Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Macquarie Investor Briefing (October 2022)
83 slides from Pinnacle Investment Management's conference presentation, Oct 27, 2022
Slide 1: Investor Presentation ASX announcement
27 October 2022 For personal use only By Electronic Lodgement Market Announcements Office ASX Ltd 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam Investor Presentation Pinnacle Investment Management Group Limited (ASX: PNI) is pleased to attach a copy of a presentation that will be given to investor
Slide 2: Macquarie Investor Briefing
For personal use only PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED (PNI) Macquarie Investor Briefing Alan Watson – Chair Ian Macoun – Managing Director and CEO Andrew Chambers – Executive Director, Head of Institutional and International Distribution Ramsin Jajoo – Director, Head of Retail Dan Longa
Slide 3: Disclaimer
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 26 October 2022. For personal use only PNI has prepared this presentation based on in
Slide 4: Agenda
Agenda Latest Update Ian Macoun 4 For personal use only Q&A 18 Additional information – FY22 Results Presentation 19 FY22 Highlights Ian Macoun 20 Financial Performance Dan Longan 32 Market Update – Institutional and International Andrew Chambers 36 Market Update – Retail Ramsin Jajoo 42 Growth Agen
Slide 5: Latest Update
For personal use only Latest Update Ian Macoun, Managing Director
Slide 6: Latest Update – FUM and flows
For personal use only Latest Update – FUM and flows 5 • Total Affiliate FUM (at 100%) at 30 September 2022 of $80.5 billion – down $3.2 billion or 4% from $83.7 billion at 30 June 2022 • Total net outflows for the three months to 30 September 2022 of $1.2 billion: • $0.2 billion retail net inflows •
Slide 7: Latest Update – FUM and flows
Latest Update – FUM and flows 6 • Whilst headline flows have been negative, there have been modest positive net inflows from both retail and offshore For personal use only channels, with negligible impact on overall management fee revenues in aggregate • Lower market levels have impacted management
Slide 8: Latest Update and Outlook – Institutional & International
Latest Update and Outlook – Institutional & International 7 • Global uncertainty around inflation, rates, earnings and liquidity driving defensive institutional investor behaviour For personal use only • Institutional flows and search activity in public markets asset classes mixed • Asset owners inc
Slide 9: Retail update
Retail update 8 Maintained positive retail flows in Q1 FY23 despite economic uncertainty, challenging market conditions and poor investor confidence. For personal use only • Weak retail market conditions have stalled retail net inflows with $0.2bn net inflows in Q1 FY23. As a result of AMP’s super s
Slide 10: Retail update
Retail update 9 Ever-changing client preferences and advice landscape requires a nimble, efficient and adaptive distribution platform to deliver success For personal use only • The retail distribution team continues to maintain high activity and engagement with clients and prospects. The team is wel
Slide 11: Retail update
Retail update 10 Affiliate reach continues to be enhanced by leading multi-affiliate sales and marketing platform For personal use only • Multi-affiliate network effect enables unique cross-selling opportunities and powerful organic Affiliate growth • Realisation of cost efficiencies in Affiliate ma
Slide 12: Research ratings and consultants' support drive future flows
Research ratings and consultants’ support are key factors that drive future flows1 11 Lonsec Research Morningstar For personal use only • Antipodes Global Fund – Long - Recommended • Antipodes Global Fund – Long – Bronze • Firetrail Absolute Return Fund - Highly Recommended • Antipodes Global Shares
Slide 13: Client engagement has never been stronger
Client engagement has never been stronger YoY engagement growth across marketing platforms: For personal use only Email Clicks LinkedIn Followers Event Attendance Rate Website Visits 75% 25% 10% 10% • More clients consumed Pinnacle & Affiliate content year on year: • Mix of content delivery is break
Slide 14: Retail - listed solutions update
Retail - listed solutions update 13 • $3.8bn1 of exchange listed FUM in nine listed vehicles spanning most asset classes across > 85 000 underlying investors • Committed to listed fund market with expanded product offering and distribution resources For personal use only • ~60 Active ETFs in Austral
Slide 15: Continuing strong investment performance of Affiliates
14 5 Y ( p .a .) 1 0 Y ( p .a .) I n c e p ti o n ( p .a .) I n c e p ti o n d a te Pinna cle Inv est m ent Ma na gem ent Hype r i o n As s e t M an ag e m e n t - G r o s s P e r f o r m an c e Continuing strong Hyperion Australian Growth Companies Fund 9.96% 12.01% 11.54% 1/10/2002 Outperformance
Slide 16: Affiliates' investment performance 30 September 2022
15 Incepti on Incepti on 1Y 3Y ( p.a .) 5Y ( p.a .) 10Y ( p.a .) ( p.a .) da te Pinnacle Investment Management Hype r i o n Asse t M an age m e n t - Gr o ss Pe r fo r m an c e Hyperion Australian Growth Companies Fund -31.07% 5.86% 9.96% 12.01% 11.54% 1/10/2002 Outperformance -23.07% 3.14% 3.13% 3.
