Australian Ethical Investments Rides ESG Wave
- Australian Ethical Investments looks to takes advantage of a rise in ESG Investing.
- Currently the company have 5.05 billion under management.
- Joe Biden has recently committed to halving US emission by 2030.
Australian Ethical Investments (ASX: AEF) currently sits at the forefront of a global wave of ethically and socially responsible investing. In recent months and years, the trend towards Environmental, Social and Corporate Governance (ESG) has provided investors a means to selectively focus their investment decisions to socially and ethically responsible businesses. In particular this week, the United States President Joe Biden led a two-day virtual summit on Climate Change, pledging the countries commitment towards net zero emissions and hence heightening investment in renewable technology.
Australian Ethical Investments is one of Australia’s largest ESG driven funds with over 62,000 customers and 5.05 billion under management as of the 31st of December 2020. The company’s three key pillars, which create the foundation for their investment strategy are Planet, People and Animals. The company’s flagship products is their Australian Shares fund which has delivered an 11.3 per cent return over the past five years. The company also offers a Balanced Fund and a Diversified Shares Fund.
On the 15th of April 2021, Australian Ethical Investments announced that total Funds Under management (FUM) had grown by 7.1 per cent for the three months to March 31, totaling $5.41 billion. In recently years the Fund has seen record inflows following both global trends towards ESG as well as the funds phenomenal performance. Australian Ethical Investments recently recorded an 11 per cent increase in underlying profit after tax to $4.9 million. Further in the first half of FY21 the company saw a 43 per cent increase in net inflows of $422 million and total FUM growing by $1 billion.
Global Trends towards renewable energy in particular are likely to driver further growth and investment within the sector. The Virtual Leaders Summit led by Joe Biden saw a variety of countries pledging carbon neutrality and emission cuts over the following 10, 20 and 30 years. “Every country will need to invest in new clean energy technologies as we work forward to deal with net zero emissions,” was the leading plea from the US president. Mr. Biden pledged to cut greenhouse gas emissions in the US in half by 2030.
As of the 26th of April 2021, Australian Ethical Investments is trading at $7.92 per share, just 13.5 per cent from its all-time highs set in June 2020. Just this year alone the company’s share price has risen over 58 per cent with technical and global momentum looking to support continual growth. Moving forward the company looks to leverage their exposure to growing and volatile markets while simultaneously lowing the funds fees to boost competitiveness. Financially the company has no debt with a strong and secure balance sheet.