Australian Ethical reports record FUM entering 2H24

Australian Ethical’s funds under management (FUM) expanded 15 per cent in the six months to 31 December to $9.67 billion, marking a new record high.

In an ASX listing on Friday, the ethical investment manager said its record FUM was underpinned by “further customer growth, positive new inflows and investment performance”.

Net flows were $259 million for the period, constituting superannuation net flows of $269 million offset by “modest” managed funds outflows of $10 million, which the firm attributed to volatile market conditions.

Meanwhile, net profit after tax (NPAT) attributable to shareholders for the half year was $6.2 million.

Moreover, Australian Ethical reported a revenue increase of 33 per cent to $48.5 million and underlying profit after tax (UPAT) of $8.5 million, up 71 per cent on the prior period.

According to the firm, this was partially offset by the impact of fee reductions in late calendar 2022 following the successor fund transfer (SFT) with Christian Super.

“This is a really strong first-half result for Australian Ethical, and we’re pleased to report increases in FUM, customer numbers, revenue and profit,” Australian Ethical chief executive John McMurdo said on Friday.

In a quarterly update in January,  McMurdo clarified that its “strategic transformation plan” continues to “move from strength to strength” supported by “strong headline growth, increased scale, and improving underlying operating leverage”.

As such, Australian Ethical’s customer base also surpassed 130,000 during the six months to 31 December, a 13 per cent surge over the prior period.

This was bolstered by a 16 per cent increase in super members, which now stands at some 117,000.

“Our growth strategy is gathering momentum and we are seeing an uplift in our key financial metrics as well as strong momentum on key strategic initiatives,” McMurdo said on Friday.

The fund manager also reported investment performance during the first half of financial year 2024 of $202 million, clarifying that strong investment performance during the September quarter of $325 million offset losses in the first quarter.

“It is encouraging to continue reporting positive net flows, and solid investment performance during a period of continued market volatility. As a result, we continue to see growth in our revenue and remain enthusiastic about the opportunities that lie ahead,” McMurdo said.

Excluding the $2.9 million dropped on integration and transaction costs for the Christian Super merger, expenses increased by 23 per cent in the first half of FY24.

Fund-related expenses also represented almost half of all spending, which included higher spend on strategic and regulatory initiatives, according to the fund manager.

Offsetting these increases was a reduction in marketing expenses, primarily due to the timing of brand spend.

However, Australian Ethical confirmed that this is expected to change in the second half of FY24 after the launch of a new brand campaign to bring greater brand awareness to Australians.