Netwealth: Gradual Flow Recovery but Shares Already Pricing in Blue Sky

There are early signs of improved flows for no-moat Netwealth relative to the subdued levels seen in 2023. However, we think prospective rebounds in net inflows will be short-lived. We retain our expectation that the rate of net inflows, as a percentage of funds under administration, will moderate over the long term. We also anticipate ongoing fee compression and reinvestment needs amid competitive pressure from other platforms. We expect Netwealth’s margin expansion rate to moderate over the next five years.