The listed investment company (LIC) Australian Foundation Investment Co Ltd (ASX: AFI) is invested in a wide array of different companies and sectors. I think it's important to know what you're invested in with AFIC shares or any other diversified options, so we'll examine that below.
AFIC is one of the oldest investment companies in Australia. It has been operating since 1928 and delivers its investment strategy for investors at a very low annual management cost of 0.14% (and no performance fees), allowing investors to enjoy the benefits of the returns.
The LIC's website states it aims to invest in between 60 to 80 companies across a range of sectors. Those investments are "selected for their ability to perform through economic cycles and generate returns over the long-term."
AFIC shares its biggest 25 investments each month, so let's examine the portfolio as of 31 May 2024.
Top holdings
The biggest positions are important because they have the largest impact on the performance of AFIC shares and its net tangible asset (NTA) value.
Excluding cash, the largest 25 holdings comprised 79.6% of the portfolio on 31 May 2024. There were ten positions that had a weighting of at least 2.5%, which I'll list below and their allocation of the portfolio:
- Commonwealth Bank of Australia (ASX: CBA) shares (9.6% of the portfolio)
- BHP Group Ltd (ASX: BHP) shares (8.6%)
- CSL Ltd (ASX: CSL) shares (7.5%)
- Wesfarmers Ltd (ASX: WES) shares (4.8%)
- National Australia Bank Ltd (ASX: NAB) shares (4.6%)
- Macquarie Group Ltd (ASX: MQG) shares (4.5%)
- Westpac Banking Corp (ASX: WBC) shares (4%)
- Transurban Group (ASX: TCL) shares (3.6%)
- Goodman Group (ASX: GMG) shares (3.6%)
- Rio Tinto Ltd (ASX: RIO) shares (2.5%)
Some of its other top 25 holdings are smaller but more growth-focused, such as CAR Group Limited (ASX: CAR), Resmed CDI (ASX: RMD), Reece Ltd (ASX: REH) and Xero Ltd (ASX: XRO).
I'll also point out that the LIC has a relatively small, but growing, part of the portfolio allocated to international shares. The company reveals its holdings each year in its annual result, with the latest being the 2023 annual report.
Sector allocation
To get an overall picture of how AFIC shares are positioned, let's look at the industry weightings.
As of 31 May 2024, AFIC had the following investments by sector:
- Banks (20.3%)
- Materials (15%)
- Healthcare (13%)
- Industrials (11.2%)
- Other financials (9%)
- Consumer discretionary (8.2%)
- Communication services (6.5%)
- Real estate (5%)
- Consumer staples (3.9%)
- Energy (3.7%)
- Information Technology (2.7%)
- Cash (1.5%)
While banks and resources may have a large allocation (around 35% between them), it's lower than how the S&P/ASX 300 Index (ASX: XKO) is positioned. In the Vanguard Australian Shares Index ETF (ASX: VAS) portfolio, which tracks the ASX 300, banks and resources make up more than 50% of the portfolio.
AFIC share price snapshot
The AFIC share price has dropped around 3% since the start of 2024, as shown on the chart below.
