Investors in the Australian Foundation Investment Co. Ltd (ASX: AFI), or AFIC for short, presumably want to see one thing from the AFIC share price: outperformance of the S&P/ASX 200 Index (ASX: XJO). AFIC has been around for decades. But over the past 20 years or so it has had to confront the rise of the exchange-traded fund (ETF).
Index ETFs mirror the indexes they track, with a very small management fee. As such, investors now have alternatives to a Listed Investment Company (LIC) like AFIC if they want a broad-based and diversified ASX share investment under a single ticker code.
So AFIC investors might be delighted to find that AFIC has indeed topped out the ASX 200 over 2022 so far. This year has proven to be an exceptionally wild and volatile one thus far, as most ASX investors would be aware of.
The ASX 200 itself has spent the year going backwards. On today's pricing, the ASX 200 has lost 7.63% of its value. But in contrast, the AFIC share price has only lost 5.9%. That's a meaningful outperformance of more than 1.7% over 2 months or so.
So how has AFIC done it?
AFIC share price beats out the ASX 200 over 2022 thus far
By differentiation, of course. BHP Group Ltd (ASX: BHP) is now the largest ASX 200 share on the index by far, thanks to its recent ASX unification. But as of 31 January, it remains the second-largest holding in AFIC's share portfolio. In it's place, we have Commonwelath Bank of Australia (ASX: CBA).
AFIC has also diverted more capital to Macquarie Group Ltd (ASX: MQG) than the other major big four bank shares. In fact, Wesfarmers Ltd (ASX: WES) and Transurban Group (ASX: TCL) occupy more weighting in AFIC's portfolio than Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB). And Australia and New Zealand Banking Group Ltd (ASX: ANZ) was only the 12th largest position in AFIC's portfolio, versus its 6th place in the ASX 200. That has helped AFIC mitigate the effects of ANZ's near-11% plunge this year so far.
So it's likely due to portfolio differences like these that have helped AFIC to outperform the ASX 200 over 2022 thus far. Let's see what the rest of 2022 holds in store for AFIC.
