Australian Ethical’s new head of equities, Nathan Parkin, has wasted no time reshaping the firm’s portfolio since joining in July. The $13 billion money manager and superannuation fund has been increasing its holdings in ASX blue chips, particularly blood plasma giant CSL. Australian Ethical is a fund manager and superannuation fund focused on ethical and sustainable investments, aiming to deliver competitive returns while adhering to strong environmental, social, and governance principles. They offer a range of investment options across various asset classes.
Parkin believes CSL, which had previously been considered too expensive, now presents an attractive valuation. The top-up occurred after CSL experienced disappointing earnings and a poorly received restructure, leading to its largest single-day share fall since 1994. Despite mixed messages from the company at the time, Parkin remains confident in the long-term prospects of the business. He notes that CSL is currently trading at a 15 per cent discount to the All Industrials PE, a rare opportunity for a company that typically trades at a premium.
Aside from CSL, Australian Ethical is underweight banks, seeing better value in smaller financials like Tyro and Pepper Money. Parkin highlights Tyro, which specialises in payment terminals, for its double-digit EPS growth and increasing margins. He also points to Sims Metal, a global metal recycler, as another standout investment due to its role in reducing carbon emissions for the US steel industry. Parkin also supports reviews of listing rules to protect minority shareholders in takeovers.
Parkin’s arrival and investment decisions reflect Australian Ethical’s commitment to both ethical investing and strong financial performance. The Australian Ethical Emerging Companies Fund (Wholesale) has demonstrated steady performance, with a one-year return of 12.8 per cent and an outperformance of the benchmark since its inception in June 2015, achieving a 13.2 per cent annual return.
