Cutting Through The Noise Of Financial Markets
Stocks in Focus: Middle of November
Context: Hub24 has stood out as one of the most consistent performers in the ASX 200 in recent years, delivering impressive returns to investors. The key question now is whether it’s too late to jump on board has the future growth already been priced in? These are the issues we set out to explore in this piece.
HUB24 (ASX: HUB) – Riding the Managed Accounts Wave
HUB24 has been a standout performer for early investors, delivering returns of more than 400% over the past five years. Today, it ranks among Australia’s best-performing companies in that period, with a market capitalisation of $8.7 billion.
What Does HUB24 Do?
HUB24 operates across several core areas in wealth management:
- Wrap Platform: One of Australia’s leading platforms, enabling advisers to manage client investments across shares, managed funds, ETFs, insurance, and superannuation in a single place.
- Managed Accounts Leadership: Consistently ranked as Australia’s #1 managed accounts provider, HUB24 equips advisers with efficient tools to implement model portfolios and rebalance client holdings at scale.
Managed accounts have surged in popularity across Australia, and HUB24 has been at the forefront of this trend. Over the past five years, the company has achieved an impressive 30% revenue growth rate, driven by adviser adoption and client demand.
Why Managed Accounts Are Growing
The appeal of managed accounts lies in their dual benefits:
- Efficiency for Advisers: They allow advisers to apply model portfolios across multiple clients simultaneously, reducing administrative burden and saving time.
- Transparency for Clients: Unlike pooled managed funds, clients can see exactly what they own in a managed account. This clarity builds trust and helps investors better understand how their money is being managed.
Can HUB24 Maintain Its Growth?
The managed accounts industry is projected to expand at 15% per annum, reaching $474 billion by 2030. If HUB24 can maintain its dominant position, it stands to benefit significantly from this structural growth.
Importantly, HUB24’s product is already well established. This means the company doesn’t need to reinvent itself industry growth alone could provide the momentum, as long as HUB24 continues to refine its offering and preserve its #1 ranking. Its advantage stems from first-mover innovation, which has already set the benchmark in the market.
Who Could Challenge HUB24?
That scenario assumes HUB24 can remain at the top. Yet competitors like Netwealth and Praemium are active in the same space and could quickly gain ground if HUB24 isn’t vigilant. HUB24’s moat lies not only in its technology but also in its strong client relationships and ability to consistently deliver marginally better outcomes for advisers and investors. However, these advantages are not unassailable the gap could close quickly if competitors continue to innovate and strengthen their own client connections.
Summary
HUB24 is strategically positioned in an industry set for rapid growth as investors and advisers increasingly embrace managed accounts, which offer tailored solutions compared to traditional managed funds. Overall, my outlook on HUB24 is neutral-to-positive: in an ideal scenario, the company won’t need to heavily reinvest in product development, allowing it to grow earnings while paying substantial dividends.
That said, investors should be mindful of valuation. HUB24 currently trades at an elevated P/E ratio of ~109, suggesting much of the anticipated industry growth may already be priced in.
Risks to Consider
Technology & Service Disruption: HUB24’s platform is highly technology‑driven, making system reliability and cybersecurity essential. Any disruption or breach could undermine confidence among advisers and investors.
Market Risk: The company’s operations are closely linked to overall market performance. Periods of downturn, though outside its control, can significantly reduce growth.
Regulatory & Compliance: Operating within Australia’s tightly regulated financial services environment requires strict adherence to ASIC oversight. Staying fully compliant with evolving financial advice regulations is critical to sustaining operations.
Disclaimer: The content provided on Whisper Wealth is for informational and educational purposes only and does not constitute financial, investment, or legal advice. While I strive to provide accurate and timely information, I am not a licensed financial advisor, and the views expressed are my own. You should not rely solely on this content to make financial decisions. Always consult with a qualified financial professional before making investment choices. Whisper Wealth and its contributors are not responsible for any losses or damages resulting from reliance on this information.
