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AFI, AUSTRALIAN FOUNDATION INVESTMENT COMPANY
nipper
post Posted: Jul 22 2019, 04:13 PM
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“The Australian equity market is facing an interesting dilemma: Very low interest rates are reinforcing the move by many investors to buy equities at a time when the Reserve Bank of Australia is concerned about the outlook for the economy,” AFIC told shareholders today. "If the economy does weaken, then this is likely to have implications for the earnings outlook for a number of companies,” it said.

Against this backdrop, the $7 billion LIC reduced the number of holdings in its portfolio during the year, from 91 to 76. It dumped nearly half its holding in Rio Tinto and also cut its stake in AGL Energy due to the structural issues the energy industry is facing, it said. But it boosted its holding in National Australia Bank due to the “attractive dividend yield on offer at the time” and added to its holdings in Reliance Worldwide, James Hardie Industries and Transurban...

Companies that contributed to the returns included BHP, Commonwealth Bank, Transurban, Telstra, Brambles and CSL, it said. In contrast, Clydesdale Bank and Challenger, both of which were sold during the second half of the financial year, significantly underperformed.

While the LIC said it was close to fully invested, it still has some cash available “to add to selected holdings should there be any short-term disappointments during the upcoming reporting season,” it said.
- dividend 10c ff, return for period 11.4% vs market 13.4%



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jan 21 2019, 03:31 PM
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In Reply To: nipper's post @ Jan 21 2019, 11:05 AM

QUOTE
Major sales arose because of participation in the Rio Tinto and BHP off-market share buy-backs (AFIC was previously well overweight the index in Rio Tinto). There was also a reduction in holdings of AGL Energy, Washington H. Soul Pattinson and Perpetual. In addition, the Company disposed of its entire position in QBE Insurance Group and Bega Cheese during the period.

More significant purchases included adding to holdings in James Hardie Industries, Transurban Group via participation in its rights issue to fund the WestConnex purchase, Adelaide Brighton, Reliance Worldwide, Woolworths Group and Sydney Airport, all of which have strong positions in their respective market segments.
- done on valuation models, not because they have to (to meet redemptions)



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: Jan 21 2019, 11:05 AM
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The nation’s largest and oldest listed investment company, Australian Foundation Investment Co, has dumped 40 per cent of its holding in blue chip miner Rio Tinto and sold off 3 per cent of its long-held position in BHP to capture the value of franking credits for its mostly elderly, retired shareholders before the dividend imputation system is ripped up by a future ALP federal government.

And the Melbourne-based investor will immediately distribute much of those funds to its own shareholders soon, declaring this morning a special dividend of 8 cents per share to be paid in late February as it races to get the money into the hands of its shareholders so to beat any devaluation of the franking by the stated ALP policy.

The company also revealed that its feedback from its 130,000 investors is they are asking for help and questioning why they are being punished for saving for their retirement which included investing in some of Australia’s biggest and most successful companies.

“This is going to hurt a lot of people who are saying I’m not rich, I’m not wealthy and why am i being forced to go on a higher tax bracket through this?,’’ Australian Foundation Investment Co chief executive Mark Freeman told The Australian this morning.

“Australian Foundation Investment Co continues to get consistent feedback from its shareholders that what’s being proposed is going to be damaging, people feel hurt that they are being classified as rich and wealthy and don’t understand why they are being forced into a higher tax bracket because they are not getting the credit back. Why them?”




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jan 22 2018, 09:51 AM
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Global equity markets have risen over the period with many major economies showing improved growth. Volatility is very low.

Resource andenergy stocks have lifted in response to economic growth, however some sectors within the Australian index have been less buoyant. Many large companies face increased competition and the prospect of disruption to their business.

It is difficult to find stand out value in the Australian equity market at present. Companies with good growth prospects continue to be very expensive.

Interim Dividend maintained at 10 cents per share fully franked.

Management expense ratio of 0.11% (annualised).

