Ladies and gentlemen, thank you for standing by, and welcome to the Pinnacle Investment Management Group Half Year Results. At this time, all participants are in a listen only mode. Call. I'd now like to hand over to Managing Director, Ian MacCallan. Thank you.
Please go ahead.
Good. Thank you. Welcome, everyone, and thanks to all who've taken the time to join the call. As you've heard, this is the first half twenty twenty financial year result for PMI. On the call, have myself, Ian McCown Chairman not Executive Chairman, Alan Watson and Executive Director, Adrian Whittingham.
You would have all seen that we lodged with the ASX earlier this morning a formal ASX announcement and a presentation. I hope that everyone participating on the call has access to these. I'll be using the presentation at least initially. So I'll start by stating the key numbers and highlights of the results. I'll do that quickly because I know that we can all read these numbers, but I think it's important that I call them out.
And then I'll seek to summarize and go into some more detail on some key issues that are relevant to the results. Also, comment on the performance of the company during the period, make a few comments on the road ahead, how we're seeing markets and the opportunities for ongoing growth as well as, I just mentioned, the increasing diversity and resilience of the company. We'll leave plenty of time for questions. And please, everyone, feel welcome to address any one of the three of us who are here with your questions. So into the presentation, Slide one contains some disclaimers.
So moving to Slide three, first half twenty twenty financial year financial highlights. Our net profit after tax was $13,800,000 which was up 37% from the prior corresponding period. Basic earnings per share was $0.81 up 33% from the prior corresponding period. Diluted earnings per share, $0.07 7, up 35% from the prior corresponding period. Our share of the net profit after tax of affiliates was $17,700,000 up 24% from $14,300,000 in the prior corresponding period.
We had cash and principal investments of $44,700,000 at the December. That's our dry powder that we talked about. Our new $30,000,000 CBA loan facility was fully drawn in December, and this was used to fund the acquisition of a 25% interest in Coolabah Capital. And we've declared a fully franked interim dividend of $0.69 per share payable on the March 20. Now footnote one on this slide is important.
The $30,800,000 headline profit number includes a net positive return on principal investments of $385,000 And in the PCP, this was a net loss of $600,000 So if we adjust for these, it's actually a 25% lift in net profit after tax, eliminating the returns on principal investments. And so that's what I really think of as the true increase in net profit after tax in this half over the impact from the first half of twenty nineteen. So I think it was a 25% result. Slide four covers the business highlights, funds under management and funds flows. Aggregate affiliates, funds under management at December 31 at 100% of affiliates from was $61,600,000,000 Now you'll note that we're making it clear that this number is 100% of the total affiliates from, not our effective share, which, of course, is substantially less.
And I'll mention that a little more in a little more detail later. But this aggregate number is what people most focus on and are interested in as a broad measure of our fund growth. The effective share numbers are in Slide 12. So we're at GBP 61,600,000,000.0. This GBP 61,600,000,000.0 was up $7,300,000,000 from GBP 54.3 at the June 30.
So a $7,300,000,000 increase for the six months. Aggregate retail funds under management, again, at 100% of affiliates total, was $14,900,000,000 up from $11,600,000,000 at the June 30. Net inflows for the half year were $2,000,000,000 so $2,000,000,000 This included $900,000,000 of retail, of which $200,000,000 was listed investment companies or listed investment trusts. So retail net inflows for the half year were lower than for the prior corresponding period and lower than for the second half of FY 'nineteen. So in the prior corresponding period, retail net inflows were $1,400,000,000 of which $200,000,000 were liquids and in second half of FY 'nineteen, this is worth $1,500,000,000 of which $800,000,000 was liquids and whips.
So a little more on that later. I know people are very focused on our flows, and I'd like to go into some detail about the market conditions and so on. Institutional net inflows of 1,100,000,000 were lower than expected, but the institutional pipeline remains strong. And pleasingly, this pipeline is from an increasingly diverse client set, diverse by geography, diverse by client type and so on. And this should support a higher rate of net inflows over the coming year or two, recognizing always that institutional flows are lumpy, and it's not possible to accurately predict them over any twelve month period.
