Shares in Australian Ethical Investment Limited (ASX: AEF) are currently trading at all-time highs, having surged more than 80% in 2021.
Investors have been scrambling to buy shares in the company since the start of the year. Read on to find out why the Australian Ethical share price is surging in 2021.
What is moving the Australian Ethical share price?
The initial catalyst that sparked investor interest in Australian Ethical can be traced back to the company’s quarterly update in early January.
The update notified investors that Australian Ethical increased its funds under management (FUM) to $5.05 billion for the quarter ending 31 December 2020. In addition to hitting a milestone of $5 billion, FUM surged 16.9% from $4.32 billion at the end of September.
Australian Ethical’s management noted that the increase in FUM was driven by the company’s exceptional investment performance and strong net inflows. This was reflected in a 22.4% quarter on quarter increase in Managed Funds FUM of $1.75 billion. In addition, Australian Ethical reported a 14.6% increase in Superannuation FUM to $3.3 billion over the period.
Investors have also been attracted to Australian Ethical given the global focus and shift to green energy. The Biden administration in the US has pledged $US trillion to climate-related policies over the next 8 years. As a result, companies like Australian Ethical which focus on environmental, social and governance issues are expected to benefit.
More on Australian Ethical
Australian Ethical is a funds management company that specializes in environmentally and socially responsible investing. The company’s business is divided into managed funds and superannuation funds.
The company’s managed funds segment provides investors with 8 different investment options. In addition, Australian Ethical’s superannuation business allows investors to build a retirement plan by investing in ethically sustainable businesses.
Earlier this year, Australian Ethical released its half year results for the 6 months ending 31 December. The company reported a 10% increase in operating revenue for the period of $25.6 million. The company attributed the growth to strong growth in new customers and positive investment performance.
However, Australian Ethical did report an 11% increase in operating expenses of $18.9 million. Management attributed the rising costs to continued investment in its brand, distribution capabilities and customer experience. As a result, Australian Ethical reported an underlying profit after tax of $4.9 million for the half.