Australian Ethical is embarking on an aggressive growth strategy as the pandemic and climate change fears draw investor attention to responsible investing.
Reporting its full-year results, the firm said it had seen a “seismic shift” in consumer attitudes towards responsible investing helped by factors such as the COVID-19 pandemic and the Intergovernmental Panel on Climate Change (IPCC) climate change report.
This led to funds under management at the firm to increase to $6.07 billion thanks to net inflows of $1.03 billion during FY21.
Of particular note was the $2.9 million performance fee from its Emerging Companies fund. According to FE Analytics, this had returned 48% over the financial year compared to an average return of 39% by the Australian Core Strategies (ACS) Australian small and mid-cap sector.
Other strong-performing funds for the firm were Australian Shares Wholesale, which returned 41.7% compared to returns of 28.5% by the ACS Australian equity sector, and Diversified Shares Wholesale and Advocacy Wholesale which both returned 31% compared to returns by the ACS global equity sector of 28.3%.
Chief executive, John McMurdo, said the firm’s climate-friendly portfolios were gaining popularity with investors which was prompting the firm to take advantage of this opportunity for growth.
Planned changes included deepening investment capabilities, expanding the product offering, growing brand awareness and expanding newer customer segments.
“The planets are aligning very quickly for Australian Ethical with societal, political and economic tailwinds pointing to a business case for responsible investing that is impossible to ignore,” McMurdo said.
“While we are well-positioned with no debt, strong cashflows and positive momentum – we will be much more ambitious to safeguard and grow our market share in what will be a fiercely-contested market in the near term.
“We are embarking on an aggressive growth strategy that reinforces our existing market share and expands it where we see the most potential. Our goal is to build a much bigger, more impactful business and we will be investing heavily in our existing business to achieve this ambition.
“The speed at which we execute this strategy is vital and dictated by the once-in-a-business lifetime expansion of the addressable market and imminent competition.”
