# AFI - Australian Foundation Investment Company



## mista200 (31 July 2005)

I realise Australian Foundation is a good blue chip stock, but can anyone recommend similar listed companies. Also at $4 is Australian Foundation still a good buy?


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## 26 Broadway (18 October 2006)

I appreciate the time lapse here, but I'd like to know whether anyone considers this a good buy too !


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## Ferret (19 October 2006)

I love this company for long term investment.  I've got about 25 stocks in my long term portfolio and AFI is 27% of the total.  Next is BHP at 9%.

Going back many years AFI has outperformed the All Ords in the longer terms.  I don't have to worry about any issues with this company and can just let my holding grow and one day get a nice retirement income contribution from the 4% fully franked dividends.

Ferret


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## Ferret (21 July 2007)

Nothing about AFI for a while.  

A big rise today to close at a record high.  Maybe on the back of ARG announcing they will have increased profit by 20% this year.

Can't find when AFI announces its results, but LICs are the first to report so it must be soon.

Ferret


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## Judd (21 July 2007)

AFI reports on Wednesday 25th.  As its siblings (MIR and DJW) reported very nice returns, expect AFI to do the same.  Most of our personal holdings are in LIC's and index funds now.  Rather spend time with my family than care about what the market or a particular share will be doing this or that nanosecond.


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## Judd (25 July 2007)

Well, if you like dividends, holders (of which I am one) would be happy with the AFI result today.  An increase of 30% in the dividend from 10c ff to 13c ff and an attributable 2.5c LIC capital gain.


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## Ferret (14 March 2008)

AFI today announced that shareholders who had elected to buy more shares under a share acquisition plan could cancel their election since the share price is now about 5% below the acquistion price.  

Now that's looking after your shareholders!


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## bloomy88 (11 November 2008)

Gday, realise there havent been many posts on afi lately.
Anyone have any opinion on the purchase of them at their current market value? Currently at $4.40 and 1 year low is $4.20.
Cheers


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## drsmith (11 November 2008)

Pre tax net tangable asset backing per share at the end of October is four dollars and eighteen cents.


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## awg (11 November 2008)

theres been a bit of support over the last week or so, outperformed the market

i bought some for my SMSF, choosing over ARGO or STW

more for timing than any other reason, caused I cashed out of a wrap fund

done better than the others i bought

got stopped out of a few

got a feeling risk is still to the downside, so i didnt go in to hard


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## IrishDigger (15 July 2010)

I'm keeping a watch, I like the idea of LIC's and AFI appears to be recovering nicely in comparison to the others.


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## brianwh (19 July 2010)

I have a substantial proportion of my SMSF Australian Share holding in LIC's - AFI, ARG and MLT. I bought them during the early part of the rally last year so have done well with them but their performance lately has been very ordinary and in fact I have been considering lightening my holding by selling ARG. The dividend of 4-5% (100% franked) is hardly stellar. And another thing that doesn't seem logical to me - the last time I looked, some of them (and I think AFI was one of them) were trading at a premium of about 5% to their net asset backing. If I have understood this correctly, it means you could buy the same parcel of shares yourself more cheaply by buying them individually.

However your original comment Irish Digger was about AFI looking OK at the moment and I agree - I will continue to hold in the forseeable future


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## IrishDigger (26 May 2012)

I'm still with AFI.

Just bumped the thread to check the current trend of opinion.


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## prawn_86 (27 May 2012)

IrishDigger said:


> I'm still with AFI.
> 
> Just bumped the thread to check the current trend of opinion.




As it is an LIC it will pretty much follow the market.

With Interest Rates on the way down however, a good yeild is handy if you can hold for the longer term


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## gez82 (3 April 2013)

Looking to start my portfolio with an LIC and AFI or ARG look like good, solid, relatively low-risk options for a first-time investor. Bit of a premium at the moment ~4.5%, though. Should I always look to buy at a negative premium?


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## prawn_86 (3 April 2013)

Hi Gez,

ASF members cant give specific financial advice as such. AFI and ARG are great tools for passive investment however. Many investors who dont want to be too active buy either of these shares and they are always a good reflection of the market overall


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## gez82 (3 April 2013)

Thanks prawn.

 I'm a little reticent to buy LIC stocks at a premium, but I guess the flipside is there's probably a food reason for the premium.


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## catfish (3 April 2013)

gez82 said:


> Thanks prawn.
> 
> I'm a little reticent to buy LIC stocks at a premium, but I guess the flipside is there's probably a food reason for the premium.




Not advice, just opinion! I would never even look at LICs over NTA, because there are alway opportunities to get in when they are trading at discounts. Take MFF for example, it traded under book for so long, now it's where it should be.  

Why would you look to buy into the market now when it has run so hard and appears expensive? I believe the best time to buy LIC are in deep market downturns, obvious, yes, but that is where you get the greatest discounts to book value in my experience. 

As a micro investor, it is relatively easy to beat the market with a little reading and education. Personally I wouldn't pull the trigger yet, especially with a passive investment at the top of the market while you are paying someone to do it on your behalf. 

If your happy with the market thats fine, I personally find it more fun and financially rewarding researching small cap stocks.


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## gez82 (3 April 2013)

Catfish, thanks for the response. 

As I said, I'm reticent to buy AFI, or any LIC for that matter, at a premium. Re the small cap stocks, I have had a look at Contango Microcap which is trading just under NAV, but is, like AFI, on its way down from a high.

Seems like now is an expensive time for a new investor looking to buy blue-chip, relatively low-risk stocks.


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## catfish (3 April 2013)

gez82 said:


> Catfish, thanks for the response.
> 
> As I said, I'm reticent to buy AFI, or any LIC for that matter, at a premium. Re the small cap stocks, I have had a look at Contango Microcap which is trading just under NAV, but is, like AFI, on its way down from a high.
> 
> Seems like now is an expensive time for a new investor looking to buy blue-chip, relatively low-risk stocks.




Again, not advice! If you don't believe in what you are buying or have a total understanding of it, don't buy it. When I bought my first stocks I rushed in only to realise I have made the wrong decision. Again though contango is a company your paying to invest your money. Correct me if I am wrong, but I believe contango has a long history of trading 10-15pc under book? Good luck


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## Muschu (3 April 2013)

I'm a retiree with a SMSF who was essentially out of the market for some time.  I began to re-enter mid-2012 and progressively bought both AFI and ARG.  One is up 17%, the other 11% - including dividends but not the franking credits.

With the volatility that has been going on these 2 buys have served me well. [To date].


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## Garpal Gumnut (3 April 2013)

Muschu said:


> I'm a retiree with a SMSF who was essentially out of the market for some time.  I began to re-enter mid-2012 and progressively bought both AFI and ARG.  One is up 17%, the other 11% - including dividends but not the franking credits.
> 
> With the volatility that has been going on these 2 buys have served me well. [To date].




Good plan.

Only buy them when the world of stocks is going to damnation.

