Australian Ethical’s (ASX:AEF) FUM falls 3%; how are shares responding?

3 min read | June 16, 2022 11:27 AM AEST | By Ashish

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Australian Ethical’s (ASX:AEF) FUM falls 3%; how are shares responding? — Image source: © Herrbullermann | Megapixl.com

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Highlights

Australian Ethical expects underlying PAT to be in the range of AU$9.8 million to AU$10.2 million.

The company’s FUM has fallen 3% to AU$6.64 billion over the last two months.

The net flows for the period between 1 April 2022 and 31 May 2022 were AU$150 million.

Australian Ethical Investment Ltd (ASX:AEF) on Thursday issued a guidance for the fiscal year ending June 2022. The ASX-listed investment manager expects underlying profit after tax (PAT) to be in the range of AU$9.8 million to AU$10.2 million. The profit range represents a mid-point rise of 9% on-year to 30 June 2021, the company said in its latest ASX filing.

Australian Ethical is Australia's largest and original 100% ethical investment manager based in Sydney. It provides wealth management products to the investors that align with their values and provide competitive returns.

The company also said that its funds under management (FUM) has fallen 3% to AU$6.64 billion over the last two months due to the negative impact of ongoing volatility in the stock markets. “The decrease in April and May was driven primarily by negative investment performance of $340 million,” Australian Ethical Investment added.

Australian Ethical’s net flows

The company’s net flows for the period between 1 April 2022 and 31 May 2022 were AU$150 million. For the financial year (2022) to 31 May, net flows were AU$990 million (including an AU$50 million institutional redemption) compared to AU$914 million in the previous corresponding period.

Australian Ethical said that it was notified an institutional client would be redeeming its AU$340 million investment in the Australian Ethical Balanced Fund between June and November 2022, representing nearly 1.7% of annual revenue. However, Australian Ethical expects its FUM to increase in FY2023.

Australian Ethical’s share price snapshot

Following this update, shares of Australian Ethical were trading at AU$4.68, up 3.08% at 10:01 AM (AEST). However, AEF shares are down over 65% on a year-to-date (YTD) basis. Similarly, the share price has declined over 64% in the past six months.

In the past year, the AEF share price has fallen 35%, while in the past month, the stock is down over 15%. The stock’s 52-week high and low stand at AU$15.08 and AU$4.34, respectively.

Meanwhile, in the third quarter of FY22, customer numbers increased to 79,909, up 4% from 31 December 2021. As of 31 March 2022, its FUM was AU$6.83 billion, a fall of 1.6% from 31 December 2021. However, the FUM was up 13% since 30 June 2021 to AU$6.83 billion. Of the total FUM, AU$4.42 billion was in superannuation.

Australian Ethical had reported a 38% jump in half-year operating revenue to AU$35.2 million compared to the 6 months ended 31 December 2020. Underlying (PAT) was up 12% to AU$5.4 million.

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