Insights

Why did the AFIC share price have such a top run in July?

The listed investment company beat the ASX 200 last month. How did it do it?
The post Why did the AFIC share price have such a top run in July? appeared first on The Motley Fool Australia. –

In some much-needed relief for investors, July ended up being a stellar month for ASX shares and the S&P/ASX 200 Index (ASX: XJO). Over the first month of FY2023, the ASX 200 rose by a healthy 5.7%, partly giving back some of the 8.9% the ASX 200 lost over June. So how did the Australian Foundation Investment Co Ltd (ASX: AFI), or AFIC, share price do?

AFIC is one of the oldest ASX shares on the share market, having first opened its doors in 1928. This ASX share is a listed investment company (LIC). This means it functions more like a managed fund than a traditional ASX company, investing in a portfolio of other ASX shares on behalf of its own shareholders.

So let’s check out how AFIC fared over the month just gone. The LIC started July at $7.51 a share. Last week, AFIC closed at a flat $8. That puts AFIC’s gains over July at a healthy 6.52%, happily outperforming the ASX 200.

How did the AFIC share price beat the ASX 200 over July?

So how did AFIC deliver this outperformance? Well, here are two factors to consider. The first is the company’s Net Tangible Asset (NTA) backing. All LICs can either trade at a discount, or at a premium, to the value of their underlying share portfolio.

As of 30 June, AFIC’s NTA backing came to $6.63 per share. That’s the latest figure that has been publically released, so we don’t know exactly how AFIC’s NTA stands today.

However, at the time, this was substantially lower than AFIC’s share price, meaning the LIC was trading at a premium to its NTA value. Over July, it’s possible this premium widened even further which could, in itself, be a source of outperformance.

But we must also consider AFIC’s own share portfolio. Unlike an index fund, AFIC does not blindly mirror the holdings of the ASX 200.

As of June 30, it had more exposure to the Commonwealth Bank of Australia (ASX CBA), Transurban Group (ASX: TCL), and Macquarie Group Ltd (ASX: MQG) share prices, amongst others, than an ASX 200 index fund.

In contrast, it gave less room to the other big four bank shares, BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS), and Woodside Energy Group Ltd (ASX: WDS), amongst others.

Since AFIC’s share portfolio differs from that of the ASX 200, there is an inherent potential for a difference in performance between the two. So this could also have played a role in AFIC’s outperformance of the ASX 200 over July.

Either way, it was certainly a pleasing month for AFIC shares.

At the current Australian Foundation Investment Co share price, this ASX LIC has a market capitalisation of $9.84 billion, with a dividend yield of 2.99%.

The post Why did the AFIC share price have such a top run in July? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Why is the Bank of Queensland share price getting a caning on Monday?
Why has the Lake Resources share price rocketed 16% today?
5 things to watch on the ASX 200 on Monday
ASX shares are back, baby!
Have Woolworths shares been a market-beating investment over the past 5 years?

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info