Australian Ethical reports 46% lift in adviser net flows

Australian Ethical has posted a 15 per cent decrease in net profit after tax to $9.6 million and a 21 per cent increase in operating revenue to $70.8 million for the 2022 financial year. 

In its results released on Friday, the ethical fund manager reported that its funds under management (FUM) reached $6.2 billion at the end of FY22, up 2 per cent on a year earlier. 

The rise in operating revenue was driven by strong average FUM growth of 33 per cent over the period while being partially offset by previously announced fee reductions.

“Australian Ethical has delivered another set of positive results despite the volatility in investment markets and widespread macroeconomic uncertainty,” said Australian Ethical CEO John McMurdo. 

“Our operating revenue has increased and profit has remained solid as we invested in line with our high growth strategy. At a time when many in the financial services industry are seeing outflows, we’ve seen strong growth in both retail and wholesale net flows as well as customer numbers, as people seek to invest in line with their values.”

Australian Ethical said that it experienced positive net flows of $900 million, down 8 per cent on the prior comparative period due to a low margin institutional redemption of $200 million.

Net flows from the adviser channel, which the firm highlighted as a key strategic growth channel, were reported to be up by 46 per cent to $300 million.  

Higher margin retail and wholesale net flows excluding institutional rose 20 per cent to $1.1 billion while super net flows were up 22 per cent to $800 million.

The firm’s customer base has grown 17 per cent since the end of the last financial year, with an 18 per cent rise in managed fund customers and a 16 per cent rise in super members. 

Expenses increased 28 per cent during FY22 as Australian Ethical works towards implementing its high growth strategy originally outlined last year.  

The firm stated that its strategic spend included further investment to support the rapid growth of the adviser channel and high-net-worth segment and also to grow the institutional channel.

“The opportunity to grow our business and amplify our positive impact remains unchanged,” Mr McMurdo said on the outlook for Australian Ethical. 

“We don’t believe current turbulence will derail efforts to shift the economy to a more sustainable footing. Today’s regulatory and policy environment is particularly supportive of ethical investing, with signs a new federal government will accelerate decarbonisation efforts in Australia.

“We continue to look forward with a long-term mindset, delivering values-aligned investment solutions and market-leading service to our growing customer base. We believe Australian Ethical remains uniquely positioned, with a differentiated purpose-driven business model and established momentum.”

Australian Ethical indicated that growth in net flows was expected to continue in FY23 and flagged further “diligent investment” towards executing its strategic roadmap. It noted that its profit outlook will reflect higher growth in operating expenses versus revenue.

A final dividend of $0.03 per share fully franked was declared by the firm, with total dividends for FY22 of $0.06 per share. 

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.