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Australian Ethical profit surges with flood of inflows

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Australian Ethical has managed to produce a profit 40 per cent higher year-on-year, with its inflows doubling for the first half.

The ethical wealth manager, excluding its charity foundation, posted a net profit after tax (NPAT) attributable to shareholders of $4.4 million for the half leading up to December. Its revenue increased by 18 per cent from the previous corresponding period to $23.3 million.

Funds under management (FUM) reached $3.87 billion by the end of the half, up 36 per cent on a year before. By the end of January, the group’s FUM sat at $4.14 billion.

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Net inflows for the first half had risen by 100 per cent from the previous year, with $295.8 million coming in. 

The bulk of the money flowing in was said to be driven by 82 per cent higher super net inflows, at $199.4 million for the half, with the fund manager citing more members, increased member engagement and retention. Funded super members increased by 13 per cent to 43,264 individuals. 

Superannuation made up two-thirds of Australian Ethical’s FUM at $2.58 billion, while its wholesale managed funds made up a fifth at $774 million. Retail managed funds contributed 8 per cent of the total FUM, with $309.6 million, and institutional was 6 per cent, $232.2 million.

Two years ago, however, institutional flows had made up a much more significant portion of inflows, when the total money flowing into the group for the first half of financial year 2018 constituted $341.1 million.

Meanwhile, in managed funds, net inflows were up by 150 per cent from the prior corresponding period to $96.4 million.

Australian Ethical chair Steve Gibbs said the results reflected growing demand for ethical investment.

“The last six months have seen an unprecedented wave of public climate demonstrations, with people’s concern for climate action reaching a tipping point and focusing firmly on solutions,” Mr Gibbs said.

“As a result, we’re seeing that more Australians want to make their money matter. They are realising that investing ethically is about so much more than avoiding unethical businesses and is about investing for better returns and a future worth living in.”

Chief executive John McMurdo added the results suggest that ethical investing has moved firmly into the mainstream and redefined the way consumers think about investing.

“It allows [Australians] to be more discerning about the impact of their investments and offers them the opportunity to align these with their personal values while also achieving outstanding financial returns,” Mr McMurdo said.

“There is an urgent need to create a more sustainable world, and we know that investing ethically can change things for the better.”

Operating expenses were up by 13 per cent to $17 million, corresponding with the group’s increased investment in its platform.

Looking forward, Australian Ethical indicated it will continue to invest in a sustainable business platform, with plans to enhance its customer experience as well as respond to ongoing regulatory change. 

The group has also stated it is committed to passing on scale benefits, with it being set to reduce its standard administration fees across its super products from 0.41 per cent to 0.29 per cent per annum from April. 

The foundation, which manages the distribution of 10 per cent of the group’s profits to charity causes under the group’s constitution, produced an NPAT of $4.4 million for the half. 

The ordinary dividend for the interim was 2.5 cents per share, fully franked – 25 per cent higher than the previous year. 

 

Australian Ethical profit surges with flood of inflows
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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