They are my Al Swearengen (Deadwood) stocks, and like you have been good.

gg


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## Judd (16 September 2014)

A ho hum share to many.  However, those who hold will have received the share purchase plan offer for up to $15,000 which closes on 25 September.


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## VSntchr (16 September 2014)

Judd said:


> A ho hum share to many.




Indeed, but at the age of about 15 this was my first ever purchase! Influenced and conducted purely by VSntchr's PAPA of course!


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## GlobeTrekker (18 September 2014)

Judd said:


> A ho hum share to many.  However, those who hold will have received the share purchase plan offer for up to $15,000 which closes on 25 September.




The SPP price is slightly below NTA which makes this quite attractive as the AFIC share price has been at a moderate premium to NTA for a while now, though this has narrowed a bit recently.


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## amf yoyo (18 September 2014)

Hi, 
I am starting out with stocks.
Don't have time for active research or chasing the
next big microcap.
What is the overall opinion?, where should 
I start, say if I had 20k?. Choose index, or 
bunch of individual shares e.g Telstra etc, or 
Go AFIC.
Many thanks


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## Muschu (19 September 2014)

As a retiree I have held both AFI and ARG since exiting and re-entering the market.  Charts good.  Dividends acceptable.  Fully franked.  Good port in a storm.

I also hold TLS and have been fortunate.  Average purchase price about $4.


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## GlobeTrekker (21 September 2014)

amf yoyo said:


> Hi,
> I am starting out with stocks.
> Don't have time for active research or chasing the
> next big microcap.
> ...




AFIC is a fairly safe bet if you have a smallish amount to invest and want some diversification without having to pay lots of brokerage on individual shares, and if you don't have time for active research.  Perfect for a set-and-forget investment strategy.  Argo, Milton and BKI are similar, you could buy a bit of each if you want just that little bit more diversification without much more risk.  These guys all tend to match or slightly outperform the Aussie index.  Alternatively you could go for an ETF if you want to straight out match the index.


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## pixel (24 October 2014)

Since the last lot of fundamental assessments, AFI has come a little off the boil - just like the whole Market did. Therefore, it can also be expected that it bottoms out when the general Market does.

I routinely run a special scan across the entire ASX, trying to pick up just this kind of stocks that look like having found a bottom and about to reverse back up. "Just for fun", I have run this scan back over this week, and AFI is the first result. The alert came up for yesterday. 





*Key features: *

Momentum (MACD) shows Bullish Divergence to price Lows.
"Speed" (red line in MACD) has turned positive, crossing above zero.
Today's High is "tentatively" Primary Resistance, reinforced by (yellow) 1-year EMA and (red) 3-month EMA.
Today's High also coincides with the tops of two long green wicks earlier this month.
*Strategy:*
I'll check tomorrow whether the resistance holds and if so, how far the pullback comes back. A rebound off support in the upper half - Fibonacci levels 50, 61.8, or 78.6% - is considered "strong" invitation to buy. A break above resistance on good supporting volume would allow me to top up or enter. Stop to be set depending on the entry; usually, I lift it quickly to the initial resistance level, which, once broken, needs to become support in this scenario.

For more details about my approach, see the new thread "Pixel's Picks" here:
https://www.aussiestockforums.com/forums/showthread.php?t=29112
and/or visit my website http://rettmer.com.au/ and use the left-most green entrance.


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## pixel (24 October 2014)

Not unexpectedly, the resistance held firm and I didn't buy yet:




$5.90-ish could potentially become support level, allowing a cautious entry. 
To help me decide, I then switch to Intraday charts. I use the same Trinity script with Volatility Envelopes and break levels, but obviously with different time and volume parameters. Depending on position size, sensitivity, and the rate at which bids and offers change, I consult charts spaced at  
Half-hourly:




5-minutes:




even down to 1 minute ticks.


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## Dona Ferentes (15 January 2016)

bit of an anomaly with AFI (but which probably won't last long)

Most holders of AFI - its a LIC that 'holds the market' to a large extent - are in for the longterm; a lot of SMSFs have it in portfolio .

Today at 4.10pm, someone dropped 106K of AFI (or nearly $600K in what is a thinly traded share) and it closed at $5.50 - its low for the last 12 months and notionally below the Dec 2015 NTA of $5.63 (again, a first for the year). But AFINA, the SPP issued share (at $5.51) is trading at $5.53, above AFI. That is weird as the next dividend - at least 9c ff and possibly 10c .. and to be announced on Wed 20th Jan - isn't included in AFINA. Notionally AFINA should, and generally has, traded about 10c + franking below AFI, of late.


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## shouldaindex (15 January 2016)

AFI also has 200m in debt, which I think means it should trade a slight discount (taking this factor in isolation) compared to debt free LICS such as ARG and MLT.


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## coolcup (15 January 2016)

Dona Ferentes said:


> bit of an anomaly with AFI (but which probably won't last long)
> 
> it closed at $5.50 - its low for the last 12 months and notionally below the Dec 2015 NTA of $5.63 (again, a first for the year).




AFI broadly speaking tracks the market right? The ASX 200 is down 8% since Dec 2015, so its NTA should fall by roughly the same amount if marked to market today, so ~$5.20. So selling at $5.50 is pretty rational behaviour when you look at it that way...

...on the other hand the lowest ask is still at $5.66 currently, so it probably won't stay at this level for long!


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## Ferret (20 January 2020)

AFI's half year report out today.  I always find it interesting to see what they have been buying and selling.  This half:






But what I find really interesting is this commentary:




AFI becoming more growth focused.  I like it.


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## Belli (21 January 2020)

Has been progressively changing the mix for about five years. And finally dumped AMO I believe.  ARG has changed its mix as well.

Not as "passive" as some think.

One sort of blurry eye so I haven't read any of the inserts


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## Knobby22 (21 January 2020)

I like their new look! Might be tempted to buy in one day.


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## Belli (21 January 2020)

shouldaindex said:


> AFI also has 200m in debt,




Where did this figure come from?  It's Annual report for EY 2019 stated it had no borrowings and in the previous year it was $100m.


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## Dona Ferentes (21 January 2020)

Belli said:


> Where did this figure come from? .



that post was from 2016 and probably relates to AFIG, since converted. Technically debt, I suppose.


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## Belli (21 January 2020)

Dona Ferentes said:


> that post was from 2016




Doh!


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## sptrawler (21 January 2020)

It is good to see a couple of moves they have done, I have also, makes me feel a bit better.


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## So_Cynical (21 January 2020)

Dumped AMP at the bottom of the price cycle, very far from genius level stock selection..


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## sptrawler (21 January 2020)

So_Cynical said:


> Dumped AMP at the bottom of the price cycle, very far from genius level stock selection..



Maybe they think AMP aren't at the bottom of the price cycle? 
Also noticed AMP aren't in MLT's top 20 holdings.


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## Belli (22 January 2020)

sptrawler said:


> Maybe they think AMP aren't at the bottom of the price cycle?
> Also noticed AMP aren't in MLT's top 20 holdings.




AFI sold a large portion of AMP a couple of years ago I understand.


