Home Sports Want to buy AFIC shares in October? That’s what you get

Want to buy AFIC shares in October? That’s what you get


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If Australian Foundation Investment Co Ltd (ASX: AFI) stocks on your radar this October, you might be interested to know what you would invest in.

AFIC is a registered investment company (LIC) which trades on both the ASX and NZX with a history dating back to 1928.

LIC invests in a portfolio of predominantly ASX stocks with a long-term, bottom-up, fundamental investment style. The proposed investment period is five to 10 years or more.

While the majority exchange traded funds (ETFs) passively track an index, LICs are typically actively managed investments.

The main difference between LIC and ETF is the structure. An ETF is open-ended, while an LIC is closed-end, meaning a fixed number of shares are issued.

Moreover, ETFs tend to offer more transparency. ETF issuers usually update their full list of holdings daily, while LICs usually provide a snapshot of their portfolio at the end of each month.

Now that we’re in October, AFIC has released theirs monthly update for September.

As of September 30, 2022, the monthly net tangible asset allocation (NTA) for AFIC stock was $6.42 before tax and $5.53 after tax.

Simply put, NTA is the total value of AFIC’s investment portfolio divided by the number of shares outstanding.

When AFIC shares closed in September at $7.32, they were trading at a premium to their NTA, which had been the case for several years.

What does AFIC invest in?

It’s time to lift the hood. These were AFIC’s top 10 holdings at the end of September:

  1. Commonwealth Bank of Australia (ASX: CBA)
  2. CSL Limited (ASX: CSL)
  3. BHP Group Ltd (ASX: BHP)
  4. Country group (ASX: TCL)
  5. Macquarie Group Ltd (ASX: MQG)
  6. National Australia Bank Ltd (ASX: NAB)
  7. Westpac Banking Corp (ASX: WBC)
  8. Wesfarmers Ltd (ASX: WES)
  9. Woolworths Group Ltd (ASX: WOW)
  10. Mainfreight Limited (NZ: MFT)

Since Augustthe only change in the top 10 was that Wesfarmers shuffled down two places to become the eighth largest holding in the AFIC portfolio.

indeed Wesfarmers shares fell 9% in September.whereas the two big ASX banks suffered more muted falls.

How does AFIC stack up against the ASX 200?

Compared to S&P/ASX 200 Index (ASX: XJO) , AFIC’s top 10 is underweighted towards large banks and miners.

The ASX’s largest company, BHP, has lost its crown, dropping to third place in the AFIC portfolio. Australia and New Zealand Banking Group Ltd (ASX: ANZ) and Woodside Energy Group Ltd (ASX: WDS) are noticeably absent from the action. Meanwhile, AFIC is giving Transurban a big vote of confidence.

At the end of September, AFIC’s largest sector weight belonged to financials, which accounted for about 28% of the portfolio. Next comes materials with a share of 15%, followed by medical services with 14% and then industry with 12%.

In contrast, BetaShares Australia 200 ETF (ASX: A200), which aims to track the ASX 200 index, had a 29% weighting to financials at the end of September. Materials account for another 23% of the portfolio, followed by medical services (11%) and energy (6%).

In terms of rising stock prices and dividends, AFIC outperformed the S&P/ASX 200 Accumulation Index over the 10-year period. According to AFIC, this delivered an average of 11.1% p.a., compared to a benchmark of 10% p.a.


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