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. After the speaker presentation, there will be a question and answer session. If you'd like to ask a question at that time, you'll need to press star one on your telephone. I'd now like to hand over to Managing Director, Ian Macoun. 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 2020 financial year result for PNI. On the call we have myself, Ian Macoun, our Non-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. 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.
I'll seek to summarize and go into some more detail on some key issues that are relevant to the results. 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, just mention 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. Into the presentation. Slide one contains some disclaimers. Moving to slide three, first half 2020 financial year financial highlights. Our net profit after tax was AUD 13.8 million, which was up 37% from the prior corresponding period. Basic earnings per share was AUD 0.081, up 33% from the prior corresponding period.
Diluted earnings per share, AUD 0.077, up 35% from the prior corresponding period. Our share of the net profit after tax of affiliates was AUD 17.7 million, up 24% from AUD 14.3 million in the prior corresponding period. We had cash and principal investments of AUD 44.7 million at the end of December. That's our dry powder that we talk about. Our new AUD 30 million CBA loan facility was fully drawn in December. This was used to fund the acquisition of a 25% interest in Coolabah Capital. We've declared a fully franked interim dividend of AUD 0.069 per share, payable on the 20th of March. Now, footnote one on this slide is important. The AUD 13.8 million headline profit number includes a net positive return on principal investments of AUD 385,000.
In the PCT, this was a net loss of AUD 600,000. If we adjust for these, it's actually a 25% lift in net profit after tax, eliminating the returns on principal investments. That's what I really think of as the true increase in net profit after tax in this half over the NPAT from the first half of 2019. I think it is a 25% result. Slide four covers the business highlights, funds under management, and funds flows. Aggregate affiliates funds under management at 31st of December, at 100% of affiliates funds, was AUD 61.6 billion. You'll note that we're making it clear that this number is 100% of the total affiliates fund, not our effective share, which of course is substantially less. I'll mention that in a little more detail later.
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. We're at AUD 61.6 billion. This AUD 61.6 billion was up AUD 7.3 billion from AUD 54.3 billion at the 30th of June. A AUD 7.3 billion increase for the six months. Aggregate retail funds under management, again at 100% of affiliates total, was AUD 14.9 billion, up from AUD 11.6 billion at the 30th of June. Net inflows for the half year were AUD 2 billion. This included AUD 900 million of retail, of which AUD 200 million was listed investment companies or listed investment trusts.
Retail net inflows for the half year were lower than for the prior corresponding period and lower than for the second half of FY 2019. In the prior corresponding period, retail net inflows were AUD 1.4 billion, of which AUD 200 million were LIC and LITs. In the second half of FY 2019, these were AUD 1.5 billion, of which AUD 800 million was LICs and LITs. 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 AUD 1.1 billion 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.
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 12-month period. 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 300 was up 1.2% over the six months, and the MSCI World Index was up 8% over the six-month period, 9.2% in AUD. We also identify and quantify the fund increases that resulted from these market movements in investment performance.
During that six-month period, it was a AUD 2.3 billion gain, AUD 300 million of which was retail. That's from market movements performance, which we can't really separate out. Finally, we emphasize 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 that 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. As 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. We don't see significant concerns. As I mentioned, we have a significant pipeline, and we think it all bodes well for larger flows going forward. Slide five, I'll be brief from here. The business highlights affiliates. We've added two new affiliates during the period. One was Horizon 3, which was Coolabah, and one was Horizon 2, which is a new build called Reminiscent 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.
It's initially a team of three led by David Adams, who's ex-Brevan Howard Asia and ex-Morgan Stanley Australia. Two new affiliates during the period, and we've launched some new listed alternative UCITS funds. One was the Plato Global Market Neutral Fund. Led by
Dave Allen
Dave Allen. Two Trees, we've launched a new UCITS fund for them with their systematic global macro. 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 result. 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. That skews the result quite strongly.
We've also pointed out that our costs were higher, costs of Pinnacle Parent, largely due to the full-year effect of some significant resource increases throughout the FY 2019 financial year. We've got the headcount numbers there. We addressed this very extensively in our full-year results six months ago, probably no need to go into it a lot more now. I know it sounds like I'm a broken record with this. I keep talking about our continued investment in Horizon 2. 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, they're a drag on our P&L in the short term. We still think it's very sensible to do that. 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. 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 NPAT 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 this is a non-cash expense. The auditors require us to value our LTI and expense it. We'd only begun our large LTI expense partway through the PCP, it was of course a full period effect this year. We had a million dollar write-off this year, this half, and only AUD half a million in the PCP. If you adjusted for that, as some people do, our growth was 29%. I'm very happy for us to talk about a 25% period.
