Pinnacle’s new UK-based affiliate has passed another milestone in its presence in Australia with its first research rating from Zenith Investment Partners.
Life Cycle Investment Partners was set up in July 2024 by former Royal London Asset Management (RLAM) manager Peter Rutter and his team.
Based in the UK and majority-owned by its staff, it will be an offshore affiliate of Pinnacle Investment Management for its non-investment functions.
However, it has faced delays around employment restraints from RLAM that led to a planned $3 billion mandate from Ironbark Asset Management, which had invested with the team via RLAM for many years, being withdrawn.
Life Cycle has indicated the fund has a capacity of $10 billion but currently sits at $10 million.
In its FY24 results, Pinnacle managing director Ian Macoun said the affiliate would be rolled out steadily.
“It is early days, these employees have employment restraints that they have to honour so we won’t see much activity in this calendar year. It takes time to build a new boutique and we build carefully and deliberately.
“This should be a very big, successful boutique over time, and we will do it at the pace that makes sense for building a quality affiliate. We will update in due course, but we tend to go slowly and carefully at the beginning.”
The firm has now received a “recommended” research rating by Zenith for its Concentrated Global Share Fund and Global Share Fund, which are style neutral, highly diversified and benchmark aware global equities funds.
Zenith recognised the team’s previous experience at RLAM and the attractive investment outcomes it achieved during that time in its rating.
All three senior portfolio managers have more than 20 years’ experience each and worked on the underlying investment strategy since 2001, while Chris Parr has seven years’ experience and was appointed as a portfolio manager in 2021.
Rutter, who spent seven years at RLAM and previously worked at Waverton Investment Management, will hold final decision-making authority but employs a consensus-based decision-making approach which promotes collaboration.
“Zenith holds the senior members of the investment team in high regard. In addition, we have been familiar with the team over an extended period, most notably during their tenure at RLAM where the strategies they managed generated highly attractive investment outcomes. We view the team’s prior working relationship as a positive for the fund as it reduces team cohesion risk typically associated with a start-up investment boutique.
“Zenith views Peter Rutter as being crucial to the ongoing success of the fund and business. His departure would result in an immediate reassessment of our rating. However, we acknowledge that there is depth within the team at LCIP. Given the investment team’s significant equity stake in LCIP, Zenith believes the team is highly incentivised to remain with the business over the long term.”
Using its Life Cycle investment process (LCIP) approach, companies are assigned to one of the following five life cycle categories: Accelerating, Compounding, Fading, Mature and Turnaround. Its investment objective is to outperform the MSCI World Index A$ by 1–1.25 per cent per annum (after fees) over rolling five-year periods.
“These categories assist the team in identifying key factors to determine whether the company is creating wealth for its shareholders. Zenith believes that the life cycle framework is a key differentiator for the fund.
“However, as the classification process is predominantly quantitatively driven, it can result in the misclassification of companies, particularly where there are multiple operating divisions, such as conglomerates. As a result, Zenith believes LCIP’s investment process is best applied to companies that operate within a single industry.”
It also felt the firm’s deal with Pinnacle would allow the team space to focus on investment and portfolio management and mitigate any concerns regarding business stability.
