31 December 2025
Australian Ethical is one of Australia's leading ethical fund managers. By investing responsibly in well-managed ethical companies, we deliver competitive financial performance to our clients and positive change to society and the environment. Since our inception in 1986, our Ethical Charter has guided all investment decisions and underpinned our business practices. Every year 10 per cent of our profits* are distributed to charitable organisations and social impact initiatives through The Australian Ethical Foundation.
To provide long-term growth focusing on Australian companies that meet our Ethical Criteria. The Fund aims to significantly exceed the return of the blended index after taking into account management costs over a 7 year period.
The opportunity to invest in a diversified share portfolio of companies predominately listed on the ASX and selected on the basis of their social, environmental and financial credentials. The Fund utilises an active stock-picking management style with stocks generally selected for growth rather than income, with a bias towards smaller capitalisation stocks listed on the ASX. All stocks are chosen on the basis of relative value where we deem the risks are being adequately priced.
| 1m | 3m | 6m | 1y | 3y | 5y | 10y | Since inception | |
|---|---|---|---|---|---|---|---|---|
| Fund | -2.9% | -4.4% | -0.4% | 2.2% | 9.7% | 4.5% | 7.9% | 9.5% |
| Composite Benchmark** | 1.4% | -0.2% | 7.5% | 14.5% | 12.4% | 10.4% | 8.9% | 7.7% |
| CY 2025 | CY 2024 | CY 2023 | CY 2022 | CY 2021 | |
|---|---|---|---|---|---|
| Fund | 2.2% | 17.2% | 10.3% | -17.6% | 14.2% |
| Composite Benchmark** | 14.5% | 10.6% | 12.2% | -1.8% | 17.5% |
Portfolio diversification: Diversify your portfolio by investing in companies and sectors not well covered by other fund managers and brokers.
Help build a better world: Invest in the new, low‐carbon economy, fund medical and technology breakthroughs, efficient transport and more.
Promote human rights: We strive to avoid any investment in companies involved in the poor treatment of asylum seekers or the exploitation of workers through poor working conditions.
The Australian Shares Fund (Fund) entered a more testing market landscape in 2025 after outperforming in the previous 12 months. The Fund rose 2.2% (net of fees) compared to the benchmark of 14.5% for the 12 months to 31 December 2025. Significant sector rotation in 2025 saw Materials significantly outperform the broader index. Within the Materials sector, investor appetite was heavily concentrated in gold-related exposures early in the year, supported by heightened macro uncertainty and a renewed search for defensive inflation hedges. As the year progressed, this momentum broadened across commodities, with rising interest extending to diversified miners and bulk commodity names. While the previous year’s environment rewarded structural growth, balance sheet quality, and idiosyncratic stock drivers, 2025 was dominated by a more cyclical, resource-led advance.
To illustrate the shift in market sentiment, the S&P ASX 200 Materials index rose by 36% in the last 6 months, compared to the S&P ASX 200 Industrials index declining 4%. The fund is perpetually underweight Materials due to the high carbon intensity of the mining and energy companies that dominate the sector. Correspondingly, the fund has maintained overweight positions to technology and healthcare. Whilst these sector positions have detracted value over the last year, they have added significantly more value over the 31-year history of the Fund (Since September 1994, the Information Technology GICs (Global Industry Classification Standard) sector has returned 19.2% per annum. This is almost twice as much as the Materials GICs (+9.7%) and three times more than Energy GICs (6.32%) in this period).
Despite these headwinds, the consumer sector emerged as a key area of strength for the Fund aided by fundamental stock picks. The Fund’s positioning in quality consumer names—supported by resilient demand profiles and strong competitive positioning—provided a partial offset to the commodity-driven skew of the broader market. Disciplined cost management, strong execution and steady earnings delivery helped these positions contribute positively to an otherwise challenging style environment.
As we head into 2026, the portfolio remains anchored in disciplined stock selection, with focus maintained on long-term fundamentals. As sector leadership gradually broadens and macro conditions begin to normalise, the Fund is well positioned to benefit from a more balanced market, supported by its strong focus on fundamental analysis and its commitment to maintaining quality and resilience across holdings. We also remain disciplined in avoiding over-valued stocks driven by short-term sentiment. Our team of experienced analysts is instead focussed on unearthing under-valued opportunities in the Australian or New Zealand market. This approach has endured the test of times over the long term, enabling the Fund to outperform the benchmark 70% of the time over the past 10 years (based on calendar year relative to benchmark returns net of fees).