We talk 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 in a dry powder, but we use it in the meantime to invest as seed in a whole range of our affiliates' new funds. 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 would think there's enough market exposure in the PNI stock. They don't want that exacerbated by having our balance sheet too market exposed. 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 markets. That just explains where those losses come from. Slide eight.
Just a couple more points on understanding our financial outcome. Slide eight focuses on the affiliates' financials rather than Pinnacle Parent. Fairly straightforward. Total affiliates revenues were AUD 132.5 million, up 28.5%. Slide nine, again, just elaborating a little further. The first, the top half of this slide is about Pinnacle Parent, where our revenues and our capabilities and costs have been increasing with our growth. The second half is about the affiliates, where their profits are also growing quite strongly on higher FUM. We do make the point that there's a drag on that, which is the investment in the affiliates that are not yet profitable. Pinnacle Parent 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 Reminiscent. As you'll see, they are all making progress.
Two Trees in particular, Longwave is making very good progress. Riparian and Reminiscent are out in the market. When FUM moves to profit, that drag goes away and becomes positive. Of course, we'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 AUD 7.3 billion increase in our fund for the half-year is simply AUD 3 billion that we acquired when we acquired Coolabah, net inflows of AUD 2.0 billion, and market movements investment performance of AUD 2.3 billion.
Slide 12 is a slide that analysts like to see, which is a full detail by affiliate of our funds under management. Historical, the top line is 31st of December. That's the composition of the AUD 61.6 billion. The bottom area is our effective share of the fund. We simply multiply each affiliate sum by our effective share, and you'll see that our look-through, if you like, effective share of sum is AUD 23.1 billion, for people who like to look at that. Twice a year, we give this full breakdown of fund by affiliate. There it is at 31st of December, 2019. That really completes what we might call the factual part of the results, the financials, the funds, and flows back for the period. I'd like to summarize a little bit how we see this half-year period.
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 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. We're optimistic and positive about future growth, whatever market conditions might be experienced going forward.
We can all talk about the concerns that are out there, the latest one being coronavirus, et cetera. We recognize that the path of a strong growth company, which we believe that ours is and very much continues to be, is rarely a smooth upward line. You have periods of explosive growth, then you have other periods where the growth is not as strong. 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 quarter of 2018 before that market drop in the last quarter of calendar 2018. I think we had AUD 7.9 billion of net inflows in 2018, we acquired Metrics and so on.
Last year's net inflows have been lower, as I mentioned. We look at the Australian insto market, the offshore sales prospects. We have 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. I would say in relation to offshore, watch this space. In the retail market in slide 20, we've listed the key considerations there. There have been significant changes that have occurred there post-Hayne and it remains to be seen where all this will settle, but certainly it's been a tougher environment in retail in, 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 insto market.
Very happy to go through those. I'm starting to feel as though I'm rabbiting on a little bit too much and I should perhaps pause and take questions. If we have time for questions, I will revisit talking further slides 17 and 20 about the Aussie insto and the retail markets. Perhaps if I pause there and invite questions. Again, please feel free to ask questions of any of the three of us.
Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. If you need to cancel that request, please press the pound or hash key. Our first question comes from Tim Lawson from Macquarie. Please go ahead.
Hi, gentlemen. Thanks for taking my question. Just with regard to your comments, Ian, on the fund 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 where you're concentrated?
Yeah. Absolutely. Thanks, Tim. Slides 17 and then 18, we've sought to put out some more granularity about the diversification of our client base. People are aware that by asset class, we're diversifying, adding Metrics and Coolabah, for example, and then a range of alternative type strategies. We believe these are in substantial demand in both the 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. I think we've 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, we're all aware of the fee pressures.
These trends in the institutional market, we've talked about industry fund consolidation, some in-sourcing, some moves to indexing, and so on. The pressure for fees to continually come down somewhat. Those pressures are real. They've been going on ever since I was a young man, which trust me, was a long time ago. The total sum is growing a lot and keeping all that in perspective, we feel very good about the insto market. 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. In terms of the trends for our asset classes, it is fairly mixed. Things like Coolabah, their average fees are pretty high because they charge performance fees as they make gains.
Metrics, they're low risk products, modest fees, but we do large volumes of those and it's very good business. Some of their more recent strategies have significantly higher fees, including performance fees and up-fronts, et cetera.
Tim, to give you an example of that, if we look back at the previous corresponding period, we had circa five managers that had north of AUD 4 billion. We now have eight who are north of AUD 4 billion. If you look at each manager, Hyperion is going into global. Their global fund, both offshore but also retail, both tend to attract higher fee rates. Plato 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 on average higher fee rates than what can be achieved domestically. Firetrail, again, on retail, with performance bouncing back. Ian talked about Metrics.
