The stock exchange operator said Smart, renamed from Smartshares during the year, is aiming to increase FUM in the current year by 10.8% (the 2024 target had been 14.7%).
Cashflows contributed 7 percentage points of Smart’s 2024 growth with market returns contributing the remaining 15.6 points.
Operating earnings from funds management rose 16% to $22.5 million with revenue up 19% and costs jumping 22.5%.
Chief executive Mark Peterson told analysts the investment performance of Quay Street, purchased in 2023, “has been excellent compared to the market.”
The partnership with Craigs Investment Partners is going well and Peterson said he’s confident it will deliver but “the momentum has taken a little longer than we had thought.”
The first new funds with Craigs were launched in April and Smart launched four new exchange-traded funds (ETFs) in October covering Bitcoin, gold, US technology and one based on the S&P/NZX 20 Index.
NZX will be retiring Smart’s current platform and moving it onto the Wealth Technologies platform.
Peterson said because revenue flows from funds under administration (FUA) on the Wealth Technologies platform vary, the company focuses on annual recurring revenue which will reach $14.2 million once contracted external clients are fully migrated. Actual revenue in the 12 months was $9.7 million, up from $6.8 million the previous year.
The Wealth Technologies FUA rose 40.4% to $16.2 billion with cash flows and new client migrations contributing 24.8 points and market returns 15.6 points.
The business added 12 new clients during the year and transitioned 11 clients during 2024.
It contributed $4.6 million to NZX’s operating earnings for the year, up from $1.6 million the previous year.
Peterson said Wealth Technologies has a mix of clients from small, with about $200 million in FUA, to medium, with about $700 million in FUA, to larger ones.
The rate at which clients transition depends on the client’s own capacity, the capacity of its existing supplier, how complex or simple the business is and the amount of data the client wants to transfer to provide an historical perspective.
Çhief financial officer Graham Law said NZX hasn’t been investing in the Smart platform because it has been focused on developing the Wealth Technologies business, so it will be doing “a bit of catch-up” investments over the next couple of years.
Smart’s technology “is certainly not market leading, would be the polite way of putting it,” Law said.
Peterson said that while NZX will look at any funds management acquisition opportunities that come along, the focus for Smart will be on organic growth.
“We’ve got good momentum,” and operational improvements will give the business greater scalability.
The funds management and Wealth Technologies businesses accounted for 44.5% of NZX’s total revenue of $120.8 million and 55.8% of its $48.5 million in operating earnings.
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