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## Ferret (22 January 2020)

So_Cynical said:


> Dumped AMP at the bottom of the price cycle, very far from genius level stock selection..



They did the same with STO a couple of years ago.  Not one of their best moves.


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## Dona Ferentes (22 January 2020)

So_Cynical said:


> Dumped AMP at the bottom of the price cycle, very far from genius level stock selection..



Well not really, matey.


Belli said:


> AFI sold a large portion of AMP a couple of years ago I understand.



Belli is closer to the mark. Easy to do a perusal.

From the Annual accounts, AFI held 20.1 million AMP shares at 30 June for three years, 2015, 2016 and 2017. Market values on these days, $121 mill, $103.7mill and $104.3 mill.

At 30/12/17 showing market value of $104mill an #18 holding in portfolio. Then in months to follow, $105.5mill, $106.3 mill and at 29/3/18, still #18 at $100.3mill. By 30/4/18, down to $76mill at #23 and, by next month, off the Top 25; by 30/6/18, 12.9mill shares held with market value $45.9mill. Last FY at 30/6/19, holding 9.6million AMP shares with market value $20.4million. Then at 30/12/19 announced disposal of a further $15.9million of AMP during the six months

So, to my untrained eye, AFI kept a sizable holding until the Feb 2018 shocker result from AMP, selling 7.2mill shares as the AMP price dropped from $5+ to under $4. In the next year, as SP declined from $3.60 to $2.20 a further 3.3 million shares sold. I assume the further disposal has cleared out the rump holding. The current share price for AMP is now $1.88.

Its a lot harder disposing of $100mill of stock; especially if you are the market.

AFI also state in their reports that AMP was a long time holding, probably since demutualisation. This affects cost base tax treatment etc.


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## sptrawler (22 January 2020)

Ferret said:


> They did the same with STO a couple of years ago.  Not one of their best moves.



Yes STO another great stock, finally nearly recovered to the 2005 price, what's that 15 years?


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## Belli (23 January 2020)

sptrawler said:


> Yes STO another great stock, finally nearly recovered to the 2005 price, what's that 15 years?




First I don't hold AFI as I'm set with my present holdings.  I take an interest in what a number of LICs do but not very closely and some tidbits I hear on market commentary although I don't follow those closely either.  So this is only from memory.

Apart from price issues, hasn't STO reduced its dividends over the last while and when did AFI sell its STO holdings?

ARG management admits they have made some wrong selections and I'd assume AFI may have done that as well. As far as I know no one always gets it right.


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## Ferret (23 January 2020)

Belli said:


> Apart from price issues, hasn't STO reduced its dividends over the last while and when did AFI sell its STO holdings?



According to their 2017 report, they had completed disposal of STO by early 2017.  That was before the bottom for STO, but it has recovered well since mid 2017 (I hold).


Belli said:


> ARG management admits they have made some wrong selections and I'd assume AFI may have done that as well. As far as I know no one always gets it right.



Absolutely.

Anyway, I like where the AFI portfolio is at the moment and I think I will participate in the dividend reinvestment plan for the first time in many years.  It has a 2.5% discount, which is pretty high these days!


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## Dona Ferentes (27 July 2020)

> "Economic conditions have been extremely challenging for many businesses, as the fallout from the COVID-19 outbreak negatively impacts many Australians. Equity markets have also been very volatile following the all-time highs reached in late February, as governments and central banks try and respond to deteriorating conditions and control of the virus remains uncertain."



 The Full Year Profit was $240.4 million. The profit for the corresponding period last year was $406.4 million. Investment income was down, as a number of one-off items were not repeated this year. This included participation in the Rio Tinto and BHP off-market share buy-backs, special dividends and the receipt of a dividend because of the Coles demerger from Wesfarmers ($134.2 million in total). In addition, several companies reduced or deferred dividends in the second half of the financial year, which also meant a fall in dividend income.
 AFIC, as a long-standing listed investment company, has reserves that can be used in difficult times. Drawing upon these reserves, the *final dividend was maintained at 14 cents per share fully franked* despite the fall in income in the second half. Total fully franked dividends applicable for the year are 24 cents per share. Last financial year total dividends were 32 cents per share. This included a special interim dividend of 8 cents per share. No special dividend has been paid or declared this year.
 During the period, AFIC continued to adjust the portfolio and took advantage of the decline in share prices to increase holdings in companies it wanted to own more of. This included participation in the recent deeply discounted capital raisings that have occurred.
 The positioning of the portfolio to ensure quality companies with strong industry positions formed the core of the portfolio has lessened the impact of the negative market. Portfolio return for the year, including franking, was negative 3.1%. Including franking, the S&P/ASX 200 Accumulation Index was down 6.6%. Over 10 years, the corresponding figures are 9.3% for AFIC and 9.4% for the Index. AFIC’s performance numbers are after costs. AFIC’s management *expense ratio is 0.13% for the year*.

A number of purchases were undertaken during the year. This included placements in National Australia Bank, Cochlear, Auckland International Airport, Oil Search, NEXTDC, Ramsay Health Care, Reece and Qube Holdings. Major additions included Goodman Group, Telstra (to bring some income into the portfolio), Macquarie Group, Cleanaway and Sydney Airport. 

While there has been a reduction in the number of holdings in the portfolio over the year from 76 to 61, three new companies were added, given we consider the long term opportunity for each business to be attractive: Altium, Netwealth and Ryman Healthcare. Major sales included the complete disposal of holdings in Treasury Wine Estates, Suncorp Group, Scentre Group, Adelaide Brighton and Perpetual.


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## sptrawler (29 July 2020)

AFI preliminary final report.

https://www.asx.com.au/asxpdf/20200727/pdf/44kvq5j6xwvn1z.pdf

I do hold


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## Dona Ferentes (15 October 2020)

AFIC has revealed that it has been running a model portfolio of between 40 and 50 international stocks for about 12 months, and having seen solid returns it will now put real money to work. To be clear, this isn’t a bet-the-farm moment, with only 1 per cent to 1.5 percent of the LIC’s $7.2 billion portfolio to be allocated offshore.But as AFIC chairman John Paterson told the LIC’s annual general meeting on Wednesday, the company hasn’t been afraid to think big, suggesting the offshore portfolio could eventually morph into its own product.







> “When the performance has been assessed, we will consider whether it represents an opportunity for our shareholders and other investors to invest in this global portfolio directly,” he said.




AFIC chief executive Mark Freeman says there were a range of reasons for setting up the global portfolio, including harnessing the work AFIC’s team was already doing assessing international stocks and markets as part of the research on the local blue chips and would-be blue chips that AFIC famously focuses on. Freeman has pitched in with a small team – one full time resource and one part time – to construct the portfolio based on the same principles AFIC uses for his ASX investing – a buy and hold strategy of names with strong competitive advantage, with an accent on founder-led businesses, or “owner driver” names in the AFIC parlance.


