) • ‘Parent’ revenues for our services, offset by costs of provision and ‘Horizon 2’ investment for future growth For personal use only • Three H
Slide 28: Introduction to PNI
For personal use only Introduction to PNI 27 • How we can we continue to grow • Our business model is deliberately modular, with autonomous units, and highly-scalable • Continuing investment in distribution and infrastructure • Is it sustainable over the long term? • 'Stand alone' Boutique investmen
Slide 29: A broadly diversified platform in place to move ahead with sustained growth
A broadly diversified platform in place to move ahead with sustained growth 1. Ongoing opportunities for growth from multiple sources • Short term domestic institutional rebalancing offset by continued strength in international and higher margin, sticky retail inflows For personal use only • Continu
Slide 30: Pinnacle has a diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 29 Track record of investing to deliver medium-term growth Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests. Equity ownership enhances alignment with shareholders. For personal use only Seed FUM and Middle office and
Slide 31: Continued track record of earnings growth
Continued track record of earnings growth 30 The strength of our platform and award-winning brands generates material earnings growth for our shareholders For personal use only NPAT growth: 2016 - 2021 EPS growth: 2016 - 2021 CAGR (five years): 63.1% CAGR (five years): 47.7% Fully franked dividends
Slide 32: Funds under management
Funds under management 31 Gross FUM ($bn) 1,2 For personal use only • FUM has grown at a CAGR of 26.0% p.a. over the ten years to 31 December 2021 (24.5% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021), driven by: • Sustained inves
Slide 33: Diversification -> increased resilience
Diversification -> increased resilience 32 A broadly diversified platform in place to move ahead with sustained growth For personal use only 1H FY22 FUM by Affiliate (%) 1H FY22 FUM by Asset Class (%) 31 Dec 21 Hyperion 9 30 Jun 16 Plato Solaris Resolution Capital 8.00.2 14.0 9 Palisade 7 4 Antipode
Slide 34: Business Model
For personal use only 04 Business Model
Slide 35: Pinnacle differentiation
Pinnacle differentiation 34 Australia’s leading ‘multi-affiliate’ investment firm For personal use only 1. Hand-picked selection of high- 2. Aligned interests with dedicated 3. Recognises the advantages and quality investment management investment professionals – who benefits of a ‘boutique firms ar
Slide 36: What differentiates Pinnacle?
For personal use only What differentiates Pinnacle? 35 Platform liberates investment professionals to focus on what they Highly attractive platform for the 1 best investment professionals do best 85% of FUM has outperformed benchmark over five-year period Gross FUM (at 100%) of $91.4bn across
Slide 37: Corporate Responsibility
For personal use only 05 Corporate Responsibility
Slide 38: Alignment with Sustainable Development Goals
Alignment with Sustainable Development Goals 37 Pinnacle recognises the need for strategies that foster economic development, reduce inequities and transition towards a more sustainable future. By aligning our sustainable initiatives with the UN SDGs and through the support of the Pinnacle Charitabl
Slide 39: Pinnacle Charitable Foundation
38 Pinnacle Charitable Foundation • Pinnacle is passionate about enabling better lives through investment excellence. This belief is strongly reflected in Pinnacle’s commitment – together with Affiliates – to the Pinnacle Charitable Foundation For personal use only • The Foundation’s focus is on gro
Slide 40: Pinnacle Charitable Foundation
39 Pinnacle Charitable Foundation • A total of 14 charity partners operating across six core categories are driving long term sustainable, impactful partnerships, with 5 new partnerships initiated in 1H FY22: For personal use only Mental wellbeing - together with illness prevention and early interve
Slide 41: Affiliate commitment to ESG
Affiliate commitment to ESG 40 Thirteen Affiliates are signatories to the United Nations supported Principles of Responsible Investment (“PRI”): For personal use only Incorporate ESG into Affiliate Signatory to PRI Have an ESG policy Investment process Aikya Yes Yes Yes Antipodes Yes Yes Yes Coolaba
Slide 42: Additional information
For personal use only 06 Additional information
Slide 43: 1H FY22 Results Presentation
For personal use only 1H FY22 Results Presentation
Slide 44: 1H FY22 financial highlights
1H FY22 financial highlights 43 Revenue growth delivered by strong retail net inflows, offsetting weaker institutional net flows which reflect short term investor rebalancing/lumpiness; institutional pipeline remains strong Affiliate FUM / Revenue (100%) NPAT / EPS DPS For personal use only Aggregat
Slide 45: Pinnacle continues to grow strongly, through varying market conditions
