Australian Foundation Investment Co. Ltd (ASX: AFI) (AFIC) is the biggest listed investment company in Australia.
Its focus has always been on the big blue chips like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Wesfarmers Ltd (ASX: WES), Telstra Corporation Ltd (ASX: TLS) and BHP Billiton Limited (ASX: BHP).
The returns that AFIC has generated over the past five years have been pretty good. It has created an average return of 9.7% per annum. When you include franking credits the average return per annum was 10.7%.
The problem with this type of investment strategy is that many of the biggest businesses have structural problems to deal with and this is where most of AFIC's money is invested.
The big four banks are required to hold more capital so that they are stronger if trouble occurs. Wesfarmers has Amazon to contend with. Telstra has a lot to worry about with the NBN. The resources boom has been finished for a long time.
Therefore, I was pleased to see that AFIC has paid a bit of attention to the changing landscape in its annual general meeting presentation, which was posted to the ASX recently. It said that the team would be taking more of a focus on the changes and opportunities that are going to occur such as Amazon, data growth or ageing demographics.
It's a shift towards smaller, faster growing companies that will make sure AFIC at least stays up with the market. The big companies of Australia have big targets on their backs.
If AFIC can position more of its portfolio towards shares like Ramsay Health Care Limited (ASX: RHC) and Treasury Wine Estates Ltd (ASX: TWE) then it should have a bright future.
Foolish takeaway
AFIC will be making the right moves if it starts positioning its portfolio for this uncertain future. The shares AFIC intends to move towards should be good long-term options.
It's currently trading with a grossed-up dividend yield of 5.77%.