> He won’t reveal any specific names in the portfolio, but says many are recognisable names. The spread of 40 to 50 stocks is a bigger basket than other Australian global specialists such as Magellan, but Freeman argues this level of diversification is more AFIC’s style.



The United States and Europe are the main markets in the model portfolio, but Freeman says there are a few names from Asia. The shift to virtual meetings forced on fund managers and companies by the pandemic has allowed Freeman and his fledgling global team to more easily buttress their research efforts with investor calls. Freeman isn’t willing to put a deadline on AFIC’s assessment period for the global strategy. The focus for now is to put real money to work and to start to assess what extra resources might be needed to run the strategy inside AFIC’s portfolio, before determining whether it could be opened up further.

“We’ve done well, but it’s early days,” Freeman says. “We just have to get really comfortable with it and that’s not something you can put a timeframe on.”
But he says a globally-focused product with AFIC-like characteristics – a long-term mindset, low turnover of stocks, a tax effective vehicle with low fees and no performance fees – remains a serious consideration. “That would be something that would fit with our group but we’ve got to understand if that’s something we can create from this.”


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## Dona Ferentes (15 October 2020)

and from the AGM : *Outlook*
_•The onset of COVID-19 means low interest rates and significant government stimulus for the foreseeable future._
_•Full impact of economic conditions on company earnings and dividends still to play out.
•Difficult to reconcile expansion of market valuations, although it is being driven by a small number of stocks – particularly Information Technology, Healthcare. 
•We believe the portfolio is well positioned given the quality of the holdings and further adjustments made through the March/April downturn.
•Upcoming US election may provide further volatility._
_•We can remain patient_


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## Dona Ferentes (30 December 2020)

Providing general information to investors, I notice a bit of a pivot by AFI, probably to differentiate itself from other investment options.

1.  *Discount vs Premium: how AFIC looks at NTA*

_"Simply put, NTA is the total value of the portfolio divided by the number of shares on issue. If an LIC has a $100 portfolio and 100 shares outstanding, the NTA per share is $1. What is important to understand is that the NTA per share does not always reflect the market price of those shares; this is due to many reasons, some easier to analyse than others.

"This is what is meant by trading at a discount or premium to NTA; if the share price is higher than NTA per share (say at $1.05 from the example above), the stock is trading at a premium, and if it is lower than NTA per share, (say at $0.95 from the example above), the stock is trading at a discount. It is a conventional investment belief that shares in LICs trading at a discount to NTA represent a good buying opportunity, but it is not always as straightforward as this...._

*The driving forces of NTA:
... Investment Performance and Costs*
*... Dividends*
*... Size
...... read more at : *








						Discount vs Premium: how AFIC looks at NTA
					

Find the latest news and updates from AFIC. Read now.




					www.afi.com.au
				




2.  *No longer only focusing only on the ASX200*

Although their benchmark for performance for many years has been the (major) index,  < _and they use the S&P/ASX200 Accumulation as a benchmark_ > the updated website has a section on Investment Objectives 








						Our Company
					

Discover an easy way to invest in Australian companies with AFIC. Find security and dividend history, performance data, and reports for shareholders, advisors, and new investors.




					www.afi.com.au
				



 and includes :
*Nursery development*
_We aim to maintain a ‘nursery’ of smaller stocks in the portfolio and therefore remain constantly on the lookout for new companies that have the capacity to develop into major businesses over time. While such companies may be small, they typically exhibit similar characteristics to those in the core investment portfolio and provide AFIC with future growth options._


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## Belli (30 December 2020)

I don't hold AFI although I occasionally do look at its financials.  I give them, and other LICs, credit for supporting the dividends to shareholders.  I have heard a number of share holders may not be traveling well financially with the decline in dividends this year and could be stressed out to some extent.  So it's something at least and, in my view, it is what the profit reserves are for.

From memory I understand the payout ratio was over 100%.  ARGs was the also over 100% payout ratio.  Be interesting to see how long that can or will be sustained.

I became curious and had a look at older research reports going back to 2015 on the AFI web-site.  I noticed they mentioned the benchmark being the ASX 200 Accumulation Index and I wonder if AFI "formally" changed its benchmark in the light of those reports and when that occurred.


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## So_Cynical (30 December 2020)

AFI has a market cap of just under 9 billion so due to the size of the company they have to invest in big stocks, thus they track the index somewhat, even with a few smaller stocks its going to be hard to get much out performance without a bit of risk.


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## Dona Ferentes (31 December 2020)

So_Cynical said:


> AFI has a market cap of just under 9 billion so due to the size of the company they have to invest in big stocks ...



or,.... _AFI has, over the long term, invested in stocks that have assumed blue chip status, and hence has a market cap of 9 bill_


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## Belli (31 December 2020)

Those who hold AFI will find out how its half-year has been on 20 January 2021 when it releases its report.

Dividend will be payable on 23 February.


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## Dona Ferentes (3 January 2021)

Just poking around, with access to full history; and it looks like I have held AFI for nearly 30 years., in two holdings. Initially in my own name and from 2007 when I transferred most into my SMSF, but kept the original parcel (CGT considerations)







During the entire period, AFI has paid a bi-annual dividend, increasing over time. There has been an opportunity to participate in DRPs and also in SPPs and Rights Issues.

An investment pathway is often determined by personal circumstances. For me it was buying direct shares in 1985/86 prior to going overseas. Was out of contact (Asia) and slept through  the '87 crash. Back in Aust, then heading OS again in '92, I resolved to diversify , in a less volatile investment. Received dividends, kept records.  The connectivity offered by internet and direct trading has also changed investment patterns but, as a core holding, AFI has been a Buy and Hold, which matches the LIC's Investment Philosophy.

In my* own name*. Bought 6000 @ $1.65 in Apr 1992. ($10K, nearly $90 in brokerage). Participated in DRPs 1994 to 2000, received Bonus shares 1995, took up SPP and Rights issues when offered 1998 to 2006. Transferred 21,300 to SMSF in 2007, keeping original 6K. Still hold.

In *SMSF *- Some 21,300 held since March 2007 , cost base $5.18; with 4 DRPs in '11 & '12 (ranging from 4.25 to 4.72),  participation in SPP in '14 at 5.88, then sold same at 6.09, and purchased a few in 2016 to hold 25,000; sold 4,000 at $7.12 in Feb 2020

I have access to XPlan calculations, and have achieved the following IRR numbers (Note: Internal Rate of Return calculations include Imputation Credits.). I realise the Accumulation Index and Franking boosts the numbers, but that is the name of the game.
_In my own name_
One Year ........... 2.70%
Three Years ....... 10.42%pa
Five Years .......... 9.64%pa
Ten Years ........... 9.81%pa
Since Inception (1992) ..16.81%pa

_In my SMSF_
One Year ........... 5.42%
Three years ..... 11.17% pa
Five Years  ....... 10.10%pa
Ten Years ......... 10.20%pa
Since Inception (2007) .. 8.24%pa

_From AFI website _- numbers to end November
Net asset / share growth plus dividends, inc. franking  .....   Share price growth plus dividends, inc. franking
One year ...................... 2.6%  ...................................................... 10.6%
Five Years .................... 10.0%pa ................................................. 11.2%pa
Ten Years ....................  9.8%pa .................................................. 10.2%pa

Takeouts.
1. Having invested for the duration, I read the reports and familiarise myself with their style and investments.
2. From *Dividends *of 3.5c and 6.5c a share in 1992, these have lifted to 10c and 14c a share in 2020 (apart from occasional Special Dividend, divis have kept at this level since 2015. )
3. Always been 100% franked
4. the near $10k invested in 1992 now yields 14.5% plus franking.... and has a market value of $43,800
5. Timing issues, buying and selling can deliver better or worse returns.
6. Tax is not taken into account. The SMSF is more efficient for both dividends and CGT calculations.
7. For a MER of less than 0.15%pa, active management is cheap. As a core holding, I can focus more on the small caps.


