Buying Australian Foundation Investment Co Ltd (ASX: AFI) (AFIC) shares comes with a lot of different underlying investments.
Although an individual company, a listed investment company (LIC) invests in other shares for shareholders. Some LICs invest in areas like Asian shares, global shares, or ASX shares.
AFIC is one of the largest and oldest LICs in Australia and primarily invests in ASX shares. 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."
Which ASX shares is AFIC invested in?
The LIC has dozens of holdings, but AFIC tells the market its top 25 holdings every month, which amount to around 80% of the portfolio's overall value.
Before getting to the individual names, let's consider the sector allocations. At 30 June 2024, the business had the following weightings: banks (20.8%), materials (14.3%), healthcare (13.2%), industrials (10.8%), other financials (9.2%), consumer discretionary (7.9%), communication services (6.5%), real estate (5%), consumer staples (4.1%), energy (3.8%), IT (2.7%), and cash (1.7%).
The AFIC portfolio has a much smaller allocation to banks and miners than its benchmark, the S&P/ASX 200 Accumulation Index (ASX: XJOA), which has a weighting of around 50% to those two sectors.
I'll now list each position in the portfolio with a weighting of at least 2%:
- Commonwealth Bank of Australia (ASX: CBA) – 10.1%
- BHP Group Ltd (ASX: BHP) – 8.1%
- CSL Ltd (ASX: CSL) – 7.8%
- Macquarie Group Ltd (ASX: MQG) – 4.7%
- National Australia Bank Ltd (ASX: NAB) – 4.6%
- Wesfarmers Ltd (ASX: WES) – 4.6%
- Westpac Banking Corp (ASX: WBC) – 4.1%
- Goodman Group (ASX: GMG) – 3.6%
- Transurban Group (ASX: TCL) – 3.5%
- Woodside Energy Group Ltd (ASX: WDS) – 2.4%
- ANZ Group Holdings Ltd (ASX: ANZ) – 2.4%
- Telstra Group Ltd (ASX: TLS) – 2.3%
- Woolworths Group Ltd (ASX: WOW) – 2.3%
- Rio Tinto Ltd (ASX: RIO) – 2.3%
- James Hardie Industries plc (ASX: JHX) – 2.2%
- CAR Group Limited (ASX: CAR) – 2.1%
Many of these stocks are some of the largest and strongest ASX blue-chip shares in Australia, so the portfolio is representative of Australia's economy.
AFIC performance
According to AFIC, its net asset per share growth plus dividends return, including franking, over the past five years was an average of 9.3% per year, compared to 8.7% for the ASX 200 Accumulation Index, including franking.
Despite that outperformance, at the end of June 2024, the AFIC share price was trading at the biggest discount to the net tangible assets (NTA) of the past decade. That might imply there's a bargain here.