Now this lumpiness is simply the reality of the institutional market, both in Australia and offshore, and the bane of all of us when we try to talk about flows over particular periods of time. We've also mentioned on this slide that the equities markets generally and our manager performance also added to funds under management during the period. The ASX three hundred was up 1.2% over the six months, and the Whiskey World Index was up eight percent over the six month period, 9.2% in AUD. So we also identified and quantified the fund increases that resulted from these market movements and investment performance. And during that six month period, it was a $2,300,000,000 gain, dollars 300,000,000 of which was retail.
That's from MarketMovements performance, which we can't really separate out. And then finally, we emphasized that we have a well diversified and increasingly well diversified client base. I would like to spend a few minutes talking about the growing diversification of our client base. I'll explain in more detail shortly, but we've decided to begin to share some more detail on the composition of our client base. We have, for many years, deliberately sought wherever possible to maximize client diversification.
And people are aware we've been operating in the Australian institutional funds market for a long time. We're very experienced in it. We've had strategies and approaches for a long time to ensure that we have a very robust business in that market. There's been a lot of commentary about changes in that market, and there are definitely some trends that we've called out and we'd like to continue to talk about. But it remains a very attractive market for us.
And we don't see significant concerns. And as I mentioned, we have a significant pipeline, and we think we'll get well, it all goes well for larger flows going forward. So Slide five, I'll be brief from here. The business highlights affiliates. We've added two new affiliates during the period.
One was Horizon three, which was Koolabah and one was Horizon two, which is a new build called Remnison Capital. We've had a program going for pretty much the last year, but we're announcing that now as it's reached the stage where we're really taking that to the market. So it's initially a team of three led by David Adams, who's ex Brevin Howard Asia and ex Morgan Stanley Australia. So two new affiliates during the period, and we've launched some new liquid alternative usage funds. One was the PLATO Global Market Mutual Fund led by Allen.
And Two Trees, we've launched a new usage fund for them with their systematic global macro. So just briefly now, the next slide is understanding the first half financial outcome. We want to draw to attention just a few points. Firstly, as always, we remind shareholders of this first half, second half skew in our results. Last year, the first half was 33% of the total financial year results.
The year before, it was 35%. I think most of our shareholders are quite well aware of the reasons for that, the various annual performance fees in Palisade, for example, and the annual success fees that we earn in Pinnacle as a distributor, they all come in the second half. So that skews the result quite strongly. We've also pointed out that our costs were higher of the costs of Pinnacle parent, largely due to the full year effect of some significant resource increases throughout the FY 'nineteen financial year. We've got the headcount numbers there.
We addressed this very extensively in our full year results six months ago, but probably no need to go into it a lot more now. I mean, I know it sounds like I'm a broken record with this. I keep talking about our continued investment in Horizon two. I do that because it's very important. We know that these investments will bring us a lot of growth and revenue in the medium term, but they're a drag on our P and L in the short term.
We still think it's very sensible to do that. And I'll talk a little about the extra people we're planning to put offshore and so on. This is all costs ahead of revenue, but we believe it's very important for future medium term growth to keep doing that. And then we just make this statement on Slide six that we remain well positioned to deliver superior business and financial performance in the medium term. We put in lots of effort and expense to keep this growth going.
We look always for multiple sources of growth. At any point in time, we expect to look forward several years and have whatever market conditions are out there, we expect to have growth from a number of different sources. Slide seven, group financial summary. I think these numbers are fairly self explanatory. I'll leave it for people to read.
You will see there, I mentioned at the beginning because I thought it was important, the adjustment to our impact by excluding the net gains and losses on principal investments, which shows a growth of 25% rather than the headline 37%. We also make an adjustment for the LTI expense, which is a positive adjustment in the sense that so this is a noncash expense. The auditors require us to value our LTI and expense it. We only began our large LTI in partway through the PCP, and it was, of course, a full period effect this year. So we had $1,000,000 write off this year this half and only $500,000 in the PCP.
You adjusted for that, as some people do, our growth was 29%. But I'm very happy to talk about a 25% period. We talked a bit about our hedging losses, which is this PI return. I just want people to realize that we hedge a substantial part of our market exposure. We use our capital, a dry powder, but we use it in the meantime to invest and feed in a whole range of our affiliates, new funds.
So it's not principally return maximizing. We do expect to make a return on it, of course. But we've taken the view that shareholders, we think there's enough market exposure in the P and I stock. They don't want that exacerbated by having our balance sheet to market exposed. So we just simply put some hedging in there.
