Platform Operator, HUB24 Posts Record Net Inflows of $2.5 Billion in 1H FY20

  • Jan 22, 2020 AEDT
  • Team Kalkine
Platform Operator, HUB24 Posts Record Net Inflows of $2.5 Billion in 1H FY20

Based in Sydney, HUB24 Limited (ASX:HUB) operates investment and superannuation platforms, connecting financial advisors and investors. The company’s superannuation and investment platform is one of the leading portfolio administration services.

HUB Posts Record Net Inflows and FUA in 1H FY20

In the December 2019 quarter, HUB24 recorded net inflows of $ 1,259 million, adding to the solid growth momentum built for FY20, with funds under administration (FUA) went up by $3 billion since June 2019.

The company recorded FY20 average monthly net inflows increase of 58 per cent to $ 416 million when compared with the same period a year ago, excluding a large transition in December 2018. First-half net inflows noted at $ 2,497 million, representing an increase of 79 per cent over the previous half of FY 2019, excluding the large transition in December 2018. The record inflows registered during the six-month period were assisted by advisers with larger client account balances.

As of 31 December 2019, the funds under administration were reported at $ 15.8 billion, an increase of 58 per cent year on year. HUB’s platform is said to be the highest growing platform, annually, with the market share increased to 1.6 per cent in the first-half period from 1.3 per cent.

Its strong growth in funds under administration was attributed to transition opportunities from new and existing advisor relationships, organic additions from existing advisor base, advisors in the key account segment, and self-licensed broker and advisor base.

The company is also tracking increasing opportunities provided by the opening up of Approved Product Lists within the institutionally aligned licensee agreement. In the December 2019 quarter, HUB boosted its advisor base with the addition of 136 new advisors. Moreover, the company signed 17 new licensee agreements in the three months to December 2019.

Source: HUB’s Announcement

Business Update

While announcing the strong growth during 1H FY20, the company also released a business update.

It was noted that transitions from incumbent platforms are continuing and the pipeline remains strong with net inflows from new boutique relationships and the expected broker channel in the second half of FY20.

The company continues to be recognised in advisor advocacy. And, in the recent Adviser Ratings’ Financial Advice Landscape Report, HUB was at the pole position for overall investment options and second in advisor satisfaction.

As such, the offering by HUB had resulted in 17 new distribution agreements during the quarter, with the additions being institutionally owned licensees and high quality self-licensed advisors.

During the first half, the record net inflows were driven by advisors with larger client account balances, highlighting the trend currently in the industry where advisors prefer business from high-value clients. As a result, clients with smaller balances are finding it difficult to get cost effective advice.

In a bid to address this market demand, the company has signed an agreement with Aberdeen Standard Investments to roll out a digital client engagement tool, which integrates the HUB platform with a customised ‘bionic’ advice product.

HUB noted that there had been a strong demand for new portfolios on the platform, and the company added 39 new portfolios during the December quarter, majority of those portfolios being diversified portfolios and others being fixed income and equity portfolios.

Its focus on international offerings resulted in the addition of 19 international ETFs to the platform menu. HUB’s offering of managed portfolio structure with an independent external responsible entity remains popular, and the product has around 60 portfolios that are utilising this structure to deliver investment management services.

HUB also has a new dedicated IT scrum team to manage and grow its position in the managed portfolio category. The company has announced the incorporation of HUB24 Innovation Lab, which is being spearheaded by Craig Apps, who was the Managing Director of Agility Applications. The lab intends to develop and deliver data management and integration solutions for HUB clients that would provide a competitive edge to their advisors.

The company has been collaborating with some of the largest licensee clients to understand the opportunities and challenges faced by them. And, HUB24 Innovation is emphasising on solutions utilising data integration, artificial intelligence (AI) to deliver value accretive and improved outcomes.

In a bid to leverage expertise across its segments, HUB has made several changes to optimise the operating model, including centralising all product development teams, HUBconnect, Agility Applications and HUB24 platform.

The product development teams are being headed by HUB’s Chief Operating Officer – Mr Craig Lawrence, which would enable to deliver a unified approach to product development, a reduction in duplication, and an aligned product strategy for clients and commercial priorities.

Stock Down By 5 Per Cent

On 21 January 2020, the stock of HUB24 Limited last traded at $ 11.28, down by 5.29 per cent from the previous close. The company has a market cap of $ 747.9 million with approximately 62.8 million outstanding shares.

Over the past month, the stock is up by 7.01 per cent, while on a year to date basis, the stock has delivered a return of 7.30 per cent.

The stock was available at a PE ratio of 103.210x with annual dividend yield of 0.39 per cent.

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