Funds management has overtaken data services as the third-biggest revenue line in the NZX balance sheets.
NZX quarterly operating metrics released last week show the group’s fund arm (comprising Smartshares and SuperLife) generated over $3.6 million of revenue over the three months to March 31 compared to $3.5 million from the data unit (mostly terminal royalties and licences).
As at the end of March the NZX funds business, headed by Hugh Stevens, reported assets under management of about $3.4 billion – down from a pre-COVID peak of over $4 billion.
Year-on-year NZX funds revenue rose almost 25 per cent from $2.9 million in the March 2019 quarter fueled by solid net flows and buoyant markets (at least until February).
The NZX in-house SuperLife KiwiSaver and traditional superannuation business was flat over the 12-month period, starting and ending the year with just over $2.2 billion under management.
However, the NZX exchange-traded fund (ETF) Smartshares unit grew external funds under management (FUM) by almost 23 per cent over the 12 months to March 31. Total external Smartshares FUM topped $1.1 billion at quarter-end compared to almost $1.8 billion of SuperLife-sourced money.
Funds management could have displaced secondary market services as the second-most lucrative NZX business unit in the quarter bar a market frenzy in March that lifted trading revenue almost 50 per cent compared to the same time last year. Securities clearing and trading income both jumped by more than 60 per cent in the March 2020 quarter against the 2019 result as total secondary market revenue broke through $5 million (versus almost $3.5 million in the first three months of last year).
The on-market mayhem, which triggered a few clearing issues in the industry, was also mirrored in Smartshares investment switch activity that peaked at about 10-times the daily average late in the quarter – coinciding just about exactly with the, to-date, 2020 NZX market bottom on March 23.
According to data from index provider S&P Global, the NZX top 50 benchmark rose close to 9 per cent over April.
Meanwhile, the NZX investment platform arm, Wealth Technologies, reported revenue of $421,000 in the March quarter, almost no change from the same period last year. Wealth Technologies, which is awaiting mass transfers from Hobson Wealth and Craigs Investment
Partners, clocked funds under administration of about $2.2 billion at March 31, up 7 per cent on the 2019 first quarter figure.