Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investment Conference, Auckland June 2011
21 slides from Australian Foundation Investment's conference presentation, Jun 8, 2011
Slide 1: Investment Conference Auckland June 2011
For personal use only Geoff Driver – General Manager Investment Conference Auckland June 2011
Slide 2: Disclaimer
DISCLAIMER For personal use only Australian Foundation Investment Company Limited and its subsidiary AICS (AFSL 303209), their related entities and each of their respective directors, officers and agents (together the Disclosers) have prepared the information contained in these materials in good fai
Slide 3: AFI group of listed investment companies
Long term buy and hold, dividend and capital growth - $4.9 billion. For personal use only MER of 0.16%, yield 4.4%, 93,000 shareholders (ASX/NZX:AFI) High fully franked yield using options, long term capital growth - $890 million. MER of 0.36%, yield 6.3%, 19,000 shareholders (ASX:DJW) Small/midcap
Slide 4: Our Approach to Investing
Our Approach to Investing For personal use only Universe of Australian equities – S&P/ASX 200 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 Buy and hold for the long term -
Slide 5: Investment Efficiency
Investment Efficiency For personal use only Closed end fund facilitates medium to long term investment focus Fund flows don’t force disadvantageous buy/sell stocks decisions Cash flow is controlled by the company. Additional capital/buy backs may be undertaken when accretive to shareholders
Slide 6: Management Expense Ratio
Management Expense Ratio For personal use only AFIC MER for the year ended 30 June 2010 = 0.16% Internal Management External Management Shareholders own “management Separate funds management rights” – enjoy benefits of scale business No outperformance fees or Asset based fees and management
Slide 7: Investment Structure March 2011
Investment Structure 31 March 2011 For personal use only Long Term Investment portfolio: A$5.0 billion Approximately 75 securities Focus on S&P/ASX 200 Trading portfolio: Up to 10% of total portfolio - A$141 million or 2.8% Short term positions Options writing strategies Fixed rate
Slide 8: All Ordinaries Price Index
All Ordinaries Price Index For personal use only 5200 5000 4800 Value 4600 4400 4200 4000 Date
Slide 9: Comparative Performance of Resources and Industrial Sectors
Comparative Performance of Resources and For personal use only Industrial Sectors 35% 30% 25% 20% 15% 10% 5% 0% -5% % ASX300 Industrials % ASX300 Resources
Slide 10: Largest Acquisitions in the Investment Portfolio
Largest 5 Acquisitions in the Investment Portfolio (1 July 2010 to 31 March 2011) For personal use only $m AMP (takeover of AXA Asia Pacific) 33.2 ANZ Banking Group 24.8 Origin Energy# 13.7 Senex Energy*#(formerly Victoria Petroleum) 12.5 QBE Insurance 10.0 * New to the portfolio # Includes particip
Slide 11: Largest Disposals in the Investment Portfolio
Largest Disposals in the Investment Portfolio (1 July 2010 to 31 March 2011) For personal use only $m AXA Asia Pacific # 52.2 Healthscope # 9.4 Nufarm # 8.7 West Australian Newspapers 8.1 # Complete Disposal
Slide 12: Top Holdings – March 2011
Top 25 Holdings – 31 March 2011 For personal use only % of portfolio (excl. $m cash) 1 * BHP Billiton 665.6 13.1% 2 * Westpac Banking Corporation 447.2 8.8% 3 * Commonwealth Bank of Australia 445.8 8.7% 4 * Rio Tinto 303.3 6.0% 5 * National Australia Bank 248.7 4.9% 6 Wesfarmers (a) 241.0 4.7% 7 * A
Slide 13: Top Holdings – March 2011 con't.
Top 25 Holdings – 31 March 2011 con’t. For personal use only % of portfolio (excl. $m cash) 11 * Santos 112.7 2.2% 12 * Origin Energy 102.1 2.0% 13 * Oil Search 99.7 2.0% 14 * QBE Insurance Group 93.6 1.8% 15 * AMP 92.4 1.8% 16 Amcor 89.1 1.7% 17 Transurban Group 79.7 1.6% 18 Incitec Pivot 78.3 1.5%
Slide 14: Top Holdings – March 2011 con't.
Top 25 Holdings – 31 March 2011 con’t. For personal use only % of portfolio (excl. $m cash) 21 Australian Infrastructure Fund 64.7 1.3% 22 * AGL Energy 62.8 1.2% 23 * Brambles 60.5 1.2% 24 West Australian Newspapers Holdings (b) 58.8 1.2% 25 * Coca-Cola Amatil 54.8 1.1% Total 4,184.7 As % of Total P
Slide 15: AFIC Annualised Returns – Year Ended April 2011
AFIC Annualised Returns* – Year Ended 30 April 2011 For personal use only 12% 10.7% 9.8% 10% 8.2% 8% 5.7% 5.6% 6% 4.6% 4.2% 4.4% 4.3% 4% 2.6% 1.8% 2% 0% 0.0% -0.4% -0.5% -2% -2.5% -4% 6 months 1 year return 3 year return 5 year return 10 year return Net Asset per share growth plus dividends Share Pr
Slide 16: Share Price Relative to Net Asset Backing
Share Price Relative to Net Asset Backing* For personal use only 20% Premium 15% 10% 5% 0% -5% -10% Discount -15% Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 * Before provision for capital gains tax
Slide 17: Current Investment Issues
Current Investment Issues For personal use only Two speed economy well entrenched with demand for resources/energy from Asia still strong and the household sector in Australia acting cautiously Strong rise of the $A Uncertainties exist: Sovereign risk arising from policy changes has become a
Slide 18: Current Investment Issues – con't.
Current Investment Issues – con’t. For personal use only Improving US economy is positive but developed economies still face major structural issues – high debt levels and potential for inflation with rising input costs Most company balance sheets are in good shape and costs have been reduced
Slide 19: All Ordinaries Price Index – A Long Term View
All Ordinaries Price Index – A Long Term View For personal use only 7000 3000 1000 200 50 Semi Log Scale has been used
Slide 20: Advantages of AFIC in a Portfolio
Advantages of AFIC in a Portfolio For personal use only History of outperformance – capital growth and regular dividend/focus on need to generate growth in dividends Actively managed portfolio Very low MER Experienced Board and Investment Team Strong commitment to shareholders Transparen
Slide 21: Enquiries
For personal use only Enquiries to: Geoff Driver, General Manager, Business Development and Investor Relations. gdriver@afi.com.au (03) 9679 1659
Australian Foundation Investment Company — Investment Conference, Auckland June 2011 on 6ix