Pinnacle flags domestic challenges to growth
Pinnacle has reported challenges in the domestic retail and institutional market where it is expending resources to ensure it is ready for a market recovery.
In a quarterly update for the three months to 30 September, the firm said the quarter had seen $200 million of net inflows comprising $700 million in retail net inflows and $500 million of offshore net inflows. However, this was offset by domestic institutional net outflows of $1 billion.
Total funds under management were $90.4 billion at 30 September, down 2 per cent from 30 June 2023.
Ian Macoun, managing director of Pinnacle, said: “Domestic retail market conditions have remained challenging (as have conditions in markets globally) but we have further increased our investment in this important capability, both to maintain our strong positioning in the short term but also to ensure that we are well positioned to prosper.
“We have invested and continue to invest in our retail capability to ensure we have the right people and processes to capitalise on a market recovery.
“The Australian institutional market remains challenging with asset class rebalancing and fund consolidation presenting both an opportunity and a risk for Pinnacle’s diversified platform of affiliates.”
Some 24 strategies had the potential to deliver performance fees and 11 affiliates earned them performance fees during FY22–23 totalling $58.2 million, the majority coming in the second half of the year. Coolabah, Palisade, Hyperion, Langdon and Metrics were all identified as being affiliates of note during the period.
The firm also has a Horizon program of three streams of growth: continuing to pursue net inflows into existing strategies, actively pursuing growth initiatives, and using capital to buy into existing businesses.
Regarding its Horizon 3 program, Macoun said: “We have explored many Horizon 3 opportunities – we seek investments that are strategically attractive and diversifying relative to the current affiliate composition; we would prefer internationally based opportunities but also have looked at select opportunities in Australia; and we seek asset classes that are in high demand including infrastructure, real estate, credit and hedge funds.”
It noted the strategy of diversification and acquisitive growth had been a drag on short-term profitability but that it expects the initiatives to begin contributing to earnings in FY24.
Further growth opportunities were identified in distribution platform expansion, robust operating platform, start-up affiliate enablement, existing affiliate expansion, and acquisitive growth.