Pinnacle continues to grow strongly, through varying market conditions 44 • Whilst growth in FUM and profitability were suppressed in FY20 due to the impacts of the COVID-19 crisis on markets and our business, Pinnacle has grown strongly, on average, over the 2½ year period to 31 December 2021, whic
Slide 46: Investment performance
Investment performance 45 Our industry leading portfolio of high performing Affiliates continues to outperform benchmarks and provides an engine for continued FUM growth and performance fee generation For personal use only Affiliate fund outperformance over benchmarks (alpha) – over 5-year period, p
Slide 47: Performance fees
Performance fees 46 18 strategies with the potential to crystalise performance fees in FY22 – delivering uncorrelated opportunities to drive a diverse base of growth Closing FUM & number of strategies subject to For personal use only performance fees • The volume of FUM with performance fee potentia
Slide 48: Major industry awards
47 For personal use only Major industry awards 2021 Zenith Fund 2021 Money Management 2021 Morningstar Fund Awards: Fund Manager of the Manager of the Year Year: Awards: • Metrics – Listed Entities Category • Hyperion – Fund Manager Of The • Hyperion – Australian Fund Manager Winner Year Winner of t
Slide 49: Financial Performance
For personal use only Financial Performance Dan Longan
Slide 50: 1H FY22 financial results
1H FY22 financial results 49 H1 FY22 ($M) H1 FY21 ($M) % Change PINNACLE • NPAT attributable to shareholders of $40.1m (+32% on 1H FY21 (PCP)) 1 Revenue 21.6 14.4 50% Performance fees earned by Pinnacle Affiliates, post-tax, For personal use only Expenses 2,3 • (19.0) (15.9) 19% contributed $6.4m of
Slide 51: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 50 Benefits of embedded operating leverage clearly emerging, notwithstanding continuing 'Horizon 2' investment both within Affiliates and in Pinnacle For personal use only Revenue (Pinnacle and Affiliates) 1 Affiliate NPAT margins continuing to strength
Slide 52: Balance sheet
Balance sheet 51 Cash and PI of $176.4m For personal use only • • Includes $147.0m invested in strategies managed by Pinnacle Affiliates Excludes $11.9m of cash applied for Affiliate equity Balance sheet table • recycling loans, working capital loans and additional Affiliate equity purchased • CBA f
Slide 53: 1H FY22 funds under management
1H FY22 funds under management 52 Pinnacle Hyperion Plato Solaris RCL Palisade Antipodes Spheria Two Trees Firetrail Metrics 4 Omega 3,5 Longwave Riparian Coolabah Reminiscent Aikya Five V 6 (total) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m) ($m)1 ($m)1 ($m) ($m) ($m)2 ($m) ($m) ($m) For pers
Slide 54: Market Update – Institutional and International
For personal use only Market Update – Institutional and International Andrew Chambers
Slide 55: Institutional & international
Institutional & international 54 Institutional and international client base was enlarged and further diversified in 1H FY22 For personal use only • 260+ individual institutional clients at 31 December 2021 • ~230 at 30 June 2021 • ~190 at 31 December 2020 • ~60 at 30 June 2016 • Top 20 institutiona
Slide 56: Institutional market - Australia
Institutional market - Australia 55 1H FY22 Australian gross inflows were higher than PCP however this was offset by portfolio rebalancing away from rallying equity markets and a lumpy, ‘passive' FUM loss. Our domestic sales pipeline outlook remains positive For personal use only Summary Outlook • 1
Slide 57: Institutional market - international
Institutional market - international 56 International inflows maintaining positive momentum in 1H FY22 For personal use only Summary Outlook • ~$11bn international FUM • International sales pipeline continues to build across Aikya global emerging market equities • 37 countries • Antipodes global val
Slide 58: Market Update – Retail
For personal use only Market Update – Retail Ramsin Jajoo
Slide 59: Retail update
Retail update 58 Record 1H retail flows achieved on the back of strong investment performance, research ratings, consultants’ allocations, continued lift in sales activities and high-performance operating model For personal use only • Record retail net flows of $2.9bn achieved in H1 FY22 (vs $1.9bn
Slide 60: Retail update
Retail update 59 • Finetuning Engagement and Communications to earn a larger share of voice with increasingly time-poor advisers/investors For personal use only • Development of on-site studio and multimedia production facilities underway along with recruitment of video production specialists • Digi
Slide 61: Retail - listed solutions update
Retail - listed solutions update 60 $4bn1 of FUM in eight listed vehicles spanning most asset classes across > 70 000 underlying investors For personal use only • ETF penetration has a long runway ahead in Australia: • ETF FUM of $134bn is 4% of unlisted managed fund FUM in Australia vs 25% in the U
Slide 62: Growth in retail FUM