I would say it's not only the breadth of managers now with eight well and truly with momentum above AUD 4 billion, but it's also, as we talked about, the geographies of where we're going and also the channel, the mix of where we're raising the assets.
That's right. As a generalization, as I said, we don't target that we want particular fee rates. It depends on the strategies and the markets. As a general statement, our average fees across the board have been sloping up modestly, and that's a trend. It's partly because of the increase in retail. Retail fees are substantially higher than institutional. As we move offshore, what we've found happily, is that like for like, offshore investors pay higher fees than Australian institutional investors. That's good for us too as we grow our offshore farm.
Thanks, Ian. That's very helpful.
Our next question comes from Nicholas McGarrigle from Ord Minnett. Please go ahead.
Morning, guys. I think it was a good result from my reading of it all. Just to understand the skewness, you've given sort of an indication, what the last couple of years was. 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 in the Metrics, Palisade's obviously grown. There's some quite large LIC raisings or LIT raisings going on in the second half, and then you've got Coolabah coming through with a contribution. Do you think that the skew to the second half could actually be greater than those last couple of years?
Yeah. It's very hard to say, Nicholas. 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. I think if people want to do conservative sort of forecasts and so on, we don't make forecasts ourselves, but I'd be using the likes of that 35%. Like the pattern is not a lot different from past years. Who knows? Could prove me wrong and you could be right that it's a stronger second half relatively compared to the past. I don't know. If I was doing my best, I'd probably conservatively use the 35%, something like that.
All right. Just in terms of the Coolabah business, we haven't spoken about that, I think, on a conference call or anything. 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? I know you've not given any indications on what that would contribute.
All right. 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. I can tell you they are very well-regarded, and there are good pipelines in both institutional and retail.
Nicholas, further to that, slide 35 provides a brief summary of our views on alternative credit and fixed income, and then slides 28 and 29 talk about Coolabah in more detail. I can 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 Metrics deal not too long ago. 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, what we've been witnessing, the Australian marketplace as a whole is probably underweight fixed income and credits relative to global peers. We've had a view for some time that we do see a greater migration into more fixed income type assets.
When we had the opportunity to partner with Coolabah, we were very pleased to do the work and ultimately get the deal completed. What is very exciting about Coolabah 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 are publicly available. The other aspect is that if you look at the peer group, the peer set in defensives, by number, there are less peers that you compete with in that space compared to equities and generally. I think not only does it meet the quality criteria, but it also meets the trajectory of where we see flows and demand in that asset class.
Okay, great. 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 the board to take on more debt? Would significant Horizon 3 opportunity mean we require equity?
Yeah. We've always said we don't want to be highly geared. We don't think that's a smart idea. The AUD 30 million that we took on, that's 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, Nicholas. We didn't want to do an equity raise just given where things are and where our share price is and so on. 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. Owen, I don't think I'm speaking out of school in saying I don't think there'd be an appetite at the board level for a lot of gearing of this company. We think we've got a great company that's going to do well in all conditions. We don't ever want anything that stresses us in any way. We'll see, Nicholas. 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 AUD 30 million and we've spent it. It's largely unchanged. We've got a nice amount of dry powder there, but obviously it depends on the size of opportunities.
Cool. I'll let someone else have a crack. Thanks.
Once again, if you'd like to ask a question, please press star one on your telephone. Our next question comes from Liam Cummins from Wilsons. 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, LIT market as you see it at the moment. We're obviously in the midst of an MXT raising, so it's good enough, I suppose, but how you see that maybe going forward versus where it's been over the last six to twelve months. Secondly, maybe where Coolabah might be positioned for their appetite in that market, just given how vocal Chris is, at least on a part of how that part of the market functions?
Yeah, sure. Thanks, Liam. 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. We need to wait and see where that ends up. We do have the Metrics raise 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 Metrics offering is a very good offering, and it's been extremely popular since it started two and a half years ago. It's pretty much always been at a premium, and it's delivered everything that investors have ever wanted. I'm not surprised that we've perceived strong demand for it when we announced the raise.
In terms of Coolabah, obviously I've talked a lot with Chris about this. He's not against LITs, is my understanding. He just is very much against the payment of stamping fees. I think we've just got to wait and see.
Liam, if I can add, our entry into this space is all about giving our clients choice. We talk about being agnostic to alternative products. We still have a very strong view on listed as a whole, and that includes ETFs. You could well see us do more on the ETF side, or I should say our affiliates do more on the ETF side. 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’ve taken the position that it’s important to provide choice to investors.
Great, thanks. Maybe more broadly within the retail market, I think last time we all spoke, you were talking about the headwinds for inflows being an industry-wide issue. Maybe how you've seen that change over the last six months, if there's been any change, and how you've positioned yourself around that.