Slide 17: Affiliates' investment performance September 2022
16 Affiliates’ investment For personal use only performance 30 September 2022 The investment returns for each fund or strategy shown are for information purposes only. Unless otherwise stated, the investment returns have been calculated for the relevant period in AUD (with distributions reinvested)
Slide 18: Pinnacle Affiliates continue to win major industry awards
Pinnacle Affiliates continue to win major industry awards 17 2022 Lonsec and SuperRatings Fund of the Year Awards 2022 2021 Money Management Fund Manager of the Year: • Hyperion – Fund Manager Of The Year Winner Spheria – Active Australian Equity Fund of the Year – Finalist For personal use only • •
Slide 19: For personal use only
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Slide 20: Additional information – FY22 Results Presentation
For personal use only Additional information FY22 Results Presentation
Slide 21: FY22 Highlights
For personal use only FY22 Highlights Ian Macoun, Managing Director
Slide 22: FY22 Themes
For personal use only FY22 Themes • Continued profit growth on record FY21 • Diversification delivering resilience • Ongoing investment for future growth
Slide 23: FY22 – Continued profit growth on record FY21
FY22 – Continued profit growth on record FY21; Diversification delivering resilience; ongoing investment for future growth 1. NPAT, EPS and dividends up 14%, 8% and 22% respectively 2. Continuing increase in base fees despite lower headline net inflows For personal use only • Industry-wide pressures
Slide 24: FY22 financial highlights
FY22 financial highlights 23 Continuing revenue and earnings growth despite market dislocation; Pinnacle is not immune to market factors, but diversified platform provides resilience and growth throughout the cycle Affiliate FUM / Revenue (100%) NPAT / EPS DPS For personal use only Aggregate Affilia
Slide 25: Pinnacle has a diversified Affiliate platform
Pinnacle has a diversified Affiliate platform 24 Track record of investing to deliver medium-term growth Executives of both Pinnacle and Pinnacle Affiliates have significant equity interests. For personal use only Equity ownership enhances alignment with shareholders. Seed FUM and Middle office and
Slide 26: Continued track record of earnings growth
Continued track record of earnings growth 25 The strength of our platform and award-winning brands generates material earnings growth for our shareholders For personal use only NPAT growth: 2016 - 2022 Diluted EPS growth: 2016 - 2022 CAGR (five years): 44.8% CAGR (five years): 39.0% Fully franked di
Slide 27: Continued track record of earnings growth
Continued track record of earnings growth 26 • Since listing as a ‘pure play’ funds management business in 2016, Pinnacle has delivered profit growth each year For personal use only • Pinnacle Affiliate revenues are linked, in part, to movements in equity markets • Pinnacle has pursued a deliberate
Slide 28: Investment performance
Investment performance 27 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 29: Funds under management
Funds under management 28 Gross FUM ($bn) 1 For personal use only • FUM has grown at a CAGR of 23.7% p.a. over the last ten years (22.0% excluding $6.8bn ‘acquired’ in July 2018, $3.0bn ‘acquired’ in December 2019 and $1.1bn ‘acquired’ in December 2021) • Equities markets were down in FY22: • S&P/AS
Slide 30: Performance fees
Performance fees 29 Now 22 strategies (18 in FY21) with the potential to deliver performance fees – driving uncorrelated opportunities, resulting in a diverse base of growth Closing FUM & number of strategies subject to For personal use only performance fees • The volume of FUM with performance fee
Slide 31: Diversification increased resilience
Diversification increased resilience 30 A broadly diversified platform in place to move ahead with sustained growth For personal use only FY22 FUM by Asset Class (%) 30 Jun 22 FY22 FUM by Affiliate (%) 11 30 Jun 16 1.0 Resolution Capital 8 1.7 1.6 0.4 7 4 41 3.8 Hyperion 24 Plato 7.7 2 67 Metrics
Slide 32: Major industry awards
For personal use only Major industry awards 31 2022 Financial 2022 Financial Standard 2021 SuperRatings and 2021 Zenith Fund Newswire/SQM Research Investment Leadership Lonsec Fund of the Year Awards: Fund Manager Awards: Awards 2022: Awards: • Spheria – Australian Equities – • Plato - Australian Eq
Slide 33: Financial Performance
For personal use only Financial Performance Dan Longan
Slide 34: FY22 financial results
