Key points
- Australian Ethical Investment is a popular fund manager and super provider
- The company has seen demand for its ethical investments skyrocket in recent years
- Is this company about to expand into offering ETFs?
The Australian Ethical Investment Limited (ASX: AEF) share price is enjoying a very successful day of trading so far this Monday. At the time of writing, Australian Ethical shares are up a healthy 4.15% at $9.29. This ethically-minded fund manager has suffered a steep drop over the past couple of months. It has fallen from more than $15.08 a share back in mid-November to $8.70 today (a staggering 42.3% descent). Even so, this company is still up a pleasing 34% over the past year. As well as a very impressive 943% over the past five years.
So today's big share price move comes amid reports that Australian Ethical might be broadening its horizons by launching an inaugural exchange-traded fund (ETF) product. According to a report in the Australian Financial Review (AFR) today, Australian Ethical is poised to pull the trigger on a listing for its high conviction fund.
New Australian Ethical ETF to launch?
Up until now, Australian Ethical was a company that offered ethically-driven investment strategies across managed funds, superannuation and pensions. The company offers a range of nine managed funds. These cover everything from Australian and international shares to fixed-interest and income-focused investments.
The company's high conviction fund was only launched last October, and is currently available only to wholesale (extremely wealthy) investors. However, this fund is reportedly the one getting the ETF treatment. According to the AFR report, Australian Ethical will be launching an ETF version of the high conviction fund tomorrow. The fund will trade under the ticker code 'AEAE' and will be available on the Cboe exchange (formerly known as Chi-X). This will be the first ETF launched by Australian Ethical.
The high conviction fund is a relatively concentrated managed fund that only holds between 20 and 35 shares. These are predominantly taken from the S&P/ASX 300 Index (ASX: XKO). According to the fund's latest update for December, its top five holdings were Bank of Queensland Limited (ASX: BOQ), Coles Group Ltd (ASX: COL), Suncorp Group Ltd (ASX: SUN), Westpac Banking Corp (ASX: WBC) and Telstra Corporation Ltd (ASX: TLS).
Between its October 2021 inception and 31 December, the high conviction fund returned -1.8%. That fares poorly against its benchmark, which delivered 2.2%.
At the current Australian Ethical share price, this company has a market capitalisation of $1.04 billion. It also has a price-to-earnings (P/E) ratio of 93.88 and a trailing dividend yield of 0.75%.
