Netwealth funds under management rise by more than a quarter to $80.8 billion

Founded as a financial services industry challenger in 1999 and listed on the Australian Stock Exchange in late 2017, Melbourne-based Netwealth (ASX: NWL) continues to close the gap on some of Australia's most well-known funds managers and has done so with a healthy profit margin.

At the end of the first financial year as a listed company in FY18, Netwealth reported FUA of close to $18 billion. Today its FUA stands at $80.8 billion, representing a 4.5-fold increase since those early days on the ASX.

At that time, companies like Magellan Financial Group (ASX: MFG) and AMP (ASX: AMP) were miles ahead of Netwealth, with funds or assets under management (FUM or AUM) levels of $69.5 billion and $258 billion respectively.

In other words, back then - and well before Magellan's leadership woes and investor base exodus - Magellan's FUM was almost four times the size of Netwealth's, and AMP's was around 14 times the then newly listed player.

In contrast today, Netwealth's level is now more than double that of Magellan which recently reported $36.9 billion in FUM, representing a year-on-year decline of 31 per cent.

Meanwhile, AMP's AUA levels across its platforms, master trust and New Zealand offerings are now at approximately $130 billion - still 61 per cent greater than Netwealth's figures, but far closer than what they were a few years ago.

Netwealth reports that its FUA rose by 24.9 per cent year-on-year to $78 billion by at the end of 2023, while the latest $80.8 billion figure from 16 February represents 29 per cent growth over the 14 months.

The company reports that in the 12 months to 30 September, it had the highest industry platform FUA net inflows, and now has 132,826 client accounts - an increase of 9.7 per cent for the year.

The annualised platform revenue per account was $1,805 for the half, representing an increase of $132 on the prior corresponding period.

The group, whose founding Heine family holds a majority stake, has reported a 20 per cent increase in total income to $123.3 million in the December half, and an even greater lift of 28.3 per cent in net profit after tax (NPAT) to $39.3 million.

"Netwealth’s advantage in leveraging data, technology and connectivity across our WealthTech, Wealth Solutions, Insights & Analytics plus our Partners & Integrations offerings has led to ongoing increases in market share," Netwealth's CEO and co-founder Matt Heine said today.

"In the latest industry data our market share was 7.4 per cent, an increase of 1.1 per cent in the 12 months to 30 September 2023 and notably Netwealth was the fastest growing platform by net funds flow."

Netwealth has managed to lift its profits while also increasing the number of roles on its team by 35 in the December half, reaching a total headcount of 588 as it increases capacity for long-term sustained growth across its technology, legal risk and compliance, product and executive teams.

Speaking at the company's annual general meeting (AGM) in November, Matt Heine highlighted several major trends that are causing widespread change in the industry, consumers' wealth needs and how they interact with technology and digital channels.

"With change, we believe comes opportunity," he said.

"As wealth, health, technology and service expectations change, we have tried to reflect that in the design of our products, including our updated Super and Wealth Accelerator which cater to the requirements of the Emerging, Mass and Established Affluent.

"From a technology perspective, it would come as no surprise that the environment is changing extremely fast and innovations in artificial intelligence, especially with the rise of generative AI offer some incredible opportunities to improve efficiency, productivity, client engagement and service."

He also noted increased demand for ESG, Impact and sustainable investments, adding that Netwealth was working with its new strategic partner iCapital to bring a new and differentiated range of alternative investments to Australia for the first time.

He also believes alternatives is the next big "mega trend" for investment markets and advice practices in Australia, particularly in the high net worth space.

"We believe, with reference to global markets where alternatives Investments have a far greater allocation in client portfolios, investment in Alternatives is the next big 'mega trend' for investment markets and advice practices in Australia, particularly in the high net worth space," he added.