Australian Ethical predicts a 86% profit jump, its shares go on a tear

Fields of tulips near Magdeburg in Germany. Sean Gallup/Getty Images

Australian Ethical Investment, the environmental and socially responsible financial services company, expects its full year profit to jump about 86% to between $3.47 and $3.84 million.

A short time ago, its shares were up 5.3% to $68.45.

The rise in profit is due to strong growth in funds under management as a result of both an increase in market values and strong flows into Australian Ethical’s products.

Funds under Management (FuM) increased 31% since July last to $1.53 billion as at Tuesday this week.

The new guidance is against trend with other listed managed funds telling the market their business has shrunk with falls in the share market.

The financial services giant AMP last week reported wealth management net cash flows down 38% to $209 million in the first quarter. Total assets under management were down 2% to $112.6 billion.

The latest Australian Ethical profit guidance is based on unaudited accounts to the end of April. Full year results are due to be announced in August.

Australian Ethical in July last year cut fees by 0.30 of a percentage point, reducing superannuation asset-based administration fees to 0.63%.

The company says the increase in funds under management outweighed the impact of the fee reductions.

Net flows for the 12 months to June are expected to be about $300 million, 67% higher than last financial year. Total expenses are forecast to be 1% higher than the prior year.

Announcing its half year results in February, the company said it was remain confident that the trend for growing social consciousness and increasing demand for ethical investment products will continue despite volatile markets.

Australian Ethical Investments screens out investments in companies involved in tobacco, uranium, coal mining, exploitation of people and old-growth forest logging.

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