The Netwealth Group Ltd (ASX: NWL) share price has dropped 3% after it released its March 2024 quarterly update.
Netwealth is a financial services company that provides superannuation products, investor-directed portfolio services, managed accounts, managed funds, SMSF administration and non-custodial administration and reporting services.
March 2024 quarterly update
There were a lot of different growth numbers reported, so I’ll just run through those.
It revealed that funds under administration (FUA) at 31 March 2024 was $84.7 billion. FUA increased $6.7 billion for the March quarter, comprising FUA net inflows of $2.7 billion and positive market movements of $4 billion.
The FUA increased by 28.5% for the 12 months to 31 March 2024, with net inflows of $10.6 billion and positive market movement of $8.2 billion. It also reported a record 12-month FUA inflows of $21.2 billion.
Netwealth reported FUA inflows of $5.2 billion for the March quarter, which was 40.7% higher than the prior corresponding period. Net inflows were $2.7 billion, an increase of 62.2%.
Non-custodial FUA reached $281 million at 31 March 2024 and there were net inflows of $39 million for the March quarter.
Funds under management (FUM) rose to $19.7 billion at 31 March 2024, an increase of $1.6 billion for the quarter. FUM net inflows for the March quarter were $0.6 billion.
The managed account balance increased by $1.4 billion for the March quarter to $17 billion.
Finally, the number of accounts increased by 11.6% year on year. The “strong momentum” in the March quarter saw the addition of 5,132 new accounts or 3.7% higher than the December quarter.
It was also announced that Netwealth founder and major shareholder, Michael Heine, has advised that as he approaches his 75th birthday he intends to transition to a non-executive role by 30 June 2024.
Netwealth share price outlook
The company noted in addition to the strong account growth in the quarter, it has expanded and strengthened its new adviser and licensee relationships. Its new business pipeline including conversion rates, is very strong across all segments.
It’s expecting the June quarter FUA inflows to be “very strong” with several new large transitions commencing, as well as higher seasonal flows and increased market activity.
The company is exploring and implementing innovations and generative AI to “improve efficiency, productivity, client engagement and service”.
It’s a great business, but the Netwealth share price has gone up more than 50% in the past year. I’m cautious about thinking this is a good time to invest at such an elevated price. There are other ASX growth shares I’d rather look at.
