Australian Ethical Investment Issues Upbeat Earnings Guidance
- Underlying Net Profit after Tax to come in between $8.8 and $9.3 million.
- Funds Under Management rose 5 per cent between 30 March and 30 April 2021.
- Fee reduction will take place starting 01 June 2021.
Australian Ethical Investment Ltd (ASX: AEF) has released to the ASX a positive business update alongside an FY2021 earnings guidance. Notably, the company was pleased to announce that for the full year, it expects underlying net profit after tax (UPAT) before performance fees to come in between $8.8 million and $9.3 million. As a point of reference, this range implies a 25 to 33 per cent increase in UPAT, relative to the prior corresponding period.
Australian Ethical Investments Limited is a wealth management company whose three core products include Superannuation, Pensions and Managed Funds. The company works as an investment manager, where it oversees a portfolio of socially responsible and ethical investments across the Asia Pacific, North America and Western Europe. What sets the firm apart from other fund managers is the fact that each investment it undertakes must fulfill the requirements outlined in its Ethical Charter.
More importantly, the guidance is provided based on unaudited results as of 30 April 2021 while assuming no drastic movements will occur in the remainder of FY2021. Additionally, it considers the effects of cloud-based development expenses amounting to $400,000, of which further details will be released in its FY2021 results. Between 31 March 2021 and 30 April 2021, Funds Under Management (FUM) rose 5 per cent to that of $5.68 billion. Specifically, the positive momentum experienced in April was supported by investment performance of $170 million alongside netflows of $100 million. More remarkably, the FUM represents a 40 per cent increase relative to FY2020.
Of crucial importance to shareholders is the reduction in fees. As part of its commitment to allow Australians to gain access to ethical investing, the firm believes that as it scales greater heights, its success can be shared through reduced fees. Consequently, the company will be bringing down fees across several super and managed funds products with effect from 1 June 2021. While this move is expected to yield a 0.04 per cent reduction in annual average revenue, it will undeniably increase the attractiveness of AEF’s product and, in turn, filter through to a prolonged increase in FUM.
Finally, Australian Ethical Investment was pleased to note several key achievements it unlocked as part of its broader strategy. These include the ability to deliver solid returns with its super products where the company came in first for 1 year, 5,7 and 10 years. As it relates to Australian Shares Fund and the Emerging Companies Fund, the firm has delivered higher than average returns. This is evident through a 15.1 and 18.6 per cent return, respectively, up till 30 April 2021. Moving forward, with the increased hype surrounding ethical investing, the firm believes it is in a great position to unlock further growth.