Australian Foundation Investment Company Limited (AFIC) is Australia’s largest listed investment company on the Australian Securities Exchange (ASX). It was established in 1928 and specialises in investing in Australian equities.
Investment Objectives: AFIC aims to provide shareholders with attractive investment returns through access to a growing stream of fully franked dividends and enhancement of capital invested over the medium to long term.
Benchmark: S&P/ASX 200 Accumulation Index.
Size of portfolio:$6.8 billion at 31 December 2018.
Management cost: 0.14 per cent, no performance fees.
Investment style: Active, fundamental, bottom-up, value.
Suggested investment period: Five years to 10 years or longer.
Net asset backing: released every month with top 25 investments.
Listed on ASX: code AFI.
Diversified portfolio primarily of ASX-listed Australian equities.
Tax-effective income via fully franked dividends.
Consistent after tax paid investment returns achieved over the long term
Professional management and an experienced Board, investment and management team.
Ease of investing and transparent ASX pricing.
Shareholder meetings on a regular basis.
Listed investment companies are incorporated as companies, and are closed-ended vehicles. This means they do not regularly issue new shares or cancel shares as investors join and leave the fund. Instead, investors must buy and sell existing shares on the ASX. Occasionally, new shares may be issued to increase the size of the portfolio, or units may be bought back or cancelled to reduce the size of the fund.
This closed-ended structure allows AFIC to concentrate on selecting investments without having to factor in money coming into or leaving the fund. This stability assists AFIC in taking a long-term approach to investing.
However, because it is a closedend fund trading on the ASX, AFIC’s share price on occasions can trade at a premium or discount to net asset backing i.e. the value of the portfolio per share.
A number of different factors influence this discount/ premium. It is important investors take note of where the share price is trading relative to the net asset backing i.e. the value of the portfolio per share when considering investing in AFIC.
For more information visit our website: afi.com.au