----------



## Belli (3 January 2021)

A very good summation there @Dona Ferentes.  Thank you.

For those who may be interested, the AFIC web-site does have a list of dividends paid and capital issues going back to the mid-1980s.

I know MIR and ARG have as well and I will assume a number of other LICs have similar details.


----------



## Dona Ferentes (3 January 2021)

Belli said:


> A very good summation there @Dona Ferentes.  Thank you.



And I think the point I should have made was, how relatively easy it was to get a significant holding, albeit over a couple of decades, while receiving increasing dividends along the way. The only big outlay was the initial 10k, then a few divis foregone for DRPs and some corporate actions (SPPs were limited to $5k for a long time) and voilà. ...

_*Compounding, the 8th wonder of the world.

Rule of 72.*_


----------



## Austwide (3 January 2021)

@Dona Ferentes I have long ago given up trying to calculate percentage returns. My returns vary depending on how I look at them.

So, I've used your numbers as a guide; $9,900 to $43,800 to get my the return. Tax excluded as that complicates issues even more.

Based on the 6000 buy and current price (no DRPs etc included) I get a compounded return  of about 5.5% or a flat percent return of about 15% on the initial investment.

I then don't know what to do with bonuses and DRP shares. Do I leave it as above or perhaps subtract the bonuses off the initial cost or what etc?

Lowering the cost would greatly increase the return.

I believe CGT remains at 50% whether held for 1 year or 30 which makes no sense to me at all.

What do you take into account to get a percent return?


----------



## Dona Ferentes (3 January 2021)

Austwide said:


> @Dona Ferentes I have long ago given up trying to calculate percentage returns. My returns vary depending on how I look at them.
> 
> What do you take into account to get a percent return?



Hi @Austwide . I used XPlan software and basically treated it as a black box. All buys, sells and dividends were accurate.

 Internal Rate of Return IRR is a common measure, though why it is more meaningful than others is beyond me to explain.








						Internal Rate of Return (IRR) Rule: Definition and Example
					

The internal rate of return (IRR) is a metric used in capital budgeting to estimate the return of potential investments.




					www.investopedia.com


----------



## Belli (3 January 2021)

Austwide said:


> I then don't know what to do with bonuses and DRP shares. Do I leave it as above or perhaps subtract the bonuses off the initial cost or what etc?





Essentially the bonus shares lowers the cost-base.  If no dividend or any other income is attached usually the date of purchase of the bonus shares is taken to be the date on which the original shares were purchased.  DRP has it's own cost-base on the date the shares were allotted.

WHF, which has a similar arrangement as AFI, has on it's web-site details of this plus the Class Ruling from the ATO.  *AFI has the same sort of links if I recall correctly.*

*Yep it does.  Scroll down the link below to DSSP Rules and the Class Ruling from the ATO.









						Shareholders
					

Discover an easy way to invest in Australian companies with AFIC. Find security and dividend history, performance data, and reports for shareholders, advisors, and new investors.




					www.afi.com.au
				



*


----------



## So_Cynical (3 January 2021)

Sept 2015 entry for me $5.76 average price with the 6 div reinvestments 2016, 17 and 18, interestingly the div yield on my original investment is only about 4.2% five years later. AFI is a nice little winner but lets not get silly here.

Looking at the chart one really needed to be buying the 2012/13 low at about $4.50 or so to do really well, or before of course.


----------



## Belli (18 January 2021)

Dona Ferentes said:


> *Mirrabooka *was close to fully invested and has therefore announced a *Share Purchase Plan*






Dona Ferentes said:


> *DJW* and also a *SPP *announced for Feb




What are the odds AFI will also announce a Share Purchase Plan when it reports which should be due soon?


----------



## Dona Ferentes (18 January 2021)

Belli said:


> What are the odds AFI will also announce a Share Purchase Plan when it reports which should be due soon?



Pretty high.. DJW are in for one, as announced today.

edit: _although with the Market Cap at $9bill, is there any point in getting bigger?  .... Maybe the hinted-at International LIC instead?_


----------



## Belli (18 January 2021)

Dona Ferentes said:


> Pretty high.. DJW are in for one, as announced today.
> 
> edit: _although with the Market Cap at $9bill, is there any point in getting bigger?  .... Maybe the hinted-at International LIC instead?_




Yes, it is a consideration but possibly depending on the amount raised, it could replace or substitute for those funds AFI has allocated towards its international trial.

And a thought just came to mind.  If MIR are new shares and eligible for 50% of the EoFY dividend, I'm guessing no DRP or DSSP will apply and should the same apply to DJW - and AFI - I wonder how many holders who participate in the DSSP will appy under the SPP.  After all, they have determined they will give up income to obtain shares to be sold at a later date with favourable CGT or withdraw from the DSSP at some stage to obtain a dividend income stream.

All will be revealed in the fullness of time and in due course - as usually happens.


----------



## Dona Ferentes (20 January 2021)

_Difficult operating conditions arising from the COVID-19 pandemic meant investment income for the six months to 31 December 2020 was $95.2 million, down from $164.1 million in the corresponding period last year. The biggest reductions came from the major banks, BHP, Macquarie Group and Transurban, while a number of companies in the portfolio did not pay a dividend during the half. _
_Despite the fall in the half year earnings per share to 6.9 cents, the interim dividend for the half year is *10 cents per share, fully franked, *the same as the previous corresponding period.  Part of the interim dividend this year has been funded from reserves. _
_ The six-month portfolio return, including franking, was 15.2% compared with the S&P/ASX 200 Index, including franking, which was up 13.7% over the same period. _
_For the 12 months to 31 December 2020, the portfolio return, including franking, was 5.8%.  The return from the S&P/ASX 200 Accumulation Index over this period, including franking, was 2.4%. _
_The management expense ratio for AFIC is 0.10% (annualised), with no performance fee_s.