Now in the last couple of years, those have produced losses. They really are offsetting gains from the market. That just explains where those kind of losses come from. Slide eight, just a couple of more points on understanding our financial outcome. Slide eight focuses on the affiliates financials rather than Pinnacle parent, fairly straightforward.
Total affiliates revenues were $132,500,000 up 28.5%. Slide nine, again, elaborating a little further. The first kind of the top half of the slide is about Pinnacle Parent, where our revenues and our capabilities and costs have been increasing with our growth. And then the second half is about the affiliates where their profits are also growing quite strongly on higher sum. But we do make the point that there's a drag on that, which is the investment in the affiliates that are not yet profitable.
And Pindle Perak is a drag in servicing those new affiliates, but directly in our share of affiliates profits,
there
are negatives from Two Trees, Longwave, Riparian and Rememisin. And as they you'll see they're all making progress. Two Trees in particular, long wave is making very good progress. Repairing and Reminiscent are out in the market. As they win some, move to profit, that trade goes away and becomes positive.
But of course, they're likely to have some more new affiliates by then that will also have some drag. Our balance sheet is there. I think straightforward. I'm not going to spend further time on that. I want to leave time for questions.
Slide 11 is the graph of our fund growth. Again, nothing very new there. The dot points I've already really referred to. The $7,300,000,000 increase in our fund for the half year is simply $3,000,000,000 that we acquired, and we acquired Koolabah, net inflows of 2,000,000,000 and market movements investment performance of $2,300,000,000 Slide 12 is a slide that analysts like to see, which is the full detail by affiliates of our funds under management. Historically, the top line is December 31.
That's the composition of the $61,600,000,000 The bottom area is our effective share of the funds. So we simply multiply each affiliate's sum by our effective share, and you'll see that our like, look through, if you like, effective share of sum is $23,100,000,000 for people who like to look at that. But twice a year, we give this full breakdown of fund by affiliate. There it is at 12/31/2019. That really completes what we might call the kind of factual part of the results, the financials, the funds and flows back for the period.
So I'd like to kind of summarize a little bit how we see this half year period. And I think I'd summarize by saying, look, we're very pleased with the progress that we made during the six month period in what was essentially kind of a solid steady as she goes period, okay? We didn't have the really large inflows that we've had in some past periods. But in market conditions, which I think we can talk a little bit more about, I think it's a pretty solid flows result. We've continued to do a lot of good work during the period in laying further groundwork for further growth and building an even more robust, diversified and resilient business.
I would say we've been measured and disciplined in our investing in the face of very extensive growth opportunities and a somewhat challenging market. But we're optimistic and positive about future growth, whatever market conditions might be experienced going forward. And we can all talk about the concerns that are out there, the latest ones being coronavirus, etcetera. So we recognize that the path of a strong growth company, which we believe that ours is and very much continues to be, is really a smooth upward line. You have periods of kind of explosive growth, then you have other periods where the growth is not as strong.
But the important thing is that you do that happens occasionally. The important thing is you do very good work during that time so you can keep growing as conditions get a little bit better. People remember we had exceptionally high growth in the couple of years to the September 2018 before that market dropped in the 2018. I think we had $7,900,000,000 of net inflows in 2018, and we acquired Metrix and so on. Last year's net inflows had been lower, as I mentioned, but we look at
the
Australian market, the offshore sales prospects. So we had a strong pipeline in Australian Insto. We've got a growing pipeline in offshore where the hard work we've done over the last few years is beginning to pay off. So I would say in relation to offshore, what's this space? And in the retail market, in Slide 20, we've listed the key considerations there.
There have been significant changes that have occurred there post Haines, and it remains to be seen where all this will settle. But certainly, it's been a tougher environment in retail in the last I'd say the last calendar year. I've got points there on Slide 20 that I'm very happy to go through. Slide 17 are points on the Aussie Insta market, very happy to go through those. But I'm starting to feel as though I'm rabbiting on a little bit too much, and I should perhaps pause and take questions.
And if we have time for questions, I will revisit talking further, Slide seventeen and twenty, about the Aussie in store and the retail markets. But perhaps if I pause there and invite questions. And again, please feel free to ask questions of any of the three of
Our first question comes from Tim Lawson from Macquarie.
