The AFIC (ASX:AFI) share price just hit an all-time high

Shares in the Listed Investment Company have hit a new high. Here’s why…

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The S&P/ASX 200 Index (ASX: XJO) is having a pretty robust day on the share markets so far today. At the time of writing, the ASX 200 is up 0.86% to 7,324 points. Now that’s not an all-time high for the index.

We saw the ASX 200 hit 7,400 points briefly last month if you remember. But the move might be spurring another ASX company to never-before levels today.

The Australian Foundation Investment Co.Ltd. (ASX: AFI) share price (AFIC for short) has just hit a new all-time high of $7.90 this morning. AFIC shares opened at the new high today and are slightly down at $7.88 at the time of writing. That’s still up 0.77% for the day.

AFIC share price hits all-time high

So what’s prompting AFIC to hit these new highs? Well, AFIC is a Listed Investment Company (LIC) and one of the oldest on the ASX boards at that. LICs work by holding a portfolio of shares within themselves.

Investors who buy LIC shares are therefore essentially buying into the company’s investment portfolio. It’s a listed alternative to other investment vehicles like managed funds and (more recently) exchange-traded funds.

Thus, if AFIC’s portfolio holdings rise in value, it’s supportive of a higher AFIC share price. And yesterday afternoon (after market close), the company gave us an update on its portfolio holdings. AFIC advised that its net tangible assets (NTA) per share rose over the month of June to $7.45 per share (after tax).

That’s up substantially from the $6.19 per share from the previous month. This means that for every one AFIC share, investors are buying $7.45 worth of other assets.

So what are these ‘other assets’? Well, AFIC told us that its largest current positions include Commonwealth Bank of Australia (ASX: CBA) in top place, followed by BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Wesfarmers Ltd (ASX: WES) and Westpac Banking Corp (ASX: WBC).

But these top 5 holdings are complemented by dozens of other ASX shares. And with the ASX 200 index recently rising to new highs, AFIC would have had a rising tide lifting its entire portfolio (evidenced by its NTA per share growth).

It’s likely that it’s for this reason the AFIC share price is hitting its all-time high today. And it’s not the only one. Other LICs in AFIC’s mould are also on the up. Today also saw the Argo Investments Limited (ASX: ARG) share price hit an all-time high.

At the current AFIC share price, the company has a market capitalisation of $9.62 billion and a trialling dividend yield of 3.05% (or 4.36% grossed-up with AFIC’s full franking credits).

Should you invest $1,000 in AFIC right now?

Before you consider AFIC, you'll want to hear this.

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*Returns as of January 13th 2022

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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