Sure. Yeah. Definitely. I still think structurally 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 development. Slide 20, I should say. They're very high level. What I would say is that 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 AUD 100 million of net retail flows the previous half PCP. This time around, we've got five managers that have delivered north of AUD 100 million.
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. I think it'll still stay somewhat challenged, but you see with some of the newer platform solutions, or they're probably not new now, are the net worth. 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. That's been our thesis for some time, and it's the way we've continued to operate in that channel.
All right, thanks so much, guys.
Just a final call. If you would like to ask a question, please press star one. Our next question comes from Scott Murdoch from Morgans. Please go ahead.
Morning, guys. A couple from me, if I can. Just interested around that second half skew. Obviously, we know the dynamics, but interested in any comments you can give on your confidence for Palisade to achieve the performance fee they typically have in the second half.
Thanks, Scott. Again, we can't speculate or forecast. It'll depend, we've still got six months to go. Everything we see in Palisade 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. Thank you. 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 trend in flows there. Maybe some others that you might want to call out. Hyperion Global, another one of interest.
Yep. Sure. You can see the FUM and the movements in FUM on slide 12. That gives you some idea. 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 at Antipodes, and their style hasn't been in favor. We have pipelines 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. We're seeing some professional investors who are certainly positioning themselves for the time when the style thing changes.
Ian, if I can add to that, obviously everyone follows the global fund, the long short, the flagship fund here domestically, particularly for retail. What I think is sometimes somewhat missed 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 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. 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.
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 their 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.
And offshore.
They're also getting traction offshore. Watch this space 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 nice business. Firetrail is largely out of capacity for their current strategies.
Institutionally.
Institutionally, that's right. We're continuing to promote them in the retail market. There's plenty of strategies that we've got a pipeline for.
Clearly Chris and the Coolabah 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 Coolabah across the various channels, institutionally, domestic, retail and also offshore.
Okay. Thank you. Very good. Just one last one from me, thanks. I think the investment in Pinnacle Parent, you've articulated the reasons and the growth in the investment there, just interested, as we look forward, just the quantum of cost growth now compared to recent periods, if you expect that to steady now and sort of pause for a bit and wait for the returns to come through?
Yeah. We've certainly said that we've been disciplined on that. 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 deals, there is a lot of opportunity there, but we've disciplined ourselves. We've got kind of this AUD 5 million or AUD 6 million number in mind that we don't want that to increase, and we think that's enough. 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.
No, the costs aren't going to grow at the rate of last year, we don't think.
Okay. Thanks, Ian. That's all for me.
Thank you. We have one final question from the line of Nicholas McGarrigle from Ord Minnett.
G'day. With obviously some 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. If you were to think about the calendar year of 2020, you've obviously got the Metrics entitlement underway at the moment. 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 others that you've talked about in the past that they'll probably call on the runway a bit in late 2018. Can you give a sense on what might be coming this year?
We always have opportunities in that market, but we have to see how things work out. Hyperion Global, absolutely, a lot of people would like to invest in that. My observation, this is my personal observation, I don't know whether Adrian agrees or not, but I think there's a bit of a strike on equities 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. I wouldn't think it's right now, it doesn't look like a great time to issue any equities, LICs or LITs from what I can see. 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.
We'll just have to see how things work out.
All right. Maybe just one circling back on Coolabah, how you see that slotting into the distribution forces Pinnacle and where the more significant opportunities sit for them to ramp up their fund range?
Well, I can tell you there have been extensive sessions with the institutional team, extensive sessions with the retail distribution team. There's a lot of work going on. We think both the Aussie institutional market and the retail market are very prospective for Coolabah. 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 institutional and retail, we wouldn't have been interested in investing in them. I don't think they would have wanted us as their partner.
I think they sit neatly alongside Metrics Credit. Coolabah are listed only, so regular liquidity, so very good for platforms, et cetera. Also Metrics, they are launching a wholesale fund also for retail. Won't have the liquidity profile of Coolabah, but will be close. They operate in different asset classes. 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 AUD 100 million funds under advice. Often we 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." With those clients, we understand their businesses and see what may be the most complementary for their client base.
Coolabah fits in very neatly with that. Domestic institutions, well, they've already made some great progress there. I think you will see further progress. Offshore's a really interesting one. Chris and the team have a long-short credit strategy. There are not too many competitors globally in that hedge fund space. When we get the Cayman vehicle up in particular, we will look forward to taking that strategy offshore. I would say there are significant growth opportunities in the pipeline for Coolabah. It fits a typical Pinnacle affiliate, if I could use that saying.
Great. Thanks for that.
Thank you so much. We have no further questions, so I'll pass back to Ian for final comments.
Well, thank you. We've gone somewhat over time, and we need to get away. I did say that we'd talk about the market, 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.