31 March 2026
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 | -6.9% | -9.7% | -13.7% | -3.5% | 5.7% | 2.4% | 7.4% | 9.1% |
| Composite Benchmark** | -8.3% | -4.4% | -4.6% | 12.3% | 9.5% | 8.5% | 8.5% | 7.4% |
| S&P/ASX Small Indust. | -8.4% | -14.3% | -17.8% | -0.8% | 4.7% | 0.0% | 4.7% | 6.3% |
| 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% |
| S&P/ASX Small Indust. | 8.8% | 12.1% | 11.4% | -21.8% | 13.7% |
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) declined by 9.2% during the March quarter, compared with a benchmark fall of 4.4%. The March quarter was a challenging period for equity markets, with investor sentiment undermined by escalating geopolitical tensions in the Middle East. Market leadership was narrow, driven by strong outperformance from the Materials and Energy sectors, which account for approximately 30% of the benchmark, while Industrials companies (representing all other sectors of the economy) lagged. The rotation into diversified miners and bulk commodity producers reflects the perceived role of these sectors as effective inflation hedges and realization of higher commodity prices.
The Materials sector outperformed Industrials by nearly 10% over the quarter and energy stocks were supported by rising oil prices. This pronounced sector rotation, which has also been evident since 2025, detracted from relative Fund performance given our structural bias towards future focused sectors like healthcare and IT and underweight position in Materials. This positioning remains consistent with our Ethical framework, which limits exposure to the carbon‑intensive mining and energy companies that dominate the Materials sector. The Fund’s overweight position in small cap names also detracted as small capitalisation stocks weakened, as investors favoured larger, more liquid names. While this dynamic represented a short-term headwind to our investment style, we view it as cyclical rather than reflective of underlying company fundamentals and continue to see attractive value opportunities within high-quality businesses.
Defensive exposures provided resilience in the portfolio, particularly within the supermarket sector. Strong operational execution, improving customer metrics and earnings upgrades helped deliver downside protection in a volatile market environment. Our overweight positions in Coles and Woolworths contributed positively to returns over the period.
Another key theme during the quarter was a sharp sell‑off in technology stocks, particularly software names. Sentiment deteriorated as concerns emerged around the potential for artificial intelligence to erode the durability of certain business models, leading to broad valuation compression across the sector. The sectoral laggards included Siteminder, a travel technology company we own. PEXA was our strongest‑performing technology holding, which we view as a high‑quality, domestic digital infrastructure asset enabling secure property settlement, with additional upside optionality from its UK investment.
As we navigate this uncertainty, what is clear to us is that equity valuations in selective pockets of the market are now very attractive. At the end of March, the portfolio held minimal cash, reflecting the active deployment of capital at attractive valuations. Our investment process remains focused on disciplined stock selection, focusing on businesses trading at attractive valuations, supported by strong balance sheets and durable long‑term earnings profiles. We believe this positioning provides a solid foundation as volatility subsides, sector leadership broadens and returns increasingly reflect underlying company fundamentals rather than macro‑driven rotations.