This morning one of Australia's largest listed investment companies in Australian Foundation Investment Company Ltd (ASX: AFI) posted its results for the full year ending June 30 2019. Below is a summary of the results with comparisons to the prior corresponding period.
- Net profit $406.6m, up 45.6% on prior year
- Revenue of $441.4 million, up 41.3%
- Net tangible assets per share before the final dividend of $6.49, versus today's share price of $6.37
- Final fully franked dividend of 14 cents per share
- Total full year dividends of 32 cents per share, compared to 24 cps in prior year
- Portfolio return for the year including franking was 11.4%, S&P/ASX 200 Accumulation Index was 13.4%
- Over 10 years equivalent figures are 11.5% for AFIC and 11.7% for S&P/ASX 200 Accumulation Index
AFIC is something of a halfway house for investors in that its performance has trailed its benchmark by 0.2% over the past 10 years, which is not great, but not that unusual for a reportedly actively managed fund.
However, it is unusual in that it charges ultra-low 0.14% management fees and no performance fees equivalent, which is equivalent to an index tracking fund.
It's also a large fund with a net asset value around $5.7 billion, which means it has little option but to closely mimic its benchmark the S&P/ASX 200 Accumulation Index.
The result is the following top five holdings; Commonwealth Bank of Australia (ASX: CBA) (8.6%), BHP Group Ltd (ASX: BHP) (7.3%), Westpac Banking Corp (ASX: WBC) (5.8%), CSL Limited (ASX: CSL) (5.8%) and National Australia Bank Ltd (ASX: NAB) (4.5%).
We can seen then why its performance has never tracked far from the index and is unlikely to in the future. Even though it's trading at a slight discount to its net tangible assets and offers a reasonable yield I'm definitely not a buyer of AFIC shares.
