One of the worst performers on the Australian share market on Friday has been the Netwealth Group Ltd (ASX: NWL) share price.
In morning trade the investment platform provider's shares are down 10% to $7.25 following the release of its quarterly update.
What was in the update?
This morning Netwealth revealed a decline in its funds under administration (FUA).
During the second quarter the company achieved net flows of $876 million. However, due to volatile markets, its FUA finished the quarter $300 million or 1.5% lower than where it started at $19 billion.
It is worth noting that this was still $3.6 billion or 23% higher than a year earlier.
So why the selloff?
Although its net flows of $876 million is a considerable sum, it is notably lower than previous quarters and industry peers.
For example, in the first quarter the company experienced net flows of $1.1 billion and rival HUB24 Ltd (ASX: HUB) recently posted net inflows of $1.5 billion.
Management has acknowledged that net flows were softer this quarter and blamed changes to competitor pricing for the slowdown. It advised that many advice groups and financial intermediaries temporarily deferred their platform decisions to re-evaluate the impact of the re-pricing.
It remains confident of strong growth in the future due to significant competitor and industry changes that are occurring. This includes the Royal Commission which has "created additional impetus for advisers to review their platform strategies".
Should you invest?
Given the premium that its shares trade at, I can't say I'm surprised to see its shares come under pressure today.
And while I think Netwealth is a quality company and could have a very bright future ahead of it, I intend to see how its fares in the coming quarters before making an investment decision.
In the meantime, I think the likes of HUB24 and Praemium Ltd (ASX: PPS) could be worth a look.
