Australian Ethical Surpasses $14.5 Billion FUM with Strong Superannuation Flows

Record FUM Milestone Amid Economic Challenges

Australian Ethical (ASX:AEF) closed the 2026 financial year with a fresh high watermark of $14.5 billion in funds under management (FUM), underscoring resilience in a year marked by economic and geopolitical headwinds. The milestone was propelled by robust net inflows, particularly in superannuation, and strategic investment from the Clean Energy Finance Corporation (CEFC).

Managing Director John McMurdo highlighted the company’s diversified asset approach and expanded investment team as critical factors enabling positive returns across most portfolios despite a volatile market backdrop. The firm’s focus on ethical investing, combined with new product innovation, helped sustain growth even as many peers faced headwinds.

Superannuation Drives Strong Net Inflows

Superannuation net flows reached $196 million in the final quarter, supported by end-of-year contributions, rollovers, and rising compulsory superannuation guarantee payments. The transition to the GROW platform and renewed momentum in employment platform acquisitions, alongside improved digital marketing, boosted new member joins in the second half of FY26.

This momentum contributed to a full-year retail and wholesale net inflow of $491 million, reflecting sustained demand for Australian Ethical’s values-aligned super products. These flows were complemented by institutional net inflows of $173 million, although partially offset by an inorganic outflow linked to the Australian Unity Bank mandate redemption.

Strategic Investments and New Fund Launches

The March 2026 launch of the Australian Ethical Growth Opportunities Fund marked a significant expansion of the firm’s asset management business. The CEFC’s $125 million investment in this fund was a key driver of flows, providing a buffer against expected redemptions amid market volatility. Despite retail and wholesale investment net flows being slightly negative $26 million in Q4, the new fund launch signals growing traction beyond the core superannuation base.

These developments reflect Australian Ethical’s strategic shift towards building a second growth engine in middle market and institutional channels, supported by new product offerings and platform enhancements.

Investment Performance in a Turbulent Year

FY26 investment returns were shaped by energy supply pressures and geopolitical tensions, including the Middle East conflict, which elevated oil and gas prices and inflationary pressures. Australian Ethical’s ethical investment stance meant it avoided many sectors that outperformed during the year, such as traditional energy companies, while overweight positions in technology, healthcare, and emerging companies faced sell-offs.

However, strong performance in fixed income and private markets portfolios helped offset these challenges. The firm closed the year with a $650 million gain in investment performance during the final quarter, providing a positive end to a complex year.