The Pinnacle (ASX: PNI) share price hit an all-time high this week

Why this Aussie fund manager’s shares are shooting into record territory.

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The Pinnacle Investment Management Group Limited (ASX: PNI) share price is flying right now. After hitting a new all-time high to start the week, shares in the Aussie investment group have slipped lower on Wednesday.

However, based on the current Pinnacle share price of $12.47, the company’s value has soared 72.24% higher in 2021 and now sits at a market cap of $2.4 billion. Let’s take a closer look.

Why is the Pinnacle share price flying?

It may surprise some investors that there haven’t been many market updates from Pinnacle in recent times. But that hasn’t stopped people from snapping up shares and propelling the company’s value higher.

One important announcement came on 6 July in the form of a market update. It’s worth noting that Pinnacle makes a fairly significant chunk of money from performance fees, as well as standard investment fees amongst other things. That means any signs of increased returns or portfolio growth could see the Pinnacle share price climb higher.

In the market update, Pinnacle said 7 affiliates have locked in performance fees of $86 million for FY2021. That means the investment group’s net share of these fees is approximately $19.5 million. The Pinnacle share price climbed higher on the news as investors eye the $2.2 million net return on principal investment for FY2021 announced at the time.

The key here is that when the share market and economy are doing well, Pinnacle tends to do quite well. Performance fees surged higher in the first half of this year thanks to the post-bear market recovery across global markets.

An injection of cash via record government stimulus at home and abroad has also seen strong asset price inflation. That has translated to significant funds under management growth for Pinnacle which is once again good for investment management fees, on top of boosted returns.

As a result, the Pinnacle share price has been on fire in FY2021. Investors will be watching closely when Pinnacle provides its full-year results update on 5 August 2021 for signs of what’s in store next year.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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