The Australian Ethical Investment Limited (ASX: AEF) share price has dropped 8% today.
Since the end of 2021, Australian Ethical shares have fallen by around 18%. That means it has lost around a fifth of its value in that time.
The ethically-focused business didn't release any ASX news today. However, it's worth keeping in mind that over the last six months that Australian Ethical shares have still risen by around 40% despite the recent decline.
However, last month the company released two announcements that it deemed were market sensitive.
The first was a business update.
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Earnings and funds under management (FUM)
Australian Ethical said that for the six months to 31 December 2021, it's expecting underlying profit after tax before performance fees to be between $5 million and $5.5 million. The mid-point increase would represent an increase on 8% year on year.
Any performance fees from the Emerging Companies Fund and the newly launched High Conviction Fund will only crystallise on 30 June 2022 if those funds outperform their benchmarks.
Within that update, FUM had increased by 9% from 30 June 2021 to $6.64 billion. This increase was driven by net inflows of $0.40 billion and the investment performance of $0.17 billion, net of distributions and fees.
Sentient Impact investment
About a month ago, Australian Ethical announced it has bought a minority stake in the impact investment business Sentient Impact Group. The investment size was $5.2 million.
This investment is part of the company's high-growth strategy as it responds to the demand for ethical investing and the opportunity to build a "bigger, more impactful business".
Sentient said that it will continue to manage and control its business operations and investment processes.
Australian Ethical CEO John McMurdo said:
Our stake in Sentient is an important step in extending our own capability in the impact investing arena while delivering on our purpose of investing for a better world.
For our customers who have long prioritised measurable impact alongside financial returns, we believe that our relationship with Sentient will lead to more opportunities to make money matter in addressing the environmental and social challenges the world faces.
Outlook
An outlook can have a sizeable impact on investor thoughts on the Australian Ethical share price.
Australian Ethical says that it has positive momentum. The company noted that mobilising private finance to tackle climate change was high on the agenda during COP26 and shifting capital flows is an essential part of the decarbonisation process.
It's going to keep investing for growth given the positive momentum it's experiencing and the scale of the opportunity.
Australian Ethical is investing in building the capability of its investment, sales and customer service teams and enhancing its product development and technology platforms. It's also planning to invest in brand recognition and marketing.
