Smartshares topped the NZX revenue lines for the first time in the September quarter as surging funds management income countered a steep decline in traditional trading activity on the local bourse.
The NZX 2022 third quarter report shows the funds management arm, headed by Hugh Stevens, contributed almost $6.4 million in revenue for the three months to September 30, up close to 30 per cent year-on-year.
September quarter trading income fell 8.3 per cent to $6.2 million compared to just under $6.8 million for the same period in 2021.
Listing fees and data services revenue also improved year-on-year to $4.9 million and $4.6 million, respectively, while the NZ investment platform Wealth Technologies arm grew income more than 55 per cent off a low base.
Wealth Technologies pulled in $1.6 million in the latest quarter against $1 million for the three months ending September 30 last year.
NZX funds management, offered under the Smartshares and SuperLife brands, has grown over the year mostly on the back of a significant acquisition – the $1.8 billion ASB employer superannuation master trust – and a $380 million booster from winning KiwiSaver default status.
According to the NZX quarterly statistics, funds under management stood at $7.8 billion as at September 30 (down from a peak above $8 billion) including the SuperLife KiwiSaver scheme ($1.7 billion), employer super master trust money ($2.8 billion) and external Smartshares exchange-traded funds ($2.3 billion).
While year-to-date funds management revenue of $17.8 million still lags the NZX secondary market income of $19.2 million, the September leadership change follows a marked slowdown in share-trading after the 2020-21 post-COVID boom.
Both the total value and number of shares traded on the NZX have plummeted more than 40 per cent year-on-year, suggesting retail investor enthusiasm for equities – headlined by the Sharesies phenomenon – has waned.
Sharesies accounted for 2 per cent of all NZX on-market trades by value for most months from May to the end of October this year, according to official data, although the platform popped higher to 3 per cent in August.
However, over the six-month period the online discount broker has been responsible for between 7 and 11 per cent of NZX share trades by number.
Last week Sharesies turned on an auto-invest feature for NZX and ASX shares, which may spark more activity on the network.
Traditional broker houses, Craigs Investment Partners and Jarden, collectively account for about 60 per cent of all NZ trading (including off-market transactions) with Forsyth Barr and Macquarie averaging about 15 per cent apiece.
The NZX bought SuperLife in 2014 for $30 million in 2014 from then owners Michael Chamberlain and Owen Nash, subsequently integrating the KiwiSaver and superannuation business with its ETF business, Smartshares.