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Netwealth share price surges 7% on record inflows

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The Netwealth Group Ltd (ASX: NWL) share price is trading 7.76% higher in today’s trade, after the company released a positive trading update.  

What did Netwealth announce?

Earlier today, Netwealth released its quarterly business update which highlighted record growth in annual net inflows. Despite negative market movements wiping $900 million from its funds, Netwealth reported that total funds under administration (FUA) grew 35% for FY20 to $31.5 billion.

The growth in FUA was fuelled by record net inflows of $9.1 billion for FY20. For the quarter, FUA surged 13% to $3.6 billion, with $1.5 billion from net inflows and $2.1 billion attributed to positive market movements.

According to the update, Netwealth has recorded the highest net fund flows for 8 consecutive quarters. In addition, of the major platforms, Netwealth is the fastest growing in absolute terms. It is also the seventh largest platforms provider on the market with a 3.6% market share.

As a result of this strong growth, Netwealth expects to exceed its previous guidance for FY20. The company had previously expected revenue for FY20 to be in the range of $116 to $120 million and forecast underlying EBITDA to be in the range of $50 to $62 million. Unsurprisingly, today’s news has had a positive impact on the Netwealth share price.

What does Netwealth do?

Netwealth Group is a specialist investment platform used by financial intermediaries to provide investment management solutions. The company’s platform provides financial advice on superannuation and other investments. It also provides users with the ability to invest in a wide range of products.

Following the Royal Commission into banking and financial services, Netwealth has been taking market share from other institutional platforms. These include the big banks and other large finance companies. Despite the uncertainty and disruptions surrounding COVID-19, the group remains positive given its strong cash position, no debt and growing market share.

As at 30 June 2020, Netwealth boasted 81,804 member accounts. This came after adding 3,261 new accounts for the quarter. 

The Netwealth share price

The Netwealth share price has surged more than 100% from its lows in March. It is currently trading over 28% higher for 2020. At the time of writing, the Netwealth share price has surged more than 7% in today’s trade and is currently trading at a multi year high of $10 per share.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Netwealth. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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