Australian Ethical launches ethical fund for wholesale investors

Australian Ethical has launched the Australian Ethical Balanced Income Fund, in collaboration with Australian Impact Investments (Aii), for wholesale investors, including foundations and not-for-profits.

The underlying Australian Ethical strategy has a 36-year track record and applies the fund's ethical charter across a multi-asset balanced portfolio.

The fund targets a return of CPI+4% real returns over the long-term.

Aii will help with impact sourcing, due diligence, measurement and reporting to the impact sleeve that is designed to deliver positive, measurable social and environmental outcomes.

Australian Ethical chief executive and managing director John McMurdo said trustees are increasingly recognising that it's not enough for investments to generate income for grants if the underlying capital may be contributing to the very challenges their organisation exists to address.

"Foundations and not-for-profits have told us they want to manage their capital responsibly, while upholding their fiduciary responsibility to preserve and grow capital over time," McMurdo said.

"This fund has been designed to bridge that gap, bringing together income, diversification and a clear focus on impact within a single, professionally managed portfolio. It's about giving organisations confidence their capital is working consistently with their purpose, without compromising on the financial outcomes they rely on."

The Reichstein Foundation, an Australian philanthropic foundation focused on social and environmental justice, is a cornerstone investor in the fund.

Reichstein Foundation chief executive Rachel Ball said the foundation is focused on ensuring its investment capital is aligned with its purpose.

"As purpose-driven investors, we look for investments that can deliver financial returns and measurable impact. The Balanced Income Fund provides foundations like ours with a practical way to do both, aligning investment capital with purpose, while maintaining the diversification and financial outcomes needed to support our long-term objectives," Ball said.

"We see this as an important development for the philanthropic sector as demand for values-aligned investment solutions continues to grow."

While developed specifically for foundations and not-for-profits stewarding perpetual capital, the fund also has broader relevance for wholesale investors seeking value-driven investments.

"Foundations and not-for-profits are increasingly looking to evolve how they invest their capital, but many don't want the complexity of building and managing a bespoke solution," Australian Ethical chief investment officer Ludovic Theau said.

"This fund provides an implementation-ready approach - bringing together diversification, income and a dedicated allocation to impact within a single portfolio, supported by clear governance and reporting."