Australian Ethical share price surges 9% on record FUM update

It appears that investors are still interested in putting money into ethical investments.

| More on:
A women cheers with clenched fists having read some good news on her laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Australian Ethical shares are on fire on Thursday
  • Investors were pleased to see the fund manager's FUM continue to grow in a tough environment
  • Management also revealed its profit expectations for FY 2023

The Australian Ethical Investment Ltd (ASX: AEF) share price is roaring higher on Thursday morning.

In early trade, the fund manager's shares are up 9% to $3.52.

Why is the Australian Ethical share price on the charge?

Investors have been bidding the Australian Ethical share price higher today following the release of a business update.

According to the release, the company's funds under management (FUM) reached a record $9.02 billion at the end of May.

This reflects further positive net flows of $90 million since March, despite the challenging economic and market environment that all investment managers are experiencing. It also notes that superannuation flows remained particularly resilient.

Australian Ethical's latest FUM represents an increase of 3% since 31 March 2023 and 45% since 30 June 2022. Though, the latter doesn't include the $1.93 billion in FUM that was added from the Christian Super acquisition that completed late last year.

Speaking of which, Australian Ethical's managing director, John McMurdo, spoke positively about both the acquisition and the state of play. He said:

The business is now better positioned than ever for further headline and earnings growth following the successful integration of the Christian Super successor funds transfer (SFT), and following positive investments' returns, and organic net cashflows.

In respect to the SFT, the company advised that it will now turn its focus to extracting further middle and back-office synergies.

Guidance

Also giving the Australian Ethical share price a boost today was the company's guidance for the second half of FY 2023.

Management revealed that revenue is expected to be approximately 21% higher than the first half driven by higher average FUM.

It will be the same for its second-half underlying profit after tax (UPAT), which is expected to be approximately 30% higher than the first half and in a range of $6.3 million to $6.8 million.

This will take its full year UPAT before performance fees to $11.3 million to $11.8 million. Management explained that stronger revenue and disciplined cost management have contributed to the emergence of operating leverage and the underlying profit increase.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Australian Ethical Investment. The Motley Fool Australia has recommended Australian Ethical Investment. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Financial Shares

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Earnings Results

Suncorp share price jumps on strong result and $4.1b return to shareholders

This insurance giant is returning significant funds to shareholders after the sale of its banking operations.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Financial Shares

Macquarie share price dips on mixed quarterly results

Macquarie released its nine-month performance update this morning.

Read more »

Sports fans watching a match at a bar.
Financial Shares

Own IAG shares? Here's what to look out for in the upcoming HY25 report

It could be a very interesting result for IAG.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Dividend Investing

6% dividend yield and up 30% in the last 6 months! Is this the perfect stock for growth and income investors?

This little-known ASX financial services company has been surging recently – and it pays a monster dividend.

Read more »

a man surrounded by huge piles of paper looks through a magnifying glass at his computer screen.
Financial Shares

Is it time to buy GQG or Magellan shares?

These two fund managers have seen a lot of volatility.

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Financial Shares

5 ASX 200 financial stocks reporting next week

Earnings season is underway...

Read more »

Woman and man calculating a dividend yield.
Financial Shares

Own AMP shares? Here's what to watch out for in the upcoming result

This is what investors should keep an eye on.

Read more »

Businessman studying a high technology holographic stock market chart.
Financial Shares

Under $6.30 now, is this ASX 200 high-flyer set to soar after 74% Japanese sales growth?

Is this ASX 200 financial share set to rise?

Read more »