FY22 financial results 33 FY22 ($M) FY21 ($M) % Ch an ge • NPAT attributable to shareholders of $76.4m (+14% on FY21) For personal use only PINNACLE Reven u e 1 46.0 32.5 42% • Performance fees earned by Pinnacle Affiliates, post-tax, Exp en ses 2,3 (43.5) (31.9) 36% contributed $16.6m of Pinnacle’s
Slide 35: Revenue and margin performance and key drivers
Revenue and margin performance and key drivers 34 Continuing improvement in average base rate fees and client diversity, ‘Horizon 2’ investment in growth initiatives moderates profits in the short term, but will drive strategic growth through the cycle Revenue (Pinnacle and Affiliates) 1 For persona
Slide 36: Balance sheet
Balance sheet 35 Cash and PI of $178.2m For personal use only • 30 Jun 2022 ($M) 30 Jun 2021 ($M) Cha ng e • Includes $134.2m invested in strategies managed by CURRENT ASSETS Pinnacle Affiliates Ca sh a nd ca sh eq uiva l ents 38.3 96.1 (60% ) • Excludes $25.1m of cash applied for Affiliate equity r
Slide 37: Market Update – Institutional and International
For personal use only Market Update – Institutional and International Andrew Chambers
Slide 38: FY22 Institutional and International Review
FY22 Institutional and International Review 37 • FY22 was characterized by improved institutional margins • Outflows were skewed towards lower margin domestic business and inflows into higher margin asset classes from local For personal use only and international investors, such that the contained a
Slide 39: Key themes - Institutional and International
Key themes - Institutional and International 38 • Market conditions have provided valuation headwinds for public equities and fixed income inflows throughout FY22 • Investors sold into equity market strength in 1H but have not been buying into equity market weakness in 2H (markets For personal use o
Slide 40: Key themes - Institutional and International
Key themes - Institutional and International 39 • Concurrent growth of domestic fund insourcing and global fiduciary outsourcing creates risks and opportunities for growth • Internalisation remains an ongoing risk to mandate retention For personal use only • The largest and most progressed funds are
Slide 41: Key themes - Institutional and International
Key themes - Institutional and International 40 • Sustained pursuit of uncorrelated returns driving demand for infrastructure, real estate, real assets, private credit, private equity, venture capital, agriculture and water For personal use only • Five V Fund IV oversubscribed in their $550m fundrai
Slide 42: FY23 Outlook - Institutional and International
FY23 Outlook - Institutional and International 41 • Expansion of our distribution force, investor networks and preferential investment consultant ratings will underpin Australian and international growth For personal use only • We remain attuned to the challenges in the domestic institutional market
Slide 43: Market Update – Retail
For personal use only Market Update – Retail Ramsin Jajoo
Slide 44: Retail update
Retail update 43 Record 1H retail net inflows achieved on the back of a high-performance operating model. Much lower, albeit still positive, 2H net inflows recorded amid volatile investing conditions and weak investor For personal use only confidence • Strong retail net inflows of $3.6bn achieved in
Slide 45: Retail update
Retail update 44 Market-leading engagement and communications initiatives have helped drive business resilience through recent market For personal use only volatility. Now primed for further growth in the ‘return to normal’ • COVID-19 has seen rapid acceleration in the development of multimedia comm
Slide 46: Retail - listed solutions update
Retail - listed solutions update 45 • $3.7bn1 of exchange listed FUM in eight listed vehicles spanning most asset classes across > 80,000 underlying investors • Continuing to successfully expand listed offering with new products and additional resources For personal use only • Broader adoption of ac
Slide 47: Growth in retail FUM
Growth in retail FUM 46 Retail FUM evolution 7.7x For personal use only Total FUM 30 June 13: $10.9bn Total FUM 30 June 2022: $83.7bn Retail: $0.9bn Retail: $21.1bn 23.4x 8% Retail 25% Retail 92% institutional 75% Institutional • Pinnacle has invested significantly in retail distribution and has gen
Slide 48: Top contributions from multiple Affiliates and Strategies
Top 5 contributions from multiple Affiliates and Strategies 47 $5Bn For personal use only $4Bn $3Bn $2Bn $1Bn $0Bn FY2020 FY2021 FY2022 Source: Salesforce, Pinnacle Retail
Slide 49: CYTD - Volatile markets, weak confidence & narrower range of winners
