Pinnacle profits take a hit amid surge in outflows
Pinnacle Investment Management Group has published its results for the first half of the 2023 financial year (1H23), reporting a net profit after tax (NPAT) of $30.5 million, down 24% from $40.1 million in 1H22.
As a result, the fully franked interim dividend per share dropped 11%, from 17.5 cents to 15.6 cents over the same period.
The weaker 1H23 result came off the back of a decline in performance fees and higher net outflows.
Pinnacle reported performance fees of just $950,000 in 1H23, down from $6.4 million in the previous corresponding period.
Six of Pinnacle’s affiliates generated fees of $3 million, down from $18.8 million in the previous corresponding period.
The decline was foreshadowed last month in an update to shareholders, with the company stating that while several strategies outperformed benchmarks, they earned “nil or lower performance fees”, given they entered the period “behind the relevant high-water marks”.
Meanwhile, Pinnacle's net outflows totalled $1.5 billion over 1H23, resulting in a contraction in aggregate affiliates’ funds under management (FUM), totalling $83.2 billion as at 31 December 2022.
Net outflows of $2.5 billion across the domestic institutional portfolio were offset by retail inflows of approximately $300 million and offshore net inflows of approximately $700 million.
According to Pinnacle, “market and style shifts” “impacted FUM over the period, offset by portfolio diversification.
“Quality and diversity of FUM has mitigated downside from volatile markets and dynamic fund flows including rotation from growth to value orientated strategies and pressure on REITS,” the ASIX-listed company noted.
Pinnacle’s overall performance was also impacted by its continued investment in ‘Horizon 2’ growth initiatives, conceding the strategy would “moderate profits” in the short-term before proving growth opportunities over the medium-term.
These investments reportedly cost $6.5 million in 1H23.
AUTHOR
Charbel Kadib
Recommended for you
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
