The NZX has bumped back the transfer of new client assets to its investment platform by at least three months citing “complexity of the transition process and aligning third-part[y] activities”.
In its half-year results presentation published last week, the NZX says a “second client implementation” on the NZX Wealth Technologies platform (formerly known as Apteryx) would also be delayed until early next year.
However, the latter transfer would be “with a view to progressing to a much more comprehensive utilisation of the system than previously indicated”, the NZX document says.
The NZX signed up Craigs Investment Partners last August as its first client (excluding the $1.3 billion under administration inherited following the 2015 Apteryx purchase) with an estimated $600 million of managed funds expected to transfer to NZX Wealth Technologies.
In September 2016 the NZX-owned platform quickly followed up with a coup to accept funds of reportedly up to $3 billion from Macquarie NZ (previously administered on the ASB-owned Aegis). After a management buyout led by Warren Couillault, Macquarie NZ was later renamed Hobson Wealth, with Macquarie Australia retaining a minority share.
An NZX spokesperson said shifting the Craigs and Hobson assets across had proved more difficult than anticipated.
“These are complex projects, and are taking more time than we had initially envisaged,” the spokesperson said. “Our focus is on ensuring we have repeatable and quality processes that will provide a sound base for the future.”
Despite the delay, the NZX half-year presentation says there is a “good pipeline of potential opportunities” for the NZX Wealth Technologies business.
“We have received a number of really positive enquires about our wealth platform,” the spokesperson said. “While this is encouraging, we are very mindful that the successful transition of the two new customers we are currently working with will set the business up for future growth.”
According to the latest NZX operating statistics, NZX Wealth Technologies had just under $1.3 billion under administration as at the end of June – down just over 6 per cent year-on-year.
The platform recorded an operating loss of $801,000 in the six months to June 30 this year on revenue of $721,000 compared to a deficit of $533,000 on similar revenue over the same period last year.
In total, the NZX funds services division turned a profit of more than $1.4 million over the six-month period with KiwiSaver and superannuation fund provider SuperLife contributing $3.9 million in revenue, up 14 per cent year-on-year. Smartshares, the NZX-owned exchange-traded funds (ETF) arm, meanwhile, booked almost $2.7 million of revenue during the same period, up 12.3 per cent compared to the first half of 2016.
As at June 30, SuperLife reported funds under management (FUM) of about $1.8 billion – up 23 per cent over the year – of which about $1.2 billion is invested via Smartshares. Excluding SuperLife funds, Smartshares FUM stood at $574 million as at June 30, representing an increase of 22.6 per cent in ‘external’ funds over the period.
In a statement, Mark Peterson, NZX chief, said: “Smartshares was the stand out performer of this segment in the first half, achieving record growth in direct retail sales of ETF products, with application numbers in the first half of 2017 up 100% on the previous year.”