Just with regard to your comments on the sort of time diversification and where it's come from, can
you talk what that might mean in terms
of fees, both in regards to what the diversity impact is, but also just market trends across sort of where you're concentrated? Yes. Absolutely. Thanks, Tim.
So Slide 17 and then 18, we sought to put out some more granularity about the diversification of our client base. People are aware that our client asset class, we're diversifying, adding metrics and cooler bar, for example, and then a range of alternative type strategies. We believe these are in substantial demand in both institutional and the retail market, and we want to be a significant player there. Fees is always a bit of a tough one, Tim, because we have such a range of offerings. And I think we talked about previously, we don't target a particular fee level.
We look to get a fair fee for every one of our strategies depending on what it is, depending on what its capacity is and so on. I would say, as a general statement, so we're all aware of the fee pressures. And these trends in the institutional market, we've talked about industry fund consolidation, some in sourcing, some moves to indexing and so on and pressure, the fees to continually come down somewhat. Those fees are those pressures are real. They've been going on ever since I was a young man, which, trust me, was a long time ago.
But the total sum is growing a lot. And keeping all that in perspective, we feel very good about the East Bay market. And in terms of fee, sometimes we're very happy to take large mandates at quite low fees where we have a lot of capacity. Where we have limited capacity, we won't accept fee pressure. But in terms of the trends for our asset classes, it is fairly mixed.
But things like Coolabar, their average fees are pretty high because they charge performance fees as they make gains. Metrics, they're they're kind of low risk products, modest fees, but we do large volumes of those, and they and they're very it's very good business. But some of their more recent strategies have significantly higher fees, including performance fees and upfronts, etcetera.
And Tim, to give you an example of that, so we look back at the previous corresponding period, we had circa five managers that had north of $4,000,000,000 We now have $8 who are north of $4,000,000,000 And if you look at each manager, Hyperion is going into global, big global fund, both offshore but also retail, both tend to attract higher fee rates. Play Doh is the same for market neutral, both domestically and offshore, although we recognize that is early. Resolution Capital is getting good traction offshore, which tend to be higher on average, higher fee rates than what can be achieved domestically. Fire trials, again, on retail, with performance bouncing back, and Ian talked about metrics. So I would say it's not only the breadth of managers now with eight well and truly
with momentum above $4,000,000,000
but it's also the as we talked about, the geographies of where we're going and also the channel, the mix of where we're raising the assets.
So that's right. So as a generalization, as I said, we don't target that we want particular fee rates. It depends on the strategies in the market. But as a general statement, our average fees across the board have been floating up modestly. And that's a trend.
It's partly because of the increase in retail. The retail fees are substantially higher than institutional. And as we move offshore, what we found happily is that like for like, offshore investors pay higher fees from Australian institutional investors. So that's good for
us, too,
as we grow our offshore fund.
Our next question comes from Nicholas McGarrigle from Ordmanet. I
think it was a good result from my rating overall. Just to understand the skewness you've given sort of an indication what the last couple of years was. But do you think that maybe this year, there's even a greater skewness to the second half given you've got even more of those private vehicles like InnerMetrix, Palisade's obviously grown. There's some quite large ROIC raising or IT raising is going on in the second half. And then you've got Coola coming through with the contribution.
Do you think that the SKU to the second half could actually be greater than those last couple of years?
Yes. It's very hard to say, Nick. There's a lot of moving parts. Of course, if we did get some performance fees in addition to Palisade, that would have that kind of impact. But I think if people want to do conservative sort of forecasts and so on, we don't make forecasts ourselves.
But I've been using the likes of that 35%, like the pattern is not a lot different from past years. But who knows? Could prove me wrong, and you could be right that it's a stronger second half relatively compared to
the past.
But I don't know. And if I was just if I was doing my best, I'd probably conservatively use the 35%, something like that.
All right. And then just in terms of the accrual of our business, we haven't sort of spoken about that, I think, on a conference call or anything. So can you give us a bit of detail around their business, how you see that fitting into the Pinnacle platform and
how we
should think about the style of investment in terms of what you paid for it versus how prospective it is? And I know you've not given any indications on what that would contribute.
