Praemium net outflows hit $414m in Q4

In an ASX update on Wednesday, Praemium reported that despite heavy net outflows, its total funds under administration (FUA) had reached $57.4 billion as at 30 June, up 30 per cent from the previous year.

Platform FUA was up 26 per cent to $28.1 billion, including an 18 per cent jump for Praemium separately managed accounts (SMA) to $11.3 billion, a 1 per cent increase for Powerwrap to $12.7 billion. The addition of OneVue also contributed to the FUA growth, bringing $4 billion.

Praemium finalised its acquisition of the OneVue business from Iress in April for an initial $1 million in cash consideration and a further payment of up to an additional $20 million over an 18-month period as milestones are met.

Meanwhile, VMAAS non-custodial portfolio administration and reporting service FUA rose by 34 per cent to $29.3 billion.

“The June quarter showed a continuation of the positive impact to SMA of improved cross-selling from our non-custodial VMA and VMAAS services,” commented Praemium CEO Anthony Wamsteker.

“The strong growth in FUA on VMAAS highlights the tremendous potential of that service. Our non-custodial capability remains market leading and represents a significant opportunity for Praemium.”

However, the results were less positive when it came to quarterly flows, with the firm seeing net outflows of $414 million, which was a sharp reversal of the net inflows of $201 million in the quarter to 31 March 2024.

Praemium SMA was a lone bright spot, experiencing net inflows of $149 million for the quarter, though even this was a drop from the $254 million of inflows during the March quarter.

“The Praemium SMA scheme is our cornerstone product and highest revenue margin service. It achieved quarterly net inflows of $149 million,” Wamsteker said.

“The continued strong level of gross inflow was partially offset by seasonal June minimum pension drawdowns in advance of the end of financial year. The full year to 30 June 2024 net inflows of $820 million represented approximately 9 per cent of opening FUA.”

Its Powerwrap offering haemorrhaged $437 million during the June quarter, continuing from the $53 million in net outflows seen in the previous quarter.

“Powerwrap’s non-systemic outflows associated with transitioning advisers have continued to have an adverse impact. Gross outflows from transitioning advisers were approximately $1 billion for the financial year,” Wamsteker added.

“The overall net outflow impact across the last three quarters is in line with previously stated estimates of impact. Absent any further adviser movement, it is currently estimated to continue at a similar rate for another six months.

“Over the long term, Praemium and Powerwrap clients have typically grown their businesses at strong rates. This should ameliorate the negative impact of the transitions which might arise from the known adviser exits.”

OneVue also saw quarterly net outflows of $126 million, however, this was an improvement on the pre-acquisition net outflow of $174 million in the quarter to 31 March 2024.

“OneVue added FUA $4.1 billion at acquisition on 15 April 2024 and retreated to $4.0 billion at 30 June 2024.

“Net outflows were broadly in line with expectations given pre-acquisition due diligence and represented a $48 million improvement on the previous quarter. We continue to commit to all previous statements on synergies, technology, and product transition and transitional services.”

Net platform inflows for the quarter to 30 June 2024 were augmented by $142 million in positive market movement. This represents approximately 0.5 per cent of the value of platform FUA, including OneVue, at 31 March 2024.