The Australian Ethical Investment Limited
(ASX: AEF) share price is up after its quarterly December update.
Australian Ethical is a fund manager that focuses on ethical investments.
FUM update
The fund manager revealed that for the quarter ending 31 December 2021, its FUM grew 6% to $6.94 billion over the three months.
Australian Ethical attributed this FUM growth to continuing strong net flows together with investment performance.
Looking at the breakdown, the managed funds segment saw growth of FUM over the quarter from $1.96 billion to $2.10 billion significantly due to net flows. Institutional FUM was virtually flat at $0.38 billion. Superannuation FUM increased from $4.21 billion to $4.46 billion – $190 million of this was due to net flows with the other $60 million coming from market movements (and ‘other’).
In total, Australian Ethical saw net flows of $0.31 billion during the quarter.
With the conclusion of the second quarter, the fund manager was able to say how it has done in the first six months of FY22.
Total FUM has increased from $6.07 billion to $6.94 billion. That included $600 million of net flows.
Profit expectations
The company said at the start of December that it was expecting HY22 underlying profit after tax to be between $5 million to $5.5 million. This would be an increase of 8% if it achieves growth of the middle of that range.
Investing for growth
Australian Ethical says that it’s going to keep investing in its high growth strategy given the positive momentum it’s experiencing and the scale of the opportunity ahead. Due to that, second half costs are going to grow compared to the first half as it implements its strategic roadmap.
The Australian Ethical CEO John McMurdo said: “This includes building the capability of our investment, sales and customer services teams and enhancing our product development and technology platforms. Further investment in brand and growing our reach in intermediated channels is also planned for the second half.
I think that this ASX share has plenty of earnings growth to come, with exposure to the superannuation tailwind. But I’m not sure if it’s a buy today considering how much growth is priced in. It has done well for long-term shareholders.