So we're very happy with our acquisition. We're absolutely delighted that they chose to partner with us. Everything we've seen during our extensive due diligence, but since then, makes us pleased that the prospects are good both in institutional and retail. It's a bit hard to say because performance fees are significant for them. But I can tell you they are very well regarded, and they have good pipelines in both institutional and retail.
And Nick, further to that, Slide 35 provides a brief summary of our views on alternative credit and fixed income. And then Slides twenty eight and twenty nine talk about Koolabah in more detail. But I can sort of provide a summary of both. One thing that we've been very cognizant of is that we have been underrepresented somewhat in fixed income within our portfolio of affiliates, notwithstanding, obviously, we did the Metrix deal not too long ago. And we've never been a firm that is about ticking boxes, as in we need to have a manager in this space and a manager in another space.
However, when what we've been witnessing, the Australian marketplace as a whole is probably underweight fixed income and credit relative to global peers. And we've had a view for some time that we do see a greater migration into more fixed income type assets. So when we had the opportunity to partner with Colivar, we were very pleased to do the work and ultimately get the deal completed. What's very exciting about Koolabah is that if you look at the results, if you look at their hit rate, if you look at the differentiation and the quality of the investment team, it is up there with the best in the marketplace. And the results speak for themselves, and they're publicly available.
The other aspect is that if you look at the peer group, the peer set in Defensive by number, there are less peers that you compete within that space compared to equities generally. So I think not only does it not meet the quality criteria, but it also meets the projection of where we see flows and demand in that asset class.
Okay. Great. And just in terms of the debt facility versus the principal book, just give us a sense on how you see the balance sheet going forward. Is there more appetite for Board to take on more debt? Or would significant horizon through opportunity may require equity?
Yes. So we've always said we don't want to be highly geared. We don't think that's a smart idea. But the £30,000,000 that we took on, that's like extremely comfortable. Given where interest rates are, it was a pretty easy decision to take on a little more dry powder.
We'd love to have more dry powder because there are plenty of opportunities out there. We'll wait and see what market conditions are, Nick. We didn't want to do an equity raise just given where things are and where our share price is and so on. So going forward, we'll just have to see. We'll have to see what the share price does, what the opportunities are and so on.
As a general statement, we don't want to take on a lot of debt. We could certainly do a bit more if that was convenient. If we had opportunities and a need, we could do a bit more. But I don't think I'm speaking out of school and saying I don't think there'd be an appetite of the board level for a lot of gearing of this company. We want to have a very we think we've got a great company that's going to do well in all conditions.
We don't ever want anything that sort of stresses us in any way. So we'll see, Nick. We just have to wait and see. We've got a nice amount I mean, effectively, we've got the same amount of dry powder that we had post the capital raise because we borrowed $30,000,000 and we spent it. So it's largely unchanged.
So we've got a nice amount of dry powder there. But obviously, it depends on the size of opportunities.
Our
next question comes from Liam Cummins from Wilson. Please go ahead.
Hi, team. Well done on the result. All looks pretty good so far. Just wanted to have a quick question just on maybe the pulse of the LIC, LAT market as you see it at the moment. We're obviously in the midst of an MXT rating.
So it's good enough, I suppose, but sort of how you see that maybe going forward versus where it's been over the last six to twelve months? And then secondly, maybe where Coolbar might be positioned for their appetite in that market, just given how vocal sort of Chris is, at least on a part of how that part of the market functions?
Yes. Sure. Thanks, Liam. So look, it's somewhat up in the air at the moment, isn't it? The Treasury is undertaking a review of stamping fees and so on.
So we need to wait and see where that ends up. We do have the metrics raised going on. That was well underway before this review was announced. And so that is live at the moment, as you said, and so we can't really say a lot about that. I would say that I think the InMetrix offering is a very good offering, and it's been extremely popular since it started sort of February ago.
It's pretty much always been at a premium, and it's delivered everything that investors have ever wanted. So I'm not surprised that there was we perceived strong demand for it when we announced the raise. In terms of Coolabah, I mean, obviously, I've talked a lot with Chris about this. So he's not against LR2s is my understanding. He just is very much against the payment of stamping fees.
So I think we've just got to wait and see.