*Acquisitions  ......... Cost ($’000) *
Woolworths Group .... 25,158
Fineos Corporation ... 20,998
Sydney Airport ............ 18,986 (1:5.15 entitlement issue)
Nanosonics ................18,518 
CSL .............................. 15,071
ASX .............................. 14,808

*Disposals ................ Proceeds ($’000) *
South32  ................. 35,848 (Complete disposal from the portfolio)
Alumina ................... 22,869
Oil Search ................ 21,471
James Hardie Ind. .... 18,949
Cleanaway Waste Mgmt ... 17,961
National Australia Bank  ....15,456

*New Companies Added to the Investment Portfolio *
Fineos Corporation
Nanosonics


----------



## Ferret (20 January 2021)

DRP will have a 5% discount for the interim dividend. 

I think this is the biggest discount for some time.  I guess they want holders to participate, since they are having to dip into reserves to keep the dividend at 10c.


----------



## Belli (20 January 2021)

Do you know the payout ratio and how are they situatied for cash?  When I looked at MIR, it had reduced its cash position by a substantial amount which is why I suspect it offered an SPP.


----------



## kenny (20 January 2021)

Nice that the BSP also has a 5% discount

*BSP price calculation methodology* 

The price will set at a 5 per cent discount to the Volume Weighted Average Price of AFI shares traded on the ASX and Chi-X automated trading systems over the 5 trading days commencing on the ex-dividend date.


----------



## sptrawler (20 January 2021)

Dona Ferentes said:


> _Difficult operating conditions arising from the COVID-19 pandemic meant investment income for the six months to 31 December 2020 was $95.2 million, down from $164.1 million in the corresponding period last year. The biggest reductions came from the major banks, BHP, Macquarie Group and Transurban, while a number of companies in the portfolio did not pay a dividend during the half. _
> _Despite the fall in the half year earnings per share to 6.9 cents, the interim dividend for the half year is *10 cents per share, fully franked, *the same as the previous corresponding period.  Part of the interim dividend this year has been funded from reserves. _
> _ The six-month portfolio return, including franking, was 15.2% compared with the S&P/ASX 200 Index, including franking, which was up 13.7% over the same period. _
> _For the 12 months to 31 December 2020, the portfolio return, including franking, was 5.8%.  The return from the S&P/ASX 200 Accumulation Index over this period, including franking, was 2.4%. _
> ...



I purchased quite a lot ( IMO) in Sept 2019 @$6.50, which wasn't long before Covid hit, I certainly am not disappointed with their performance.
As it was my first venture into LIC's, I purchased MLT at $4.58 in Dec 2017, it will be interesting to compare their performance over time.


----------



## Ferret (20 January 2021)

Belli said:


> Do you know the payout ratio and how are they situatied for cash?



At 31/12/20 they had $103,222,000 cash and 1,216,722,000 shares on issue.  

So if everyone opted for a cash dividend this would be $121,672,200 which is more than their cash on hand!


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## Dona Ferentes (20 January 2021)

Ferret said:


> At 31/12/20 they had $103,222,000 cash and 1,216,722,000 shares on issue. So if everyone opted for a cash dividend this would be $121,672,200 which is more than their cash on hand!



but there isn't a call for cash (SPP or otherwise) (which would be silo'ed into new investments anyway). DRP pulls in a bit....

Reserves are one thing AFI has







> _Part of the interim dividend this year has been funded from reserves._




and from the Outlook statement







> _AFIC has sufficient funds available should good buying opportunities arise in the second half of the financial year during any market weakness_.


----------



## Belli (20 January 2021)

Ferret said:


> At 31/12/20 they had $103,222,000 cash and 1,216,722,000 shares on issue.
> 
> So if everyone opted for a cash dividend this would be $121,672,200 which is more than their cash on hand!




Thanks for that.  So it means it's well over a 100% payout ratio I assume.

Sometimes, which isn't often, to get a feel of how the LICs I hold are going, I look at any large variation of teh EPS compared with teh previous corresponding period.  In AFIC's case I'd be also looking at how much cash it retains as a result of both the DSSP and DRP as indicated by @Dona Ferentes.  I don't think the hald year profit reserves state to what extent dividends can be supported (the annual report normally advises of this.) and to what extent the franking balance can be used to provide the tax credit (there isn't any cash in franking accounts by the way.)

Overall I wouldn't be concerned with any of the older LICs.  They have been around the block a few times and, in any case, if investors don't have confidence in the people they employ, ie the mangers, then don't put money with them.


----------



## Belli (20 January 2021)

I will apologise for the spelling errors in my posts.  Pretty shoddy I know but, to be honest, I'm rather indifferent if some are offended by them.  Have had sufficient number of years on this earth to now not care about what others think of me and my assults on the English language.


----------



## Ferret (20 January 2021)

Belli said:


> Overall I wouldn't be concerned with any of the older LICs.



Yes, I don't have any concern over the payment of the dividend or the general running of AFI.

Income should recover significantly in the next half with banks paying dividends again etc.  I think AFI maintaining the 10c by using reserves is quite prudent.

I was actually expecting they would do a SPP, so that surprised me.


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## Belli (20 January 2021)

Ferret said:


> I was actually expecting they would do a SPP, so that surprised me.




If the company has a heap of cash ($103M), having an SPP isn't necessary or warranted.  If the managers are cautious about how they are investing funds, having more can create issues and, in effect, it's dead money for those investors who took up an SPP.

And you may be interested in this calculator









						Dividend Payout Ratio Calculator
					

This dividend payout ratio calculator can help you measure the percentage of net income that is distributed by a company to its shareholders in the form of dividends during the year.




					www.thecalculator.co
				




I had a look at the accounts and the EPS is down by close to 50% pcp to 6.9c.  With the dividend of 10c that makes the payout ratio 145%.


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## Dona Ferentes (3 June 2021)

Dona Ferentes said:


> edit: _although with the Market Cap at $9bill, is there any point in getting bigger?  .... Maybe the hinted-at International LIC instead?_



and, it would seem, first steps toward an International LIC has been taken

From the May NTA statement, out this afternoon:


> _As first signalled at the AGM in October 2020, a small part of our funds, $45 million (which represents approximately 0.52 per cent of the portfolio) has been invested into a diversified global equities portfolio during May. This consists of what we have assessed as high-quality companies with strong competitive advantage, good growth potential and across a broad range of industries. _


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## Dona Ferentes (27 June 2021)

and AFI slowly leaking out the good dope on the company. 









						Succeeding over the long term
					

Find the latest news and updates from AFIC. Read now.




					www.afi.com.au
				




Succeeding over the long term​


> _AFIC has held investments in blue-chip stocks such as miner BHP Billiton, the major banks and retailers Coles and Woolworths ‒ throughout their evolution as companies - since AFIC was established in 1928. That’s over 90 years._





> _We’ve also held investments in a host of other companies for 20 years or more, including Transurban, Wesfarmers, Rio Tinto, Computershare, and Telstra. We’ve held many of these stocks because we assess a company’s growth potential over at least a 10-year period, not six months, and this approach has delivered long-term value....._





> AFI understands that there will be economic cycles and ups and downs. Sometimes a downturn in stocks presents an opportunity to add to a holding in a particular company. Nonetheless, AFIC is not against sometimes trimming or selling some positions. _We are prepared to exit a stock when we believe the time is right, even after holding it for 80 to 90 years. _





> _For example, over the last 18 months, AFIC sold its holding in energy provider *AGL *when the AGL share price was a lot higher than it is now. Using our long-term framework, we observed the industry structure was changing and likely to continue to change which would negatively impact AGL’s earnings potential. Even though AGL is looking to adapt to changing market conditions, we need to consider influences that have real impacts on long term business model_


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## peter2 (4 August 2021)

Impressive price rally this FY and since making new yearly highs in June 21.


