The Australian Ethical Investment Limited (ASX: AEF) share price is down around 7% after the ethically-focused fund manager gave its quarterly update to investors.
Australian Ethical describes itself as Australia's leading ethical investment manager. It aims to give investors investment products that align with their values and provide competitive returns.
Quarterly funds under management (FUM) numbers
At 31 March 2022, Australian Ethical had a total of $6.83 billion of FUM. This represented a slight decline of 1.6% from the $6.94 billion of FUM at 31 December 2021.
The company attributed the decline to the "highly volatile market conditions" such as the conflict in Europe, inflation expectations, as well as supply chain disruptions.
However, Australian Ethical noted that the FUM movement for the 2022 financial year to date is still positive. FUM has grown by 13% in FY22 since 30 June 2021.
While the business suffered an overall decline in FUM during the period, it still achieved total net inflows of $0.24 billion. It was the $0.35 billion negative effect of 'market and other' movements that hurt the FUM in the three months to 31 March 2022.
Australian Ethical said that positive net flows for the quarter were driven by "continuing strong" superannuation contributions, which includes the consistent superannuation guarantee contributions together with rollovers from new customers joining. Superannuation net flows amounted to $0.18 billion for the quarter.
Managed fund net flows were positive but were impacted by "cautious market sentiment" related to overall market volatility.
The ASX share said that 5,191 customers joined Australian Ethical during the quarter, taking total customers to 79,909. This was an increase of 4% from 31 December 2021.
Since the start of FY22, Australian Ethical has benefited from $0.84 billion of net flows.
Recent profit result
FUM changes can have an influence on the profit and Australian Ethical share price.
In the first six months of FY22, Australian Ethical generated $5.4 million of underlying net profit after tax (NPAT), which was an increase of 12%. Total revenue rose by 35%.
With the release of that result, the Australian Ethical CEO John McMurdo discussed the impact of significant growth for genuinely ethical investment funds:
As Australia's original and leading ethical investor, this puts us in an enviable position to capture our natural and achievable share of a rapidly growing addressable market.
In our full-year results, we outlined our ambitious high growth strategy which is already yielding meaningful results. We've successfully launched new products, won multiple awards and fast-tracking our strategic plans by acquiring a minority stake in Sentient Impact Group.
Australian Ethical share price snapshot
Since the start of the year, Australian Ethical shares have fallen by 54%.
