LICs have a fixed number of shares which are traded on the Australian Stock Exchange. The closed-end nature of the fund enables a focus on long-term portfolio performance without having to deal with funds moving in and out of the portfolio due to changes in investor sentiment.
We invest in companies that typically have high quality businesses and that are financially sound. It is our view that such businesses generate superior returns over the long-term. This approach has historically produced attractive returns and fully franked dividends over time for shareholders.
AFIC has an experienced investment team that actively reviews current and potential investments across a broad range of companies. When selecting investments for our portfolio we look for a strong management and board, and sound financial metrics including return on investment, profit margins, cash flow and levels of debt. This approach leads to a portfolio which is typically between 80 - 100 companies.
AFIC receives dividends from the companies it invests in as well as other income. AFIC then distributes its income to shareholders via fully franked dividends which are paid twice a year. Shareholders can choose to reinvest these dividends via the DRP and DSSP to grow their investment over time.
When shareholders receive a franked dividend it means they are potentially entitled to a rebate on the tax already paid by the company AFIC invests in. Franking credits attached to the dividend are sometimes known as imputation credits.
Assessment of Environmental, Social and Governance (ESG) issues is an important part of our investment process. As a long-term investor, we seek to invest in companies that have strong governance and risk management processes, which includes consideration of environmental and social risks. We regularly review companies to ensure ongoing alignment with our investment framework. More details are in the attached document.
There are two main types of brokers. Full-service stockbrokers are a dedicated stockbroker that will typically offer a broad range of services including general advice. Full-service stock brokers may charge a higher brokerage fee than online brokers. Share Trading Platform (Online Broker). These are non-advisory, share-trading platforms that gives you access to buy and sell shares online, typically for a lower cost per trade. Most major financial institutions have online brokering services.
Once you have set-up your broker account and have funds available in your broker account, you are ready to buy shares in AFIC (ASX code: AFI). There is no set limit on the number of AFI shares you may purchase, however your broker may apply a minimum amount (typically $500). You can purchase (and sell) AFIC shares as often as you would like, but please be aware of the cost of brokerage that is charged by your broker.
Once you have become a shareholder in AFIC you will receive a welcome letter from our share registrar, Computershare, with details including your Holder Identification Number and how to update your bank details (to receive your dividend) or participate in the Dividend Reinvestment Plan (DRP) or the Dividend Substitution Share Plan (DSSP).