Is the Netwealth Group Ltd (ASX: NWL) share price worth buying after it gave its September 2019 quarter funds under administration (FUA) update?
Netwealth was founded in 1999 and is a financial services technology company that helps financial planners manage client money in a user-friendly way, whilst also reporting and charging for services. The founding Haine family still own more than half of the company.
Netwealth’s September 2019 FUA Update
Netwealth has just announced its funds under administration (FUA) at the end of the September 2019 quarter.
Compared to June 2019, FUA increased by 8.5%, or $2 billion, to $25.3 billion. The increase over the past 12 months was 31.3%, or $6 billion in dollar terms.
FUA net inflows for the quarter were $1.5 billion, which was $0.4 billion higher than the prior corresponding period. Positive market movements made up the other $0.5 billion rise for the quarter.
The net inflows were well diversified according to Netwealth, with no single client group representing more than 8%. That’s good so that Netwealth isn’t too reliant on one client who could have too much bargaining power over Netwealth.
Funds under management (FUM) at the end of September 2019 was $4.4 billion, an increase of $0.5 billion over the quarter, representing a 12.6% increase. The managed account balance was $3.1 billion, an increase of $0.3 billion (12.5% increase) with net inflows of $287 million. Managed funds at the end of the quarter was $1.3 billion, an increase of 12.7% for the three months with net inflows of $170 million.
Netwealth continues to be the fastest growing wealth platform. In June 2019 quarter it had the highest platform inflows and increased its market share to 2.6%. It also announced that at the Momentum Media SMSF awards it won the SMSF platform provider of the year award.
This growth is being realised by Netwealth’s profit growth and market capitalisation growth. Netwealth is now in the ASX 200 index (ASX: XJO).
But it comes with a high price tag of 39 times the estimated earnings for the 2021 financial year. I would rather think about growth shares that are less popular such as the ones in the free report below.
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