Pie Funds has seen its profits slide by about $2.3 million year-on-year after ditching performance fees.
The latest Pie annual accounts show the boutique manager carved out an after-tax profit of about $643,000 on revenue of more than $15 million over the 12 months to March 31.
In the previous annual period Pie booked an after-tax profit of close to $3 million on income of $19 million.
The accounts reveal that the higher base management charges on Pie products that kicked in on April 1 last year equated to about half of the performance fee income levied over the 2018/19 year.
Investment management fees rose from $10.3 million last year to $14.6 million in the latest reporting period.
Pie dumped its lucrative performance fee model at the end of the 2018/19 financial year, garnering almost $8.5 million of revenue via the method in the last hurrah.
Over time the higher base management charges and new Pie business lines (advice and KiwiSaver) could fill the performance fee void. During the 12 months ending March 31, Pie more than doubled advisory income to over $380,000 (versus $169,000 in the previous year) as administration fee revenue from the-now $100 million plus Juno KiwiSaver scheme jumped about five-fold to more than $280,000.
The company, which has offices in the exclusive suburbs of Takapuna and Havelock North, also pared back expenses in the 2019/20 financial year to about $14.7 million ($15.5 million in the previous period) – primarily on lower employee costs.
This June Pie embarked on a restructure that saw seven employees leave the business. According to the latest annual accounts, the firm also paid zero staff bonuses over the year (issued as units in Pie funds) after spending over $525,000 on the remuneration boosters in the 2018/19 period.
However, Pie equity-holders split a $2 million dividend (last year $1.2 million) paid out of retained earnings.
Along with the staff restructure, Pie also sold its glitzy investment magazine Juno in June to property player Opes Partners. On the books at $35,000, Juno (the magazine) went for $25,000, the Pie accounts show.
Launched in 2007 by founder, Mike Taylor, Pie runs about $1 billion spread among a suite of nine unit trusts – of which seven remain open – and Juno (the KiwiSaver scheme).
Last week Pie also reduced the redemption time on several of its funds following feedback from clients and advisers as well as a ‘stress testing’ exercise. Pie fund cut the withdrawal times from 20 to 10 days five of its products, although with some discretion to reinstate the longer redemption period.