CYTD - Volatile markets, weak confidence & narrower range of winners! 48 Total Funds Under Mangement - Retail Funds CYTD $2,000Bn For personal use only $1,800Bn $1,600Bn $1,400Bn $1,200Bn $1,000Bn $800Bn $600Bn $400Bn $200Bn Annualised Estimated Net Flows - Retail Funds $69.8Bn $43.3Bn $30.3Bn $13.0
Slide 50: Sales activity has remained high
For personal use only Sales activity has remained high – this should drive flows over time Source: Salesforce, Pinnacle Retail
Slide 51: Large and diversified footprint across the intermediated channel
For personal use only Large and diversified footprint across the intermediated (wealth management) channel 50 82% of net flows sourced outside Top 20 clients 18% of net flows $562 m sourced from Top 20 Wealth Net flows from Mgt Clients Top 20 clients $3.1bn Net flows across retail funds in FY22 Sour
Slide 52: Research ratings and consultants' support are key factors that drive future flows
Research ratings and consultants’ support are key factors that drive future flows1 51 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 53: Retail platform enabling high performance business development
52 Retail platform continuing to enable high performance business development management 21,300+ 1,050+ 150+ 1,000+ Advisers Researchers Consultants Brokers For personal use only Source: Pinnacle, Salesforce & Pardot
Slide 54: Growth Agenda
For personal use only Growth Agenda Ian Macoun, Managing Director
Slide 55: Three Horizons of growth
Three Horizons of growth 54 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 56: Future growth drivers
Future growth drivers 55 An excellent platform in place to move ahead with sustained growth For personal use only Distribution Platform Robust, Flexible, Start-Up Affiliate Existing Affiliate Acquisitive Expansion Operating Platform Enablement Expansion Growth • Investment in (and • Stable / robust,
Slide 57: Horizon – Update
56 Horizon 2 – Update Pinnacle and Affiliates continue to actively pursue growth initiatives, recognizing that these will moderate profits in the short term but provide extremely lucrative growth opportunities over the medium term For personal use only Examples of previous Horizon 2 initiatives, wit
Slide 58: Horizon – Update
57 Horizon 2 – Update Examples of previous Horizon 2 initiatives, within Affiliates, include: • Hyperion Global, Palisade Renewables, Plato Australian Income, Resolution Capital Global REITS, Solaris Long/Short For personal use only Current initiatives, within Affiliates, include: Affiliate Initiati
Slide 59: Horizon – Update
58 Horizon 2 – Update • The aggregate annual net cost to Pinnacle of these initiatives, within Pinnacle and Affiliates, is approximately $12m For personal use only (Pinnacle share, after tax) • Each initiative is only entered into after careful consideration of the longer-term benefits and with reas
Slide 60: Horizon – International
59 Horizon 2 – International Incubations remain a highly attractive investment proposition for Pinnacle. We are looking to incubate more outside of Australia and leverage off the operational infrastructure we have developed in the UK/Europe and in Canada For personal use only Aikya (London) • Commen
Slide 61: Horizon
60 For personal use only Horizon 3 • We have explored many Horizon 3 opportunities with the following characteristics: • Strategically attractive and diversifying relative to current Affiliate composition • Internationally-based, plus select opportunities in Australia • High demand asset classes inc
Slide 62: Corporate Responsibility
For personal use only Corporate Responsibility Ian Macoun, Managing Director
Slide 63: FY22 Highlights
FY22 Highlights 62 ESG Working Group ESG Charter For personal use only We established a cross-affiliate ESG Working Group to share We developed the Pinnacle Group ESG Charter to reflect knowledge and promote industry best practice ESG Pinnacle and Affiliates’ shared commitment to ensuring that stand
Slide 64: Our contribution to the United Nation's 2030 Agenda
Our contribution to the United Nation’s 2030 Agenda 63 The United Nations Sustainable Development Goals (SDGs) aim to address the biggest problems human beings face on this planet. We recognise the need for strategies that foster economic development, reduce gender inequalities and transition toward
Slide 65: Pinnacle Charitable Foundation
64 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 66: Pinnacle Charitable Foundation