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## Dona Ferentes (4 August 2021)

Small cap LICs doing even better. MIR just gone ex divi


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## qldfrog (4 August 2021)

I checked for my investment portfolio but well above intrasic value..i forgot the english term but you know what I mean


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## peter2 (4 August 2021)

I rarely look at this sector (LICs) because I can usually beat them. Over the past four months I haven't. Too late now that price is going parabolic.

I've been looking for about five opportunities for a conservative portfolio that I can buy in dips and hold for longer without worrying about earnings seasons. Buying *AFI* on the break-out (>7.55) would have been a perfect start. I've been keeping an eye on the Wilson stable but they're not looking very attractive at the moment. *MIR*, any others worth monitoring?

Edit: I've also been looking at a few ETFs as well for this portfolio. Bought a position with a longer term outlook in ACDC in the recent div dip. Holding CHC and GMG in this portfolio as well.


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## sptrawler (4 August 2021)

peter2 said:


> I rarely look at this sector (LICs) because I can usually beat them. Over the past four months I haven't. Too late now that price is going parabolic.
> 
> I've been looking for about five opportunities for a conservative portfolio that I can buy in dips and hold for longer without worrying about earnings seasons. Buying *AFI* on the break-out (>7.55) would have been a perfect start. I've been keeping an eye on the Wilson stable but they're not looking very attractive at the moment. *MIR*, any others worth monitoring?
> 
> Edit: I've also been looking at a few ETFs as well for this portfolio. Bought a position with a longer term outlook in ACDC in the recent div dip. Holding CHC and GMG in this portfolio as well.



I have quite a few AFI and treat them a bit like a term deposit, set and forget sort of thing, probably not the best way to do it but my trading skills are anything to write home about.


----------



## Dona Ferentes (25 January 2022)

The AFI Half Yearly came out yesterday. Pretty much as expected; a positive period for the Company. At end Dec, 2021, the NTA was  $7.76, up from $6.64 at 31 December 2020. Portfolio performance was a couple of % above the benchmark S&P ASX Index.

The management expense ratio for AFIC is 0.15% (annualised), with no performance fees

Interim dividend is 10 cents per share, fully franked, the same as last year, on an ex-dividend basis 09 February 2022. There is no conduit foreign income component of the dividend.

*Portfolio Adjustments* 
Short term volatility provided attractive prices to increase our holdings in Transurban, Coles Group, CSL, Goodman Group, Domino’s Pizza Enterprises and BHP, where we consider long term prospects for all these companies remains strong. Transurban will be a significant beneficiary as economies gradually reopen, leading to increased traffic across its road transport network, while improved mobility will enhance plasma collection volumes for CSL.  

 We initiated positions in JB Hi-Fi and WiseTech Global. JB Hi-Fi is the largest consumer electronics retailer in Australia and New Zealand. While primarily providing attractive income to the portfolio, we expect the consumer electronics category to continue delivering meaningful growth. WiseTech Global is a leading developer and provider of software solutions to the global logistics industry facilitating customers to digitise their freight forwarding operations.

We exited Qube Holdings, APA Group, Lifestyle Communities, Origin Energy and Altium, considering each company’s long term prospects increasingly challenged as competitive intensity increases. We also exited our holding in Milton Corporation as a result of the takeover by Washington H. Soul Pattinson. 

*Outlook *
Our strategy of owning a diversified portfolio of quality companies that are well placed to deliver earnings growth over the medium to long term remains appropriate. While market volatility may emerge, short term periods of uncertainty often present good buying opportunities for investors focused on a company’s long term prospects. The portfolio is soundly positioned despite the spectre of rising interest rates and heightened global uncertainty.


----------



## Belli (25 January 2022)

Dona Ferentes said:


> We initiated positions in JB Hi-Fi and WiseTech Global. JB Hi-Fi is the largest consumer electronics retailer in Australia and New Zealand. While primarily providing attractive income to the portfolio, we expect the consumer electronics category to continue delivering meaningful growth. WiseTech Global is a leading developer and provider of software solutions to the global logistics industry facilitating customers to digitise their freight forwarding operations.
> 
> We exited Qube Holdings, APA Group, Lifestyle Communities, Origin Energy and Altium, considering each company’s long term prospects increasingly challenged as competitive intensity increases. We also exited our holding in Milton Corporation as a result of the takeover by Washington H. Soul Pattinson.




If I read it correctly, AFI did not take up the SOL script I gather.

I do not hold AFI.


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## Dona Ferentes (25 January 2022)

Belli said:


> If I read it correctly, AFI did not take up the SOL script I gather.



That is what I read. And out at a higher price than SOL is at now.

Ditto Lifestyle Communities ((code LIC); was in the $18-23 range, closing at $20 at end of the reporting period .when disposed of and these shares now trading around the low $17 range. Also ALU, QUB, APA , (but not ORG) generally below the previous half year, so timely disposals (and kudos to AFI for selling into a rising market)


----------



## divs4ever (25 January 2022)

Belli said:


> If I read it correctly, AFI did not take up the SOL script I gather.
> 
> I do not hold AFI.



that was the way i interpreted as well 

 i do not hold AFI ( but do hold SOL )

 i suppose i should crunch the numbers of AFI , again 

 i note it holds several shares i do not  so a slight reduction in concentration risk  , if i buy in 

 DYOR


----------



## Belli (25 January 2022)

Beyond me how someone can think investing in AFI or any other LIC reduces concentration risk.

They all have a relatively small number of shares in comparison with the whole market.  And in AFI's case the Top 25 account for 77% of the entire portfolio.  That was easy to discover simply by bothering to look at the web-site.  It could be argued that is a level of increased concentration risk not a reduction.

What should be expected if outsourcing decisions to the management of LICs is they do it well.  They won't always get it right but are likely to do better than the average investor.  If you're good enough (and how are you going to objectively measure and determine valid parameters to apply in order to prove it?) you would not invest in LICs at all. Or, like me, prefer to do other things and let professionals do it for me.


