Australian Ethical profit soars as funds reach record

Australian Ethical has posted a 29 per cent increase in net profit after tax attributable to shareholders for FY26, alongside record funds under management and stronger organic net flows.

The ethical investment manager reported NPAT attributable to shareholders of $25.7 million for the year, up from $19.9 million in FY25, while underlying profit after tax attributable to shareholders rose 15 per cent to $27.3 million. Operating revenue increased 9 per cent to $129.5 million, driven by higher average funds under management, which grew 11 per cent over the year.

According to Australian Ethical, the increase was partially offset by a marginal decline in the average blended revenue margin, primarily reflecting the full-year impact of the Altius fixed income funds under management. FUM reached a record $14.5 billion at 30 June 2026, up 4 per cent year-on-year, with the result supported by positive net flows and investment performance.

Organic net flows rose 13 per cent to $664 million, including $491 million from retail and wholesale channels and $173 million from institutional investors. The institutional result included a $125 million investment from the Clean Energy Finance Corporation into the new Australian Ethical Growth Opportunities Fund.

Superannuation remained a key contributor to growth, recording $527 million in net flows during FY26 alongside record end-of-financial-year voluntary contributions and record super guarantee contributions. Member acquisition also strengthened in the second half, rising 20 per cent compared with the first half.

Australian Ethical said its digital marketing, website and onboarding improvements had contributed to the increase in member joins. The fund also completed insurance harmonisation, reduced administration fees, refreshed its investment menus and launched a new retirement calculator during the year. Operating expenses rose 7 per cent to $90.4 million, predominantly reflecting higher employee and IT expenses.

The underlying cost-to-income ratio improved from 71.4 per cent in FY25 to 69.8 per cent in FY26. The company said its average revenue margin slipped from 0.92 per cent to 0.91 per cent, reflecting the full-year contribution of lower-margin Altius fixed income funds under management and further superannuation fee reductions, partly offset by the introduction of an insurance administration fee. The revenue margin stood at 0.89 per cent at 30 June.

The numbers tell a fairly straightforward story of an asset manager scaling up while keeping costs in check. The revenue margin compression bears watching over the next couple of reporting cycles, especially as fee reductions continue to bite across the superannuation sector.

Australian Ethical also continued its governance uplift during FY26, including finalising an independent review with EY and working with APRA to satisfy its licence conditions during the balance of FY27. The final phase of an investment platform upgrade is expected to be completed in the first half of FY27. The company declared a final dividend of 10 cents per share, payable on 18 September 2026, taking total dividends for FY26 to 18 cents per share, up 29 per cent on the previous financial year.