Australian Ethical Surges to $13.94B FUM with 68% Profit Jump

Robust Growth Amid Ethical Investing Momentum

Australian Ethical Investment Limited (ASX – AEF) has reported a remarkable financial year ending 30 June 2025, marked by a 34% surge in funds under management (FUM) to a record $13.94 billion. This growth reflects a combination of strong organic net inflows, strategic acquisition, and solid investment returns, underscoring the rising appeal of ethical investment strategies in Australia.

The company’s underlying profit after tax (UPAT) climbed 29% to $23.8 million, while net profit after tax (NPAT) attributable to shareholders soared 68% to $19.9 million. These figures highlight not only operational efficiency but also the successful integration of Altius Asset Management, acquired in late 2024, which added nearly $2 billion in FUM despite some net outflows post-acquisition.

Operational Leverage and Strategic Investments

Australian Ethical’s revenue grew 19% to $119.4 million, supported by a 31% increase in average FUM. However, the average revenue margin declined slightly due to the lower-margin fixed income funds from Altius. Despite this, the firm improved its underlying cost-to-income ratio from 73.7% to 71.4%, reflecting disciplined cost management and operating leverage benefits.

Investment in technology and platform enhancements also featured prominently, with increased IT expenditure aimed at strengthening infrastructure and cybersecurity. The transition of superannuation administration and custody services to GROW Inc and State Street respectively is expected to yield further cost efficiencies and enhance customer engagement.

Board Changes and Ethical Commitments

In governance, the company announced the retirement of long-serving director Kate Greenhill, who has been instrumental in guiding Australian Ethical through a period of significant growth. Fiona Reynolds, with extensive experience in superannuation and responsible investing, has been appointed Chair of Australian Ethical Superannuation Pty Ltd, signaling a continued focus on strong leadership aligned with the company’s ethical mission.

True to its values, Australian Ethical allocated a record $2.8 million to its Foundation, supporting charities focused on climate change solutions and resilience. This commitment to social impact remains a core pillar of the company’s identity and appeal.

Looking Ahead – Preparing for the Next Growth Phase

Looking forward to FY26, Australian Ethical anticipates further profit growth alongside strategic reinvestment to support expansion. The company expects ongoing organic FUM growth driven by compulsory superannuation guarantee increases and enhanced member engagement. Additionally, new revenue opportunities are anticipated from expanded asset classes including private markets and international equities, although modest margin compression is expected due to fee reductions.

Managing Director John McMurdo expressed confidence in the company’s positioning, citing strong investment performance, a robust balance sheet, and enhanced platforms as key enablers for sustained growth despite market volatility. The next year will be pivotal as Australian Ethical completes platform upgrades and continues to build on its ethical investment leadership.