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Australian Foundation Investment Company Limited (AFI)
is a publicly listed company on the Australian Securities Exchange (ASX).
About Australian Foundation Investment Company Limited
Australian Foundation Investment Company (AFIC) specialises in investing in Australian equities. They have been investing in Australian companies for over 80 years and are Australia's largest listed investment company with a market capitalisation of $6.5 billion as at 30 June 2014.
Their aim to provide shareholders with attractive investment returns through access to a steady stream of fully franked dividends and enhancement of capital invested.
In this regard their primary goals are:
- To pay dividends which, over time, grow faster than the rate of inflation; and
- To provide attractive total returns over the medium to long term.
Features of Australian Foundation Investment Co
There are a number of advantages in investing in AFIC.
- A diversified portfolio numbering around 90 of Australia's major companies.
- A Board and Investment Committee with extensive investment skills and practical business experience.
- A fund with no upfront fees or commissions to third parties – transaction costs will be borne when buying and selling AFIC shares through a stockbroker.
- Managements fees - 0.17% for the financial year to 30 June 2014.
- On-going capital management:
- A dividend reinvestment plan which allows investors to cost effectively put their dividends back into the Company
- From time to time, a share acquisition plan which allows shareholders to top up their holdings with no brokerage and sometimes at a small discount to the market price.
- Activation of the share buy back program which gives the Company the flexibility to buy back shares at appropriate times, particularly if the shares start trading at a discount to their net asset backing
- AFIC as a separate legal entity pays tax just like any other company. However the tax is small because companies receiving fully franked dividends do not need to pay any additional tax on the franked dividend. These fully franked dividends are passed straight through to shareholders in March and August of each year. Certain Australian shareholders may also claim a tax benefit where the dividend is sourced from a LIC capital gain.
- Yearly and half yearly profit announcements, regular shareholder briefings and access to all company announcements, including net asset backing announcements that are intended to keep shareholders informed about the Company's activities and performance.
How AFIC Invest
AFIC focuses on investing in Australian companies with unique high quality assets, brands and/or business footprints that can withstand the business cycles. They also look for management and Board strength and for sound, disciplined financial metrics covering returns on investment, profit margins, cash flow and gearing. Their view is that such businesses will generate superior returns over the long term.
AFIC's primary investment goals are to provide their shareholders an attractive return over the medium to long term and to pay dividends which over time grow faster than the rate of inflation.
Investing With AFIC
An investment in AFIC can be used for a number of different purposes. For example some shareholders invest on behalf of their children and grandchildren; others use AFIC as part of their self managed superfund whilst some shareholders use AFIC to as a way of providing funds for different life events.
AFIC's investment horizon is over the long term so you need to consider this when thinking about whether an investment in AFIC is going to satisfy your specific needs.
Australian Foundation Investment Company Limited
101 Collins Street
+61 3 9650 9911
Fax: +61 3 9650 9100
The General Overview, Services, Products and Projects information for this profile was last edited on 05 Feb 2016.