Growth in retail FUM 61 Retail FUM evolution 8.6x For personal use only Total FUM 30 June 13: $10.9bn Total FUM 31 Dec 2021: $93.6bn Retail: $0.9bn Retail: $23.8bn 26.4x 8% Retail 25% Retail 92% institutional 75% Institutional • Pinnacle has invested significantly in retail distribution and has gene
Slide 63: Strong YoY growth from multiple Affiliates and strategies
Strong YoY growth from multiple Affiliates and strategies 62 1H FY Retail Net Flows and Top 5 Affiliate Contributions For personal use only $4,000,000,000 $2.9bn $3,500,000,000 $3,000,000,000 $2,500,000,000 $1.9bn $2,000,000,000 $1,500,000,000 $0.9bn $1,000,000,000 $500,000,000 $0 ($500,000,000) ($1
Slide 64: Extended COVID-19 lockdown(s) - 130%+ lift in retail sales activity
For personal use only Extended COVID-19 lockdown(s) - 130%+ lift in retail sales activity 63 Source: Salesforce, Pinnacle Retail
Slide 65: Large and diversified footprint across the intermediated channel
For personal use only Large and diversified footprint across the intermediated (wealth management) channel 64 84% of net flows sourced outside Top 20 clients $510 m 16% of net flows sourced from Net flows from Top 20 Wealth Top 20 clients Mgt Clients $2.7bn Net flows across retail funds in 1H FY22 S
Slide 66: Research ratings and consultants' support are key factors that drive future flows
Research ratings and consultants’ support are key factors that drive future flows1 65 Lonsec Research Morningstar For personal use only • Antipodes Global Fund – Long - Recommended • Resolution Capital Global Property Securities Fund – Gold • Firetrail Absolute Return Fund - Highly Recommended • Sol
Slide 67: Expanded retail platform
For personal use only Expanded retail platform 66 21,300+ Advisers 1,050+ Researchers 150+ Consultants 1,000+ Brokers Source: Pinnacle, Salesforce & Pardot
Slide 68: New digital marketing approaches to overcome 'digital fatigue'
New digital marketing approaches to overcome ‘digital fatigue’ 67 Email version testing is enabling our On-demand ‘Netflix-style’ event hub helps For personal use only content to break through the clutter drive record attendance at Pinnacle’s Multi-Affiliate Annual Virtual Summit • A/B testing exper
Slide 69: The digital activities continue to nourish the sales engine
The digital activities continue to nourish the sales engine Video Content & Events Email Automation Websites For personal use only Attendance | Views | Clicks | Page Views Distribution Team Leads Direct Applications
Slide 70: Affiliate Summaries
For personal use only Affiliate Summaries
Slide 71: Pinnacle Affiliates
Pinnacle Affiliates 70 Global Emerging Market Equities • High quality Absolute return For personal use only • • Concentrated portfolio • Long term sustainable growth • Stewardship and Sustainability • Headquartered in London, United Kingdom Global, Asian and Emerging Markets equities • ‘Pragmatic va
Slide 72: Pinnacle Affiliates
Pinnacle Affiliates 71 Australian, Global, Small Cap & Long/Short Equities • Deep fundamental research approach consistently applied for 15+ years For personal use only • Experts in high conviction investing • Focused on generating alpha from stock selection, whilst reducing exposure to unintended m
Slide 73: Pinnacle Affiliates
Pinnacle Affiliates 72 Canadian and Global Small Cap Equities • Idiosyncratic approach to small caps in a conviction-based manner For personal use only • Bottom-up process resulting a in a concentrated, high-conviction portfolio • Headquartered in Toronto, Canada Australian Small Cap Quality Equitie
Slide 74: Pinnacle Affiliates
Pinnacle Affiliates 73 Australasian Private Infrastructure • Mid-Market focus results in better acquisition multiples and portfolio yield • Actively involved in the operational management and governance of the assets unlocks embedded value For personal use only • Owns airports, seaports, portside bu
Slide 75: Pinnacle Affiliates
Pinnacle Affiliates 74 Australasian Private Agriculture, Food & Water • Real asset backed investments across the food and agriculture sector For personal use only • Participation throughout the value chain investing in assets that are critical to the production of essential goods; water, farmland, a
Slide 76: Pinnacle Affiliates
Pinnacle Affiliates 75 Systematic Global Macro For personal use only • Former GMO SGM team • Competitive edge is the novel way in which the firm fuses together a deep philosophical understanding of financial economics with rigorous scientific techniques for forecasting returns, volatility and correl
Slide 77: Disclaimer
Disclaimer 76 Lonsec Research For personal use only The Lonsec Ratings presented in this document are published by Lonsec Research presented in this document are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421445. The Ratings are limited to "General Advice" (as defined in the Corpor
Slide 78: For personal use only
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Pinnacle Investment Management Group — Wilsons Rapid Insights Conference 2022 on 6ix