Australian Ethical Investment was hit in 2022, but cushioned the blow

Nick Sundich, December 15, 2022

Australian Ethical Investment (ASX: AEF) just issued earnings guidance for the half year ending 31 December 2022. As a fund manager, particularly one with exposure to the tech sector, it was hit by the dour market conditions. But it was able to soften the blow and still anticipates an underlying profit.

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Australian Ethical saved from a FUM decline

In 1HY22 (the 6 months to 31 December 2021), Australian Ethical made an underlying (and net) profit of $5.4m and has $6.9bn in Funds Under Management (up 38%).

This morning it told shareholders it anticipated a similar result this time around – a $4.5m-$5m underlying profit. And FUM actually rose to $8.6bn.

The catalyst was the acquisition of Christian Super and its members into the Australian Ethical platform, contributing $1.9bn. It had a wafer-thin net inflow of $0.12bn, but would have seen a decline in FUM to $6.2bn if not for this deal.

Needs to perform in H2

In absence of another M&A deal, Australian Ethical will need improved market conditions to achieve FUM growth. Whether or not it will be achieved is anyone’s guess.

Of course, this is not to say the company is at risk of collapse. It has been around since 1986 and has substantially grown in recent years, even with the Tech Wreck.

In mid-2019, it had just $3.4bn in FUM, barely over a third of what it has now. And as of 30 November 2022, it has over 100,000 super members and over 13,000 managed fund investors.