The Australia Foundation Investment Co Ltd (ASX: AFI), or AFIC, has long been a stalwart of the ASX boards. It originally opened its doors way back in 1928, and has been doing pretty much the same thing ever since. That would be investing in a broad portfolio of mostly blue-chip ASX shares for the benefit of its owners. Listed investment companies (LICs) like AFIC long pre-date the exchange-traded fund (ETF). Thus, they were one of the only options for passive investors once upon a time.
But these days, the game has changed. ETFs, particularly index funds, are today far more popular than LICs like AFIC. That's despite some LICs (AFIC included) displaying an ability to beat an equivalent ETF over long periods.
But how does AFIC go compared against other LICs? It certainly isn't the only LIC out there offering a passive investment strategy. Well, let's check it out.
So, as of 30 April, AFIC has delivered a return of 14.8% over the preceding 12 months (including dividends and franking). It has also averaged a 13.3% return per annum over the past five years, and 12.8% over the past 10.
Is AFIC the best LIC on the ASX?
AFIC is certainly not the only LIC on the ASX that has been around a long time. Milton Corporation Ltd was another one, but it was absorbed by Washington H. Soul Pattinson and Co Ltd (ASX: SOL) last year. Argo Investments Limited (ASX: ARG) is still going, and, like AFIC, Argo has been around for decades (although not quite as long as AFIC).
Argo shares have returned 13.4% over the past year (again, to 30 April). Over the past five years, this LIC has managed an average return of 8.6% per annum. That rises to 10.3% per annum over the past 10. So AFIC's looking pretty good against Argo.
But there is another popular LIC on the ASX – WAM Capital Limited (ASX: WAM), run by Wilson Asset Management. WAM Capital has only been around since 1999. It takes a different, more activist approach to earn dough for its investors. At the end of last month, WAM Capital shares had gone backwards by 3.4% over the preceding 12 months (again including dividends). Over the past five years, this LIC has managed an average return of 8.8% per annum. This rises to 12.9% over the past 10. However, these metrics are before fees, whereas the above LICs' metrics include fees.
So again, it seems AFIC comes out on top here.
There are many, many LICs still on the ASX, so we can't go through them all. But few have been around as long as AFIC, and even fewer have the long-term record of this LIC to boast of. Thus, on the metrics we've gone through, it's possible to conclude that AFIC is a strong contender for the ASX's best LIC today.
