NZX wrap platform looking to add four more firms

NZX’s wealth technologies platform should add at least four new clients this calendar year, chief executive Mark Peterson, told the stock exchange operator’s annual shareholders meeting.

Wednesday, May 3rd 2023, 9:06AM

The wealth technologies business had $9.96 billion in funds under administration (FUA) at Dec 31 with revenue in calendar 2022 rising 36.3% to $6 million from 2021.

“Wealth Tech’’s pipeline prospects remain strong …. further FUA growth is underpinned by a large, contracted client that we are now onboarding in early May,” Peterson said.

The business also won three new medium-sized advisory clients in the first quarter which are scheduled to transition to the platform this year, he said.

Chair James Miller told the meeting the Smartshares passive index-tracking funds grew more than six-fold in the eight years he has been NZX chair.

“I am proud of our achievements in growing the Smartshares business with a diversified client base, smart acquisitions and achieving default status as a KiwiSaver provider,” Miller said.

Smartshares’ funds under management (FUM) were about $1.7 billion when Miller became chair in May 2015 and are now about $10.3 billion. That includes the $31.25 million acquisition of QuayStreet funds completed in February which added $1.6 billion to FUM.

“In my view, Smartshares will lead the passive market in New Zealand in the years to come. Given the KiwiSaver market is around $96 billion, and most global markets have approximately 20% allocated to passive, the business has a clear path to grow to $20 billion without factoring in industry growth factors.”

That will give both NZX and New Zealand capital markets greater control over their destiny, Miller said.

Peterson said “changes in market conditions” impacted Smartshare’s funds under management levels, but this was largely offset by net cash inflows of $800 million and the purchase of the ASB Superannuation Master Trust in 2021.

NZX is on track to increase annual earnings from the ASB trust by between $4 million and $4.3 million and to increase QuayStreet’s earnings by between $3.3 million and $3.6 million, Peterson said. Integration costs in 2023/24 should be between $3 million and $3.5 million, he said.

“Scale and operating leverage are important elements for a funds management business … our market analysis indicates $15 billion to $20 billion of FUM is the point when cost bases are at their most efficient for a New Zealand fund.”

Tags: NZX