Australian Ethical FUM drops by $70m

Australian Ethical saw a net outflow of $100 million in its investment business in the first quarter of the financial year.

The ethical fund manager said wholesale redemptions outweighed the inflows from new products and client wins.

Net flows into the superannuation business, however, rose to $130 million for the quarter, up on the corresponding period last year.

The total funds under management (FUM) came to $14.43 billion in the quarter, a drop of $70 million from the $14.5 billion it reported at the end of FY26.

"The first quarter demonstrated the continued momentum and resilience of our business," Australian Ethical managing director John McMurdo said.

"While challenging investment markets and some wholesale redemptions affected headline FUM, these factors do not change our confidence in the long-term growth opportunity."

In its annual report, Australian Ethical said middle-market inflows had provided some resilience against higher-than-usual redemptions in its advised and direct channels during FY26, with further middle-market clients expected to land in early FY27.

It recently launched the Australian Ethical Balanced Income Fund for wholesale investors, including foundations and not-for-profits. This is supported by the Reichstein Foundation as a founding investor.

Australian Ethical said positive flows in the super business and its expansion in the middle market channel with the launch of such products demonstrated continued underlying momentum of the business.

"We welcomed more members to our super fund, increased superannuation net flows compared to the corresponding quarter last year and launched a new middle market product with the support of a founding investor," McMurdo said.

"We remain focused on attracting and retaining super members, expanding our reach in the middle market and delivering long-term value for customers and shareholders."

In the annual report, chief investment officer Ludovic Theau highlighted the growth in its private markets business, saying the firm's scale gave it a structural advantage in targeting transactions in the $25 million to $75 million range that larger funds tend to overlook.

"Investment performance during the quarter reflected a challenging market environment with inflationary pressures, higher interest rates and geopolitical uncertainty weighing on Australian equities," Australian Ethical said.

"This was offset by stronger performance from international equities and private markets. Australian Ethical remains focused on its long-term investment approach and continues to identify opportunities where market volatility and valuations create attractive entry points."