Leeny, if I can add, our entry into this space is all about giving our clients choice. We talk about being agnostic to alternative products. So we still have a very strong view on listed as a whole, and that includes ETFs. So you could well see us do more on the ETF side or I should say our affiliates do more on the ETF side. So we still have this view that there will be migration to the exchange and that listed as a whole, and we're seeing that with other ETFs, to be frank, where flows are happening in that space.
We take the position that it's important to provide choice to investors.
Great. And maybe sort of more broadly within the retail market, I think last time we all spoke, you're sort of talking about, I guess, the headwinds for inflows being an industry wide sort of issue, sort of maybe how you've seen that change over the last six months, if there's been any change in sort of how you've positioned yourself around that?
Sure. Yes, definitely. I still think structurally, the those headwinds exist. Perhaps for the short term, and there is a slide I think it's on Slide 19 that we refer to, which is the retail market that's Slide 20, I should say. They're very high level.
What I would say is that you can still there are still winners in retail, as we've said previously, if your strategy is differentiated and you can execute on distribution. We're still seeing that with our own flows whilst they're down on PCP. Last period, we had four managers that delivered north of $100,000,000 of net retail flows the previous half PCP. This time around, we've got five managers that have delivered north of $100,000,000 So our breadth of distribution on retail flows is increasing, which is really pleasing. And we have opportunities like Palisade and Riparian coming forward in that wholesale high net worth retail market space.
So I think it will still stay somewhat challenged that you see with some of the newer platform solutions, or they're probably not new now, Hub and Netwealth. They're still gaining flows. Index is gaining flows. ETF is gaining flows. I think the key thing is have a really good sales team, have a clear strategy, obviously, high quality offerings and make sure you execute on it.
And that's been our thesis for some time, and it's the way we continue to operate in that channel.
Our next question comes from Scott Murdock from Morgan.
Just a couple from me, if I can. Just interested around that second half SKU. Obviously, we know the dynamics, but interested in any comments you can give on your confidence for Palisades to achieve the performance fee that they typically have in the second half?
Yes. So thanks a lot. Again, we can't speculate or forecast. So it will depend we've still got six months to go. But everything we see in Palisades indicates they're doing a terrific job, and there's certainly nothing to indicate they're not as good as they've ever been.
Okay. Just
interested also at the flows trend, I guess, more so at the affiliate level, whatever information you can give us. Obviously, the main ones there around Antipodes and the transient flows there and maybe some others that you might want to call out, Hyperion Global, another one of interest.
Yes. Sure. So you can see the sum and the movements in sum on Slide 12. So that gives you some idea. So obviously, Antipodes inflows haven't been as strong, and this is this perception of performance relative to benchmark and so on.
I would continue to point out to everyone that there's a style issue with Antipodes, and their style hasn't been in favor. There's actually we have pipeline in relation to the likes of Antipodes, not so much in the retail market, but in the institutional market, where professional investors understand that these things move in cycles. And we're seeing some professional investors who are certainly positioning themselves for the time when that the style of thing changes. And Ian, if I can
add to that. Obviously, everyone still likes the global fund, the long short, the flagship funds here domestically, particularly for retail. However, what I think is sometimes somewhat is the global long only strategy, and that is the strategy that we are taking to institutions and also taking offshore as well as now retail more recently. If you compare them in the value peer group, which institutional investors do, they do do that, which is as per Ian's comment, Their performance since inception is pretty much close to the top relative to their peers. And even over the one year, their performance is solid.
So yes, we're certainly well aware of the short term underperformance. We're doing everything we can with our clients to explain that and making sure that we're very visible. But on the flip side, there are a few opportunities that may be somewhat less visible, I guess,
you would say, because of the short term underperformance. Hyperion Global is getting traction, both in retail and institutional. It's been slower than we originally expected, particularly given the outstanding performance and the way the team is rated and assessed and so on. It's just been particular market circumstances that have caused that, but and offshore. And they're also getting traction offshore.
So what's this place in terms of Hyperion Global. A couple of our strategies have reached capacity, such as Solaris Core. They're doing very well with their long short. That's not big volumes, but it's very, very nice business. Fivetrail is largely out of capacity for their current strategies.
Institutional. Institutional, that's right. We're continuing to promote them in the retail market. So there's plenty of strategies that we've got a pipeline for.
And then we're starting the clearly, Chris and the Coolabot team have been in the retail and institutional market for some time. But we're also starting, I guess you would call it, our rollout strategy with Coolabat across the various channels, institutionally domestic, retail and also offshore.
