The S&P/ASX 200 Index (ASX: XJO) has seen a lot of volatility in 2022. How are things going for the Australian Foundation Investment Co Ltd (ASX: AFI), also known as AFIC, share price?
The ASX 200 currently registers a decline of 7.1% for the year. However, the index has been through a couple of declines – one during January 2022 and the latest drop over the last few weeks.
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AFIC share price performance
AFIC, the biggest and one of the oldest listed investment companies (LICs), has also seen a decline since the start of 2022. The AFIC share price has dropped by 5.5%. That means that the LIC's share price has outperformed by 1.6%.
Both AFIC and the ASX 200 represent portfolios of ASX blue-chip shares. The performance of those holdings will influence how the price of the LIC and ASX 200 perform.
In the ASX 200 are blue chips like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES) and Telstra Corporation Ltd (ASX: TLS).
LIC holdings
The following are AFIC's largest holdings and their weightings, at the end of April 2022. Readers may notice that the list of names is in a different order because the LIC has decided on a different weighting to the index:
CBA (9.1%)
BHP (7.4%)
CSL (7.2%)
Macquarie (5.1%)
Transurban Group (ASX: TCL) (4.6%)
Westpac (4.1%)
Wesfarmers (4%)
NAB (4%)
Woolworths Group Ltd (ASX: WOW) (3.1%)
Investment underperformance over one year
While the AFIC share price has gone up around 8% over the last year, the ASX 200 is down slightly by 0.6%.
However, when looking at the actual underlying investment performance in the year to 30 April 2022, AFIC disclosed that it has underperformed its benchmark.
The LIC's net asset per share growth plus dividends, including franking, over the previous year was 9.6%. However, the S&P/ASX 200 Accumulation Index (ASX: XJOA) return over the same time was 11.7%.
However, AFIC isn't necessarily trying to outperform an index in the short term.
It says that it "aims to provide shareholders with attractive investment returns through access to a growing stream of fully franked dividends and enhancement of capital invested over the medium to long-term."
AFIC aims to provide low-cost investing. It has an annual management fee of 0.14%, with no performance fees. Its investment style is "long-term, fundamental, bottom-up".
Market commentary
AFIC noted that corporate activity continued to be a "feature" of the market in April 2022 with a bid for Ramsay Health Care Limited (ASX: RHC), the restructuring of AMP Ltd (ASX: AMP) and a takeover bid for Pendal Group Ltd (ASX: PDL).
The LIC noted utilities as the strongest performing sector, partly thanks to the performance of the AGL Energy Limited (ASX: AGL) share price.
The materials sector declined 4.3% over April amid the easing of commodity prices because of ongoing lockdowns in China.
However, the weakest sector was IT, which fell 10.4%. AFIC explained the tech weakness was due to rising bond yields.
