Ethical investing is becoming an increasingly common theme for the modern investor. Increasingly, investors not only want to grow their wealth, but they also want to feel good about where that growth comes from. Climate change, the ongoing COVID-19 pandemic, and the many social justice movements that have gained traction globally over the past 12 months have all made people more aware than ever of the impacts the companies they invest in have on society and the environment.
So, it’s no wonder then that Australian Ethical Investment Limited (ASX: AEF) has seen its price rally 124% so far this year (to $11, as at the time of writing).
What is Australian Ethical?
Australian Ethical is a wealth management company with over $6 billion in funds under management (FUM). The company offers a range of managed funds (catering to various risk appetites), as well as superannuation and pension products.
Managed funds pool together cash from multiple individual investors, and then the fund manager decides on how to invest the money. A fund mandate document normally sets out the terms of the investment, including the fund’s strategy and any performance benchmarks – exceeding the annual return on the S&P/ASX200 Index (ASX: XJO), for example.
While other investment vehicles and exchange-traded funds (ETFs) just screen out companies that fall short of various environmental, social and governmental (ESG) targets, Australian Ethical claims to actively seek out companies that are doing good.
So, what does it invest in?
The managed funds in the Australian Ethical product suite are weighted differently according to their risk level and investment objectives. For example, the Australian Ethical Australian Shares fund, which is high risk and focused on long-term growth, invests heavily in the financial and healthcare sectors. However, one of its top ten holdings is New Zealand-based sustainable energy provider Contact Energy Limited (ASX: CEN), which claims that over 80% of its energy is generated by renewable sources.
The financials
Australian Ethical makes money by charging fees on its investment products. Operating revenue jumped 18% in FY21 (to $58.7 million), on the back of a 50% increase in FUM. Australian Ethical also earned a one-off $2.9 million performance fee on its Emerging Companies Fund, after it beat its one-year retail benchmark return by a whopping 17.3%.
Commenting on the result, Australian Ethical CEO John McMurdo stated: “The planets are aligning very quickly for Australian Ethical with societal, political and economic tailwinds pointing to a business case for responsible investing that is impossible to ignore.”
He went on to say that the company was “embarking on an aggressive growth strategy that reinforces [Australian Ethical’s] existing market share and expands it where we see the most potential.”
Recent moves in the Australian Ethical share price
After a brief dip around June and July, the Australian Ethical share price has taken off again. Since the release of the company’s full-year results on 26 August, the Australian Ethical share price has gained almost 16%.
And after those incredibly bullish comments from CEO John McMurdo, the Australian Ethical share price will definitely be one to watch over the coming months.
The post The Australian Ethical Investment (ASX:AEF) share price is up 124% this year! appeared first on The Motley Fool Australia.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of August 16th 2021
More reading
- 2 ASX shares ready to explode after COVID: expert
- 5 things to watch on the ASX 200 on Tuesday
- ASX 200 up, Sydney Airport flies, Nuix rises
- Is worst over for ASX gold shares as Macquarie upgrades sector?
- Here are the 3 heaviest trading ASX 200 shares on Monday
Motley Fool contributor Rhys Brock owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/3hweLsV
Leave a Reply