Despite its century-long history as an ASX listed investment company (LIC), the Australian Foundation Investment Co Ltd (ASX: AFI) share price, or AFIC for short, continues to attract investor attention in 2022.
Perhaps this is due to AFIC's continuing ability to outperform ASX-based index funds like the Vanguard Australian Shares Index ETF (ASX: VAS).
Or perhaps it's due to AFIC's long history. Whatever the reasons, the fact remains that today, AFIC has a market capitalisation of almost $9.5 billion, making it one of the largest passive investment vehicles on the ASX.
LICs like AFIC aren't normal ASX companies. They instead invest their capital in other assets (including ASX shares) on behalf of their investors.
So now that AFIC has reported its preliminary earnings for the 2022 financial year, it might be a good time to look back and see how this LIC's portfolio has changed over FY 2022.
The first thing to note is that AFIC's investment portfolio had a tough financial year. Back in June 2021, the LIC reported that its net asset backing per share (before tax) stood at $7l45. Fast forward to 30 June 2022 and this had shrunk 11% to $6.63. But let's dig into the specifics.
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AFIC's not-so-different ASX share portfolio of FY2022
At the end of FY21, AFIC reported that its top 10 shares were as follows
- Commonwealth Bank of Australia (ASX: CBA), with a portfolio weighting of 8.8%
- BHP Group Ltd (ASX: BHP) at a weighting of 7.3%
- CSL Limited (ASX: CSL) at 6.9%
- Wesfarmers Ltd (ASX: WES) at 4.9%
- Westpac Banking Corp (ASX: WBC) at 4.5%
- Macquarie Group Ltd (ASX: MQG) at 3.8%
- Transurban Group (ASX: TCL) at 3.8%
- National Australia Bank Ltd (ASX: NAB) at 3.3%
- Woolworths Group Ltd (ASX: WOW) at 2.7%
- Australia and New Zealand Banking Group Ltd (ASX: ANZ) at 2.7%
Let's now take a look at AFIC's top 10 shares as of 30 June 2022:
- Commonwealth Bank at 8.8%
- CSL at 7.9%
- BHP at 7.1%
- Transurban at 5.1%
- Macquarie Group at 4.5%
- Wesfarmers at 3.8%
- NAB at 3.7%
- Westpac at 3.7%
- Woolworths at 3.2%
- Amcor CDI (ASX: AMC) at 2.6%
So as is evident, there really haven't been too many dramatic changes to AFIC's ASX share portfolio over FY22. BHP and CSL have swapped places. And AFIC has traded in some Westpac and ANZ shares for more NAB and Macquarie shares.
But this is probably what AFIC's investors expect. After all, the LIC prides itself on its long-term investment horizon and performance. And we know that a high portfolio turnover can increase transaction costs and taxes.
As of 31 July 2022, AFIC has returned an average of 12.2% per annum over the past 10 years (including dividend and franking returns). At the current AFIC share price, this ASX LIC has a dividend yield of 3.11%.
