Global Operating Review

Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.

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Markets: A Year in Review

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Financial Performance

The 2020 Financial Year saw heightened market volatility, particularly in the March quarter as a result of COVID-19 before recovering in the second half of the year. Cash Net Profit After Tax (Cash NPAT) was $146.8 million, a decrease of 10.2 per cent on the previous year, while Statutory NPAT declined 24.7 per cent to $116.4 million. Funds under management (FUM) declined eight per cent to $92.4 billion primarily due to net outflows of $6.5 billion, resulting in a 3.3 per cent decline in revenue to $474.8 million for the year.

Five-year profile FY16 FY17 FY18 FY19 FY20
Cash NPAT ($m) 156.0 173.1 201.6 163.5 146.8
Statutory NPAT ($m) 142.0 147.5 202.0 154.5 116.4
Operating revenue ($m) 493.9 491.0 558.5 491.2 474.8
Operating expenses ($m) 297.0 281.9 316.9 290.2 298.5
Cash EPS (cps) 50.8 55.3 63.7 51.3 45.5
Dividends (cps) 42.0 45.0 52.0 45.0 37.0
Average FUM ($b) 80.2 90.4 99.5 98.8 94.8
Closing FUM ($b) 84.0 95.8 101.6 100.4 92.4

Funds under management (FUM)

Closing FUM was $92.4 billion as at 30 September 2020, eight per cent lower than pcp ($100.4 billion). The decline in FUM was primarily the result of net outflows of $6.5 billion and unfavourable foreign currency movements of $2.3 billion as the US dollar (-5.1%) and British pound (-0.9%) weakened against the Australian dollar. Market movements and investment performance combined added $0.8 billion to FUM with strong investment performance more than offsetting the adverse impact of market movements.

Outflows were primarily the result of $3.3 billion in net redemptions from European strategies as investors continued to reduce their exposure to the region over Brexit concerns and investment underperformance.

Additionally, Westpac outflows totalled $2.6 billion due to the ongoing run-off of the legacy book as well as further transitioning of corporate superannuation portfolios during the year.

Positive net flows were achieved in a number of strategies including International Select (+$1.0 billion), Global Opportunities (+$0.7 billion), UK Dynamic (+$0.5 billion) and UK Opportunities (+$0.4 billion).

$b 30-Sep-19
Closing FUM
Net flows Other2 FX impact 30-Sep-20
Closing FUM
Institutional 38.0 0.3 0.4 (0.8) 37.9
Australia 8.2 (0.5) (0.4) 7.3
OEICs 19.1 (4.1) (2.6) 12.4
US Pooled 16.3 0.4 3.6 (1.5) 18.8
Pendal Group Core Funds 81.6 (3.9) 1.0 (2.3) 76.4
Westpac - Other1 13.8 (1.1) 12.7
Westpac - Legacy 5.0 (1.5) (0.2) 3.3
Total Pendal Group FUM 100.4 (6.5) 0.8 (2.3) 92.4
1 Represents all Westpac directed mandates covering corporate and retail superannuation, multi-manager portfolios, managed accounts and Westpac capital
2 Includes market movement, investment performance and distributions

Investment performance

Global equity markets were volatile during the year. Following a rally in the four months to January 2020, markets contracted significantly in February and March upon the outbreak of the COVID-19 pandemic before recovering ground in the June and September quarters.

For the 12 months to 30 September 2020, market returns across the globe were quite varied. The MSCI ACWI Index in local currency terms returned 6.3 per cent and the S&P 500 rose 13.0 per cent, while the S&P/ASX All Ordinaries Index and the FTSE 100 fell 11.6 per cent and 20.6 per cent, respectively. Markets in Europe were particularly affected by the pandemic and declined significantly while Asian markets experienced mixed returns.

Pendal’s investment performance during the year saw notable improvement with 72 per cent of the Group’s FUM outperforming respective benchmarks. Global and Australian equity strategies performed particularly strongly, as well as those in cash and fixed income. Long-term investment performance remains strong with 71 per cent of investment strategies outperforming their benchmarks over the three years to 30 September 2020 and 70 per cent over five years.

1 Yr
3 Yr
5 Yr
Since Inception
Global/International Equities 33.9 79% 79% 88% 83%
Australian Equities 15.1 95% 94% 82% 97%
Cash 12.1 92% 100% 100% 100%
Fixed Income 8.1 89% 89% 55% 82%
UK Equities 7.9 14% 8% 9% 83%
Emerging Market Equities 4.8 43% 51% 78% 97%
Multi-Asset 4.0 1% 1% 1% 67%
European Equities 2.9 37% 0% 0% 86%
Property 1.7 100% 100% 100% 100%
Asian Equities 1.6 83% 82% 3% 73%
Other 0.3 21% 21% 96% 96%
Total FUM 92.4 72% 71% 70% 88%
1 Fund performance is pre-fee, pre-tax and relative to the fund benchmark; % of FUM outperformed relates to FUM with sufficient track record only.


Total fee revenue was $474.8 million, down 3.3 per cent on the previous year, primarily due to lower base management fees which declined by 5.1 per cent. Average FUM over the year was 4.0 per cent lower at $94.8 billion and fee margins declined one basis point to 48 basis points as a result of outflows in higher margin channels. Performance fees for the year totalled $13.4 million, a $7.5 million increase on the prior year led by strong outperformance in the Pendal MicroCap Opportunities Fund.

With global markets and flows stabilising in the second half of the year, and investment performance strong in a number of key investment strategies, momentum is positive heading into the 2021 Financial Year.


Total operating expenses were $298.5 million, a 2.8 per cent increase on FY19. During the year there was a natural reduction in certain expenses due to COVID-19 including travel, sales conferences and administrative expenses as activity was scaled back. Despite the challenging environment, investment in people, product and operations continued. The Group expanded its Global Executive team with the appointment of Nick Good, as JOHCM CEO – USA, onboarded a UK-based Global Equity Impact team and enhanced the operating platform with an increased focus on data and technology.

In the coming year, investment into strategic growth initiatives will continue. The Group is looking to expand its responsible investment capabilities, building on its strong reputation in the rapidly growing ESG sector, and broaden its global distribution network to capture market share, particularly in Europe and the US. Investment in the Group’s operating platform will be elevated, particularly in data and digital marketing to drive efficiencies and leverage global scale.

New underlying profit measure from FY21

From the 2021 Financial Year, Pendal Group will be using “Underlying Profit After Tax (UPAT)” to report the underlying earnings of the business. Under UPAT there will be no adjustment for certain employee expenses which have historically been adjusted under Cash NPAT. This will simplify reporting and is aligned to market practice.

UPAT will continue to adjust for the amortisation and impairment of intangible assets, and gains and losses from financial assets including the Group’s seed portfolio. Both of these items are not considered part of the underlying earnings of the business.

The Group’s UPAT, if applied to the 2020 Financial Year, was $132.6 million.