Portfolio Adjustments
Given the generally strong market conditions AFIC looked to selectively add to existing holdings, often during periods of temporary weakness. Major purchases included Macquarie Group, Westfield Corporation (which is now subject to a takeover offer), CSL, Origin Energy, Boral, CYBG (Clydesdale Bank) and Scentre Group. The only new holding added during the period was Adelaide Brighton Group. AFIC also participated in the Transurban rights issue which was completed toward the end of the period.

Major sales included a reduction in the holdings of Incitec Pivot, Coca-Cola Amatil, QBE Insurance and Japara Healthcare. There was also the complete sale of Australian Agricultural Company from the portfolio. AFIC also participated in the Rio Tinto off-market buy back given the high level of fully franked income that was available.

Going Forward
It is difficult to find stand out value in the current market. Companies that are displaying prospects for strong growth are being sought by investors and are fully valued.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Oct 26 2017, 08:49 AM
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at recent AGM, there is a sense of, a recognition that, change. A LIC such as AFI is (sometimes erroneously) portrayed as cumbersome, too big ($6bill) and full of legacy holdings such that it could be seen as an 'index hugger', if only by default.

At least the company is talking about change and long term themes that need to be considered (autonomous vehicles, Amazon effect, IoT, Data, Demographic change, Workforce participation).

"Disruption Very Likely for Some Industries" for digital
QUOTE
Communication/ Media - 67%
Financial Services - 62%
Technology - 54%
Professional Services - 51%
Education - 43%
Retail - 41%
Healthcare - 36%
Government - 36%
Manufacturing - 27%
(Harvard Business Review 2016)

At least the company is talking about change, and its implication for Portfolio Management

QUOTE
• Change in business is occurring more rapidly.

• We need to research our companies to consider whether they have a sustainable competitive advantage, how will they be disrupted and to what extent.

• We are looking to keep abreast of these short and long term changes.

• Positioning of the portfolio likely to change more often than in the past.






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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Sep 15 2017, 10:01 AM
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AFIC announces the prospective retirement of Ross Barker as Managing Director and Chief Executive Officer (CEO) at the end of the year. Mark Freeman, current CIO, will take over.

- Mr Barker has been a steady pair of hands. The succession looks normal, no real egos at play here, and thus expensive hires/ handcuffs (ditto for some of the other LICs such as Argo).

LICs have always been my preferred route, for 'locking in' the boring bit of the portfolio. They are not 'set and forget', but managed with a long term view. I don't see the attraction of ETFs; low fees are only part of the story. (agree with your take, balance)

QUOTE
Australian Foundation Investment Company (ASX: AFI) is Australia's oldest listed investment company (LIC), established in Melbourne, Australia in 1928.

AFIC is a closed end fund that specialises in managing a portfolio of Australian equities.

It has approximately 120,000 shareholders and $6.9 billion in funds under management (FUM) as at 30 June 2017






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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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balance
post Posted: Aug 4 2017, 11:58 AM
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In Reply To: nipper's post @ Aug 4 2017, 09:45 AM

There are heaps of people piling into ETFs particularly those run by Vanguard because of their low fees. The "You can't time the market or beat the market" theme is quite strong out there. And for many people it's likely true.

I see AFI as a good alternate to a simple index fund as they can avoid or lighten some stocks / sectors that are really on the nose whereas index funds of course must own and weight everything within the scope of the fund.



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nipper
post Posted: Aug 4 2017, 09:45 AM
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11 years since the last post on AFI; and this $6bill LIC has just updated their monthly NTA - maybe becoming 'less boring'

PS the MER is lower than Aussie ETFs, and dividends have 100% franking






--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
goldi
post Posted: Dec 11 2006, 11:25 AM
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Perhaps this stock is too boring to rate much discussion, but hey, some balance form my ridiculously speccies is required.

Anyway, SFI are just completing a share acquisition plan, and at the same time announcing an on-market share buyback.

Does this compute?

goldi



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Life is a terminal disease
 
tasteofmoney
post Posted: Jul 13 2005, 07:01 PM
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The chart says it all!!.
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