The Australian Ethical (ASX:AEF) share price is sliding 4%. What’s next?

Australian Ethical shares are currently down.

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The Australian Ethical Investment Limited (ASX: AEF) share price is currently down by around 6%.

It just so happens that Australian Ethical has gone ex-dividend today. However, that dividend was only $0.05 per share, which equates to a yield of 0.5%.

That final dividend came after the ethical fund manager’s FY21 result.

FY21 result

In the FY21, the business generated underlying profit after tax (UPAT) of $11.1 million, an increase of 19%. This was driven by operating revenue increasing by 18% to $58.7 million.

The fund manager’s customer base increased by 23%. The ASX share boasted it remains one of the fastest growing super funds in the country by both the number of members and funds under management.

Australian Ethical generated a performance fee of $2.9 million from investment outperformance by the Emerging Companies Fund. Excluding the outperformance fees, operating revenue growth was 21% and UPAT increased by 30%.

Operating expenses increased by 18% to $43.6 million as the business continues to invest for growth.

One of the key drivers of the result was that group funds under management (FUM) increased by 50% over the year to $6.07 billion, which was helped by investment performance and net inflows of $1.03 billion (56% higher than last year).

In terms of the dividends, the final ordinary dividend was 4 cents per share and a special performance fee dividend of 1 cent per share, bringing the total year dividend to 8 cents per share – an increase of 33%.

What is the outlook for the Australian Ethical share price?

In the short-term, the business is going to focus on improving its investment capability, expanding its product offering, increasing brand awareness, improving the customer experience and increasing the size of its newer customer segments.

In the longer-term, the company believes that the initiatives mentioned above will allow it to leverage the scale of the business and grow profit.

The Australian Ethical CEO John McMurdo said:

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. And while we are well positioned – with no debt, strong cashflows and positive momentum – we will be much more ambitious to safeguard and grow our market share in what will be a fiercely contested market in the near term.

Should you invest $1,000 in Australian Ethical right now?

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

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