----------



## divs4ever (25 January 2022)

Belli said:


> Beyond me how someone can think investing in AFI or any other LIC reduces concentration risk.
> 
> They all have a relatively small number of shares in comparison with the whole market.  And in AFI's case the Top 25 account for 77% of the entire portfolio.  That was easy to discover simply by bothering to look at the web-site.  It could be argued that is a level of increased concentration risk not a reduction.
> 
> What should be expected if outsourcing decisions to the management of LICs is they do it well.  They won't always get it right but are likely to do better than the average investor.  If you're good enough (and how are you going to objectively measure and determine valid parameters to apply in order to prove it?) you would not invest in LICs at all. Or, like me, prefer to do other things and let professionals do it for me.



 simple  , i hold a very small number of WBC ( and no other direct exposure to the other big 4 ) , no RIO , no CSL , no SQ2 , no TLS ( sold them ) , no NCM ( sold them ) , no ALL , no BXB ( sold them ) no TCL , no GMG ( but they are still on my watch-list )

 and there are a few popular names  missing from the top 50 list as well 

 i was chasing  divs + room for growth  , just being a 'blue chip' wasn't enough for me 

 i am just not very heavy in most of the popular shares 

my top 10 holdings at the end of last month  ( that will have changed after today but  some sort of guide )

1. MQG. ( 'free-carried ')

2. PME ( 'free-carried ' )

3. APE ( at some cash risk )

4. API ( full cash risk ) ( less than $100 behind )

cash ( boosted by take-over payouts )

5. WES ( at full cash risk )

6. JHG ( full cash risk )

7. BHP ( some profit taken )

8. CMW ( at full cash risk ) ( less than $400 behind )

9. GRR ( at full cash risk )

10. CDM ( at full cash risk )


----------



## divs4ever (25 January 2022)

AFI , AUI or ARG , would be a perfect choice for me ( at  the bottom of a crash ) as  would  a top 200 index fund


----------



## Belli (25 January 2022)

A Top 200 Index fund?  AFI?  Convoluted thinking at it's best.

A200, STW or IOZ are index funds.  AFI is not.


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## divs4ever (25 January 2022)

i was talking  about exposure to 'blue chips '  of which AFI holds several  , while  the ETFs will hold anything with a large market cap. 

 but currently many think dumb ( computer algos ) is smart  ,  a good LIC chooses it's investments  , but asks more fees 

 one is thoughtful  precise but ( more ) expensive  , the other  is cheap  and less discriminatory


----------



## So_Cynical (26 January 2022)

Belli said:


> A200, STW or IOZ are index funds.  AFI is not.



AFI due to sheer size pretty much tracks the index, STW - AFI 5 year comparison chart below, AFI more than twice the MC of STW.
~


----------



## sptrawler (26 January 2022)

I think it depends on what stage of your investment journey you are on, as most investment decisions do IMO, AFI give a pretty reliable dividend and I find them better than a term deposit.
If your retired that becomes important, especially when the market is in turmoil, there is a hell of a difference between getting a pa ypacket in your bank every week whether you want it or not and having to live off your wits.
So AFI might not be everyone's cup of tea, but IMO it fits well with my overall strategy, I run about 30% cash and 60% equities and 10% property. So the 30% cash is earning zip, the property I use for leisure and the 60% has to provide the legislated drawdown for the SMSF, so everyone to their own.


----------



## kenny (26 January 2022)

I'm fond of AFIC's Bonus shares option as a tax management tool. I am willing to pay for the discretionary oversight and stewardship of my funds in a way that Index funds & ETF's will never claim to do. I have and do get exposure in both and Index funds have certainly shone a necessary light on LIC's to force them to justify their continued relevance.


----------



## divs4ever (26 January 2022)

kenny said:


> I'm fond of AFIC's Bonus shares option as a tax management tool. I am willing to pay for the discretionary oversight and stewardship of my funds in a way that Index funds & ETF's will never claim to do. I have and do get exposure in both and Index funds have certainly shone a necessary light on LIC's to force them to justify their continued relevance.



yes SOME LICs needed a shake-up , and give other LICs the opportunity to shine a little brighter


----------



## Dona Ferentes (28 January 2022)

it's interesting that AFI will come out with this . today.


> recent fall in markets through January 2022 has meant AFIC’s Net Tangible Asset Backing per share (NTA) has fallen by approximately 9.5% since 31 December 2021.   The NTA at 31 December 2021 was $7.76 per share (before tax).



And with AFI shares are trading well North, last price $8.49 (with 10c dividend), and a quick calc puts it really only worth $7 a share.

Keeping the market informed.


----------



## Dona Ferentes (4 February 2022)

Dona Ferentes said:


> And with AFI shares are trading well North, last price $8.49 (with 10c dividend), and a quick calc puts it really only worth $7 a share.



the premium to NTA is still there.  Latest trade $8.65 and the NTA announced for end Jan at $7.19_ cum dividend. _The 10c ff divi goes _ex- _on 09 Feb

_I had thought about selling some MIR which was trading at a similar discrepancy, and noted the small distribution, but as a smaller company, there wasn't the volume to make a meaningful clip. (Was $4.02 prior to going ex- but if I had tried to unload say 10,000 shares, I would have only got around $3.95 according to the depth. Then when it went ex- the 3.5c, the drop was only to about $3.82;  with low volume on offer it would be likely re-entry price would have cost me closer to $3.90 which is where it is now.)_

And with AFI, although the depth is greater, I'm not sure there's too much benefit in any similar strategy. There's no guarantee the market will sell it off. Hence I'll be like @sptrawler  and take the div, and continue to hold.


> _"I think it depends on what stage of your investment journey you are on, as most investment decisions do IMO, AFI give a pretty reliable dividend and I find them better than a term deposit."_


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## Dona Ferentes (25 July 2022)

A fully-franked final dividend of 14 cents per share, the same as last year’s final dividend. There is no conduit foreign income component of the dividend.
The Board has elected to source 10 cents per share of the final dividend from capital gains, on which the Group has paid or will pay tax. The amount of this pre-tax attributable gain, known as an “LIC capital gain”, equals 14.29 cents per share.
Short-term portfolio performance was impacted by adjustments in the market resulting from geopolitical events and rising interest rates which produced a fall in many growth companies trading on high valuations. These conditions also produced fluctuations in the more cyclical stocks, where AFIC is generally underweight given its long-term investment focus. Portfolio return for the year was negative 6.8%, including franking. The return for the S&P/ASX 200 Accumulation Index, was negative 5.1%, including franking. Over 10 years, the corresponding figures are 10.5% per annum for AFIC and 10.9% per annum for the Index. AFIC’s performance returns are after costs.


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## Dona Ferentes (25 July 2022)

The majority of *purchases *during the year focused on increasing weightings to existing holdings including Transurban Group, CSL, Domino’s Pizza Enterprises, Coles Group, Goodman Group, Carsales.com and Auckland International Airport.  
We also *initiated *positions in JB Hi-Fi, Mirvac Group and a small holding in WiseTech Global.
During the 12-month period we *exited *Qube Holdings, APA Group, Lifestyle Communities, Origin Energy, Endeavour Group and Altium.  We are observing structural industry challenges for many of these companies or an environment where competitive intensity has materially increased.  We consider the growth prospects for all these companies to be increasingly challenged as a result.  
Additionally, we exited our holding in Milton Corporation and Sydney Airport as a result of *takeovers*.


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