Okay. Very good. And just one last one for me. I think the investment in P and I Parent, you've articulated the reasons and the growth in the investment there. But just interested, as we look forward, just the quantum of cost growth now compared to recent periods, if that's if you expect that to steady now and sort of pause for a bit and wait for the returns to come through?
Yes. So we certainly said that we've been disciplined on that. I mean, there's a lot of opportunity out there. If you look at offshore distribution, you look at direct to retail distribution, look at new affiliate bills. There is a lot of opportunity there, but we disciplined ourselves.
We've got kind of this 5,000,000 or $6,000,000 number in mind that we don't want that to increase. And we think that's enough. So we've got the headcount indications there that we had that big growth last year. We kind of explained that, signaled it fairly strongly, and that growth has come right off. We will continue to add at a modest rate going forward.
We do want to put a few more people offshore in distribution because we think it's going to be very worthwhile. But now the costs aren't going to grow at the rate of last year, we don't think.
We have one final question from the line of Nicholas McGarrigle from Ordmanet.
Just with obviously, of the rhetoric around the LIC, LIT market and that channel, I'm sure that you wouldn't be expediting any potential issuance just to avoid future regulation. But if you were to think about the calendar year of '20, you obviously got the metrics entitlement underway at the moment. But are there any other, fresh listings of products that you think would be suitable for the market? I know Hyperion Global is probably a great example. And there's probably a couple of those that you've talked about in the past, but they'll probably call on the runway bidding late twenty eighteen.
Can you give a sense on what might be coming this year?
So we always have opportunities in that market, but we have to see how things work out. I mean Hyperion Global, absolutely, a lot of people would like to invest in that. But my observation is my personal observation. I don't know whether Adrian agrees or not, but I think there's a bit of a strike on equity amongst retail investors for the time being, and that's really been in place for pretty much a year. And that's both domestic and global.
So I wouldn't think it's a right now, it doesn't look like a great time to issue any equity mix or lifts from what I can see. But look, we just have to wait and see. Adrian mentioned that we like giving people choice, and we decided some time ago that there are people out there who like to invest on market. And we'll just have to see how things work out.
All right. And then maybe just one circling back on Coolabah, how you see that sliding into the distribution forces, Pinnacle and where the most significant opportunity fit for them to ramp up their front load?
Well, can tell you there have been extensive sessions with the in store team, extensive sessions with the retail distribution team. There's a lot of work going on. We think both the in store market and the retail market are very prospective for Koolabah. They're already good at distribution. We think we can help them a lot to boost that.
If we didn't think we could help them grow distribution even more in both in store and retail, we wouldn't have been interested in investing in them. And I don't think they would have wanted us as their partner.
I think they fit neatly alongside Metrix Credit. Coolbar are listed only. So regular liquidity, so very good for platforms, etcetera. And also, Metrix, they are launching a wholesale fund also for retail, won't have the liquidity profile of accrual above, but we'll be close. And they operate in different asset classes.
So they're very complementary in what is a massive asset class. When we speak to our clients, particularly you've heard me talk about the fact in retail, we focus on top practices. There's now circa 1,100 of those that have more than 100,000,000 funds under advice. Often, are, I guess you would call it consultative selling. We don't necessarily go in there and say, this is the latest and greatest strategy.
We with those clients, we understand their businesses and see what may be the most complementary for their client base. And so CoolBar fits in very neatly with that. Domestic institutions, well, they've already made some great progress there. I think you'll see further progress. And offshore is a really interesting one.
Chris and his team have a long short credit strategy. There are not too many competitors globally in that hedge fund space. So when we get the Cayman vehicle up in particular, we look forward to taking that strategy offshore. So I would say there are significant growth opportunities in the pipeline for Koolaba. It's a typical Pinnacle affiliate, if I can use that sign.
We
have no further questions, so I'll pass back to Ian for final comments.
Thank you. We've gone somewhat over time, and we need to get away. So I did say that we talk about the markets, but we've pretty much done that. So I think we can just about leave it there if there are no more questions. Thanks to everyone for participating.
Thank you so much. Ladies and gentlemen, that does conclude the call for today. Thank you so much for your attendance. You may now disconnect.