The Australian Foundation Investment Co. Ltd (ASX: AFI), or AFIC for short, is not the most well-known ASX share. But it is one of the oldest. A Listed Investment Company (LIC), AFIC opened its doors back in 1928, and has been investing in ASX shares on behalf of its investors ever since.
Today, it is the largest LIC on the ASX boards, besting rivals like Argo Investments Limited (ASX: ARG) and WAM Capital Limited (ASX: WAM) in terms of market capitalisation. But the modern world of investing is very different to the world upon which AFIC opened its doors to in the 1920s.
LICs have certainly lost some popularity at the expense of the ever-popular exchange-traded fund (ETF). The increasing desire of passively-minded investors to put their cash in index-tracking and low-cost ETFs instead of the more actively managed LICs like AFIC is a trend that has been growing for years now.
So how does AFIC measure up in the modern world of investing?
Well, let's get straight into the numbers. So, AFIC tells us that as of 31 January, its total return (share price growth plus dividends and franking) was 12.5% for the preceding 12 months. That compares well with the S&P/ASX 200 Accumulation Index. It has returned 10.9% over the same period (also including dividends and franking).
Over the past five years on average, AFIC's total return has come in at 10.6% per annum against the index's 10%. But over the past ten years, AFIC and its benchmark are dead-even at 11.1% per annum on average each.
So that effectively means an investment in AFIC shares has bested investing in an ASX 200 ETF over both the past year and the past five years.
How does AFIC's performance measure up against the ASX 200 and other LICs?
But how does this compare to Argo and WAM Capital?
Argo tells us that its total return performance, as of 31 December, was 25.5%. We can't take too much stock in that when comparing to AFIC though. That's because January was such a negative month for the ASX 200 Index. But over five years, Argo's total return has averaged 10.5% per annum, just under AFIC's. In saying that, it doesn't appear that those returns factor in franking, which could give Argo an extra boost. Over ten years, Argo's total return averages at 11.5% per annum.
Unfortunately, WAM Capital is not as transparent with its performance data. It only releases the performance of that LIC's underlying investment portfolio, rather than the total return shareholders have enjoyed. Still, let's check it out for comparison's sake. So, as of 31 January, WAM Capital's underlying portfolio enjoyed a gain of 7.5% over the preceding 12 months, including dividend returns (again, franking doesn't seem to factor in here). Over the past five years, it has averaged a return of 9% per annum. And over ten years, it's 13.7% per annum.
Those metrics don't factor in WAM Capital's management fee either, which, at 1% per annum, is far higher than AFIC and Argo's 0.14%. AFIC and Argo's performance figures account for their fees.
So that's how AFIC's performance stacks up against its rival ASX LICs, as well as the ASX 200 Index. It appears AFIC comes out on top for the five year period, but Argo and WAM Capital best it over ten years, if only slightly.
At the current AFIC share price, this ASX LIC has a market capitalisation of $9.94 billion, with a trailing dividend yield of 2.96%.