65 Pinnacle Charitable Foundation • Total donations by the Foundation in FY2022 were over $900,000 (an increase of almost 70% from 2021), primarily For personal use only directed towards 14 not for profit partners. Support was also provided for initiatives aligned with employee volunteering and fund
Slide 67: Pinnacle Charitable Foundation
66 Pinnacle Charitable Foundation • A total of 14 not for profit partners - operating across six core focus areas - are delivering long term impact through sustainable change, including 5 new partnerships initiated in FY22: For personal use only MENTAL WELLBEING Together with illness prevention and
Slide 68: Conclusion
For personal use only Conclusion Ian Macoun, Managing Director
Slide 69: Pinnacle differentiation
Pinnacle differentiation 68 Australia’s leading ‘multi-affiliate’ investment firm For personal use only 1. Distinguished from competitors 2. High quality, experienced, 3. All the advantages, benefits and by comprising the highest dedicated, passionate superior conditions of a quality investment mana
Slide 70: Summary
Summary 69 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 and research house ratings
Slide 71: Appendix
For personal use only Appendix
Slide 72: Continuing strong investment performance of Affiliates to 30 June 2022
71 Continuing strong investment performance of For personal use only Affiliates to 30 June 2022 83% of Pinnacle Affiliates’ strategies and products (with a track record exceeding 5 years) have out- performed their benchmarks over the 5 years to 30 June 2022 The investment returns for each fund or st
Slide 73: Affiliates' investment performance June 2022
72 Affiliates’ investment For personal use only performance 30 June 2022 The investment returns for each fund or strategy shown are for information purposes only. Unless otherwise stated, the investment returns have been calculated for the relevant period in AUD (with distributions reinvested) and a
Slide 74: Affiliates' investment performance June 2022
73 Affiliates’ investment For personal use only performance 30 June 2022 The investment returns for each fund or strategy shown are for information purposes only. Unless otherwise stated, the investment returns have been calculated for the relevant period in AUD (with distributions reinvested) and a
Slide 75: FY22 funds under management
For personal use only FY22 funds under management 74
Slide 76: Pinnacle Affiliates continue to win major industry awards
75 Pinnacle Affiliates continue to win major industry awards 2022 Financial Newswire/SQM Research Fund Manager of the Year Awards 2020 Zenith Fund Awards: • Resolution Capital – Global REIT Category Winner (seventh consecutive year) • Spheria – Australian Equities – Small/Mid Cap Finalist • Metrics
Slide 77: Affiliate commitment to ESG
Affiliate commitment to ESG 76 All Pinnacle Affiliates embed ESG into their investment decision making process: 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 Coolabah Yes Yes Yes Firetrail Yes Yes Y
Slide 78: Pinnacle Affiliates
Pinnacle Affiliates 77 Global Emerging Markets Equities For personal use only • High quality • Absolute return • Concentrated portfolio • Long term sustainable growth • Stewardship and Sustainability • Headquartered in London, UK Global and Emerging Markets Value Equities (Long Only and Long-Short)
Slide 79: Pinnacle Affiliates
Pinnacle Affiliates 78 Australian, Global, Small Cap & Long-Short Equities For personal use only • Deep fundamental research approach consistently applied for 15+ years • Experts in high conviction investing • No enduring style bias. Building concentrated portfolios of our best growth and value idea
Slide 80: Pinnacle Affiliates
Pinnacle Affiliates 79 Global and Canadian Small Cap Equities For personal use only • Active and Engaged owners of world class smaller companies • Quality/Growth at a Reasonable Price (Q-GARP) • Seek to identify and evaluate businesses that can compound intrinsic value at high rates over the long te
Slide 81: Pinnacle Affiliates
Pinnacle Affiliates 80 Private Infrastructure, Impact & Real Assets • Mid-Market focus results in better acquisition multiples and portfolio yield • Actively involved in operational management and governance of assets; unlocks embedded value For personal use only • Owns airports, seaports, portside
Slide 82: Pinnacle Affiliates
Pinnacle Affiliates 81 Australian and New Zealand 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; wate
Slide 83: Disclaimer
Disclaimer 82 Lonsec Research For personal use only The Lonsec Ratings 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 Corporations Act 2001 (Cth)) and based solely on consideration of
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