InvestSMART Group Limited swung to a net loss of $575,633 in FY26, marking a sharp reversal from the prior year’s profit, amid a strategic pivot including a pending $16 million sale of its Intelligent Investor business.
- Net loss of $575,633 in FY26 vs $200,380 profit prior year
- Funds under management rose 10% to $753 million
- Performance fees collapsed due to fund underperformance
- Proposed $16 million sale of Intelligent Investor business underway
- Operating expenses increased 4%, including legal and leave costs
Losses Mount Despite FUM Growth
InvestSMART Group Limited (ASX:INV) reported a net loss of $575,633 for the year ended 30 June 2026, a stark contrast to the $200,380 profit recorded in the previous year. Total revenue dipped slightly by 1% to $10.12 million, but the headline loss was driven by a combination of factors including a collapse in performance fees and increased operating costs.
Funds under management (FUM) increased by 10% to $753 million, supported by a 24% jump in Professionally Managed Accounts (PMA) FUM to $479 million. This growth was underpinned by a revised fee structure implemented in April 2025, which introduced a 0.10% administration fee and lowered portfolio fees, aiming to attract new accounts and reward ongoing contributions.
Performance Fees and Subscription Dynamics
Performance fees plunged to a negligible $2,446 from $669,492 the prior year, reflecting the Intelligent Investor Select Value Share Fund’s (ASX:IISV) failure to outperform its ASX 200 Accumulation Index benchmark for the first time. Subscription income, however, edged up 2% to $4.62 million, buoyed by a 17% increase in average revenue per user to $686, despite a decline in paying subscribers from 7,561 to 6,742.
Insurance commissions continued their downward trajectory, falling 10% to $951,306, consistent with regulatory changes that have been eroding trailing commissions since 2021.
Ramping Up Costs and One-Off Expenses
Operating expenses rose 4% to $10.25 million, including a non-recurring $124,898 charge for increased leave provisions and legal expenses. Employee costs surged partly due to these provisions and additional incentive payments in September 2025. The company remains debt-free with $7.8 million in cash and net tangible assets of 3.83 cents per share.
Strategic Shift: Intelligent Investor Sale
In a defining strategic move, InvestSMART announced on 20 May 2026 a proposed sale of its Intelligent Investor business to Teaminvest Private Group Limited (ASX:TIP) for $16 million, minus subscriptions in advance and associated liabilities. This sale encompasses the Intelligent Investor website and management rights to four ASX-listed ETFs but excludes the Responsible Entity license. The transaction remains subject to shareholder approval and other conditions precedent.
Post-sale, InvestSMART plans to concentrate on its proprietary investor wealth platform, digital and personal financial advice, and PMAs, aiming to leverage artificial intelligence to address the growing advice gap in Australia. The company highlighted the potential of AI to integrate personal advice journeys and improve advisor-client experiences.
Governance and Remuneration Insights
The board, led by Chairman Paul Clitheroe and Managing Director Ron Hodge, continues to emphasize strong corporate governance and alignment of management incentives with shareholder interests. The Employee and Director Share Plan (EDSP) remains a key component of remuneration, with 31.4 million shares issued under the plan and loans extended to November 2028.
On-market share buybacks continued, with 108,013 shares repurchased during FY26, reflecting ongoing capital management efforts.
Uncertain Path Ahead
While InvestSMART’s pivot towards digital wealth management and AI-driven advice aligns with broader industry trends, the timing and completion of the Intelligent Investor sale remain uncertain. The underperformance of key funds and declining subscriber numbers pose challenges to revenue growth. The company’s ability to scale its PMA platform and convert free users into paying customers will be critical to reversing recent losses.
Bottom Line?
InvestSMART’s FY26 loss underscores the risks in transitioning from legacy businesses amid regulatory and market pressures, with the Intelligent Investor sale a pivotal but uncertain milestone.
Questions in the middle?
- Will the Intelligent Investor sale close smoothly and on what timeline?
- Can InvestSMART’s PMA platform and AI integration drive sustainable subscriber growth?
- How will ongoing regulatory changes impact commissions and advice revenue streams?