Funds management continues to act as the growth engine for the NZX with the division reporting the single-largest top-line revenue result this year amid flat results in core exchange activities.
September quarter operating statistics released last week show the funds arm delivered income of almost $32.5 million over the first nine months of 2024, up more than 18 per cent year-on-year.
During the nine months to September 30, the NZX pulled in listing and trading fees of $12.7 million and $18.6 million, respectively, equating to growth-rates of 1.8 per cent and -2.3 per cent compared to the same period in 2023.
NZX information services, meanwhile, reported income of $15 million year-to-date (down -0.7 per cent on the 2023 result).
The funds unit, currently comprising the Smart and SuperLife brands, has grown over the last few years largely on the back of acquisitions of the ASB superannuation master trust and the QuayStreet active investment management business.
At their respective point-of-sales, the ASB master trust and QuayStreet managed $1.8 billion and $1.6 billion.
But the NZX funds under management has also seen organic growth through its exchange-traded fund (ETF) suite and SuperLife KiwiSaver scheme – the latter receiving a significant bump upwards after winning default provider status in 2021.
As at the end of September, the exchange reported almost $12.6 billion in funds under management for a year-on-year increase of more than 20 per cent: the figures rose to almost $13 billion and 26.5 per cent by October 31.
Last month, NZX funds chief, Anna Scott, also kicked off a rebrand process as the Smartshares ETF took on the Smart mantle: next year the renaming will extend to the unit trust, KiwiSaver and super master trust products. QuayStreet, however, will retain its own identity.
In an investor presentation last week, Scott projected the Smart product ensemble to total $20 billion by 2029. NZX chief, Mark Peterson, has previously flagged the $15 billion to $20 billion as a minimum to achieve scale benefits for local fund managers.
And while funds management was the star revenue-generator in the NZX stable, its Wealth Technologies platform business also turned in a solid income result for the nine months to September 30 of almost $6.9 million – up almost $2 million (or more than 41 per cent) compared to the same period last year.
The platform reported more than $15.7 billion in funds under administration (FUA) at the end of September for a year-on-year increase of 41.6 per cent.
Lisa Turnbull, Wealth Technologies chief, told NZX investors last week that about $9 billion of its FUA was held under custody while the remaining $6 billion or so related to the, less profitable, software-as-a-service (SAAS) clients.
Another “large” SAAS client “onboarding is in progress”, she said.
The presentation shows Wealth Technologies now has $45 billion of contracted clients – including about $10 billion is likely in-house Smart money – with transition dates ranging out to 2026.
Turnbull said the total addressable platform market of advised funds as at 2024 amounts to about $190 billion, of which competitors administer $106 billion while $39 billion remains in stand-alone in-house systems.
By 2029 the potential overall NZ platform market size was on track to swell to $275 billion, she said.
The NZX has spent at least $30 million building the platform business with further capital expenditure ahead but was nearing “cashflow positive” territory.