Underlying performance remains strong, an Australian firm that specialises in ethical investing said, despite suffering a big profit drop in the second half of 2014.

An Australian investment and retirement fund group focusing on areas such as renewable energy and biotech as part of an “ethical” stance says underlying financial performance remains robust despite suffering a profit slide.

The Australian Ethical Investment firm, which is listed on the Sydney Stock Exchange, said fee cuts, property impairments and remuneration changes pushed down net profit after tax to A$553,000 million ($429,021) for the six months to end-December 2014, down 55 per cent from the same period a year earlier. Underlying profit after tax was A$965,000, down 32 per cent on a year earlier.

Australians continue to be keener on investing in line with ethical guidelines, the firm said. Membership of its superannuation fund rose 22 per cent, it said in a statement on its results. The gain bucks a trend of shrinking membership of superannuation schemes, falling 1.4 per cent.

While debate continues on the benefits and costs of investing in line with specific ethical codes and screens, the firm said inflows suggest there remains demand for such approaches.

The firm cut fees substantially on its superannuation fund last year, it said, arguing that this will produce more sustainable business in the longer term.

“The impact of the fee reduction on revenue was offset by increases in FuM [funds under management] and net flows, resulting in an overall 1 per cent increase in revenue over the period compared to the previous six months,” Phil Vernon, managing director, Australian Ethical, said.

Funds under management rose 30 per cent from 31 December 2013 to A$1.039 billion. The fund now has 19,284 members, up 22 per cent from the end of 2013.

(Editor's comment: while the AuM and investor numbers are certainly positive and worth noting, the firm will have to ensure that this new business translates into better profit figures going forward.)