Profit Up Strongly as Income Recovers, Portfolio Outperforms
- AFIC’s investment focus is on a diversified portfolio of Australian equities, seeking to provide attractive income and capital growth to shareholders over the medium to long term. This is achieved at a low cost, with lower volatility than the market, and with low portfolio turnover which produces tax effective outcomes for shareholders.
- Half Year Profit was up by 73.5% to $146.0 million following on from the recovery in dividend income. In the corresponding period last year, Half Year Profit was $84.1 million.
- Investment income for the six months to 31 December 2021 was $159.4 million, up from $93.8 million in the corresponding period last year. The biggest increases came from the major banks, Macquarie Group, and BHP and Rio Tinto as a result of previous very strong iron ore prices. A number of companies in the portfolio also reinstated dividends during the half year, which included James Hardie Industries and Ramsay Health Care.
- The interim dividend for the half year is 10 cents per share fully franked, the same as the previous corresponding period.
- The six-month portfolio return including franking was 6.9% compared with the S&P/ASX 200 Index return including franking of 4.6% over the same period.
- For the 12 months to 31 December 2021, the portfolio return including franking was 22.4%. The return from the S&P/ASX 200 Accumulation Index over this period including franking was 18.7%.
- The management expense ratio for AFIC is 0.15% (annualised), with no performance fees.
- The level of economic activity has improved materially from the pandemic-induced lows of mid 2020 putting interest rate increases back on the agenda. While the timing of these increases remains uncertain US interest rates have already started to move upwards leading to increased volatility in equity markets. We remain well positioned to purchase our preferred companies should attractive opportunities present themselves in these conditions.