NZX’s Smart FUM growth slowed to 3.8% in the first half

However, chief executive Mark Peterson pointed out that the further recovery in financial markets helped lift FUM 17.3% to $14.46 billion by the end of July from the same seven months last year.

About $400 million of the funds management arm’s FUM growth came from cash inflows and $100 from market returns.

NZX said increasing KiwiSaver members and their increasing contribution rates are among the macro drivers of the business.

Chief financial officer Graham Law said: “In certain areas of the business, we’ve been light on marketing spend. It has been detrimental,” while Peterson guided to “maybe a bit of marketing in our funds business” in the second half.

Smart spent $75,000 on marketing in the latest six months compared to $319,000 in the same six months last year.

Peterson said that US President Donald Trump’s “liberation day” announcement of global tariffs had a detrimental of all aspects of NZX’s business, including Smart’s market returns.

A recent report by Forsyth Barr analyst Ben Crozier had noted that NZX’s fees are higher than other low-cost passive KiwiSaver providers, leading to “emerging signs of weakness” in Smart’s KiwiSaver product.

The FUM growth in the latest six months compares with the 2024 growth of 22.6% and the 8.2% growth shown in the first half of 2024.

NZX said it expects increasing penetration of its exchange-traded funds (ETFs), noting that it remains low in NZ compared to the US and Europe.

Smart’s active investment manager, QuayStreet, purchased in 2023, won awards from INFINZ and Morningstar, the latter being KiwiSaver manager of the year for a second year.

“The next stage of QuayStreet’s operating model integration is expected to complete in the third quarter and will enable a wider distribution of QuayStreet funds.”

Wealth Technologies

The stock exchange operator’s Wealth Technologies (WT) platform lifted annual recurring revenue (ARR) to $11.9 million compared with $9.7 million at the end of 2024.

The WT platform increased funds under administration (FUA) by 8.6%, or $1.4 billion, to $17.6 billion in the latest six months with the three new client migrations contributing $1.3 billion of the increase.

The WT business is currently migrating seven clients with four new clients acquired in the latest six months, and that will take ARR to $13.9 million.

Excluding integration and restructuring costs, Smart contributed $13.7 million in earnings before interest, tax, depreciation and amortisation (ebitda) in the latest six months, up from $11.1 million in the previous first half.

Integration and restructuring costs jumped to $862,000 from $431,000 in the previous first half.

The WT business contributed $2.5 million in ebitda, excluding those costs, up from $1.5 million previously.

Overall, NZX’s ebitda excluding those costs was up 7.5% to $25.1 million while including those costs, ebitda was up 5.4% to $24.1 million. Net profit fell 46.4% to $8.3 million, mainly reflecting a change in value of the earnout for QuayStreet in the previous first half.

Crozier’s report had questioned the value of the WT business, estimating it was worth between $30 million and $60 million compared with the about $70 million that NZX has invested in it.