Australian Ethical Investment Limited (ASX: AEF) shares were cruising higher today despite no price sensitive announcements out of the company. By the market's close, the Australian Ethical share price was trading at $5.05, up 8.84% from yesterday's close.
The rise in the Australian Ethical share price comes as the Democrats sit on the verge of taking control of the United States Senate. But more on that in a moment.
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What Australian Ethical does
Australian Ethical is a funds management company that specialises in environmentally and socially responsible investments. Its business is divided into two key segments in the form of managed funds and superannuation.
Australian Ethical's managed funds business comprises eight different investment options and allows investors to invest from as little as $500.
The company's superannuation arm aims to assist investors to "change the world through a retirement plan that performs well but also benefits humanity."
So why is the Australian Ethical share price soaring?
One possible explanation for the impressive performance of the Australian Ethical share price today could be found in this article from The Wall Street Journal. It suggested that Joe Biden's election win would likely result in greater impetus for green energy, in which Australian Ethical is a big investor.
For example, some of Australian Ethical's renewable energy holdings include First Solar Inc (NASDAQ: FSLR) and Ormat Technologies Inc (NYSE: ORA). These shares saw rises of 6% and 7% respectively last night (our time).
Earnings update
Australian Ethical updated its earnings guidance in late December. The company advised that underlying net profit after tax was expected to be between $4.6 and $5.1 million. This represents an 11% increase on the 6 months ended 31 December 2019.
Australian Ethical also reported at the time that strong growth in funds under management was partially offset by the impact of superannuation fee reductions, including those implemented in the second half of FY20.
What now?
John McMurdo, CEO of Australian Ethical, provided an outlook of what's to come:
We have seen excellent momentum in the first half of this financial year as a growing number of Australians seek to do good and do well with their money. Buoyed by excellent investment performance, we expect this strong growth in net inflows to continue.
He went on to say…
Financials in the second half of the financial year compared to the first half will be impacted by higher operating expenses, as well as increased investment in strategic and regulatory initiatives as we position our business for continued success.
