The Australian Ethical (ASX:AEF) share price just hit a new all-time high

What’s lit a fire under Australian Ethical?

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The S&P/ASX 200 Index (ASX: XJO) isn’t having a great time of it on the ASX boards this Thursday. At the time of writing, the ASX 200 is down 0.32% to 7,425 points. That’s in stark contrast to the Australian Ethical Investment Limited (ASX: AEF) share price.

On the surface, Australian Ethical’s gain of 0.3% to $13.32 a share (at the time of writing) doesn’t look that momentous. However, when you consider that this company hit $13.59 a share around lunchtime today, you might want to break out the champagne, especially if you happen to be an Australian Ethical shareholder. That’s because $13.59 is a new all-time high for Australian Ethical Investment.

Yes, a new all-time high. That certainly doesn’t happen every day. But this development is just the latest in a long line of good news investors in this company have enjoyed in recent times. At today’s racing, Australian Ethical is now up an incredible 172% year to date in 2021 so far. It’s also up almost 206% over just the past 12 months, as well as a mind-boggling 1,381% over the past 5 years.

So what’s gone so right for Australian Ethical in 2021 so far?

Australian Ethical share price surges on higher FUM inflows

Well, it seems to be quite simple. This company is growing at breakneck speed.

Back in July, Australian Ethical announced that it had enjoyed a 56% increase in funds under management (FUM) over the financial year ending 30 June 2021, bringing its total FUM to $6.07 billion.

Fast forward to this month, and it was only last week that Australian Ethical declared that its FUM now stood at $6.54 billion, as of 30 September. That’s a 7.75% increase in 3 months. The company also announced that its net inflows for the quarter were $160 million, a record high.

Since Australian Ethical is in the business of funds management, these figures arguably bode very well for its profitability. Fund managers work on a ‘clip the ticket’ model, where they take a slice of the total FUM pie every year. The faster its FUM grows, the ‘ticket’ that Australian Ethical gets to clip gets exponentially larger.

This is probably the main reason we are seeing such strong share price appreciation for this company.

At the current Australian Ethical Investment share price, this company has a market capitalisation of $1.5 billion, with a dividend yield of 0.52%.

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

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Motley Fool contributor Sebastian Bowen 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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