Australian Foundation Investment Co. Ltd. · ASX:AFI
Australian Foundation Investment — Investor Presentation (March 2021)
25 slides from Australian Foundation Investment's investor presentation, Mar 16, 2021
Slide 1: Letter to shareholders - Invitation to Shareholder Telephone / Webcast briefing
16 March 2021 The Manager ASX Market Announcements For personal use only Australian Securities Exchange Exchange Centre Level 4 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Australian Foundation Investment Company Limited Letter to shareholders - Invitation to Shareholder Telephone / Webcas
Slide 2: Shareholder Presentation 16 March 2021
For personal use only Shareholder Presentation 16 March 2021
Slide 3: 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 4: Presentation Agenda
Presentation Agenda For personal use only • Long Term Markets (Mark Freeman) • Objectives, Investment Process, Markets and the Portfolio (David Grace) • Outlook (Mark Freeman) • Questions Shareholder Presentation March 2021 3
Slide 5: Very long term returns of the Australian share market since 1940
In perspective… the very long term returns of the Australian share market – All Ordinaries Price Index since 1940 For personal use only Shareholder Presentation March 2021 4
Slide 6: Dividends are an important part of long term returns in the Australian market
Dividends are an important part of the long term returns in the Australian market For personal use only S&P/ASX Accumulation Index Index S&P/ASX Price Index Source: FactSet Shareholder Presentation March 2021 5
Slide 7: Long term value in the context of the recent market moves
Long term value in the context of the recent market moves For personal use only S&P/ASX 200 Index Price to Book – S&P/ASX 200 Index Price to Sales – S&P/ASX 200 Index Index Times Times Source: FactSet Source: FactSet Source: FactSet Shareholder Presentation March 2021 6
Slide 8: Our Investment Objectives reflect a long term approach
For personal use only Our Investment Objectives reflect a long term approach The Company aims to provide The Company’s primary investment goals are: shareholders with attractive investment returns through access to a growing • to pay dividends which, over time, grow stream of fully franked dividends
Slide 9: Investment approach: diversified portfolio of quality stocks – what we look for
As does our investment approach which offers a diversified portfolio of quality stocks – what we look for For personal use only Sustainable competitive Strong management Recurring, predictable Financial strength advantage – unique team and board earnings are preferred – strong cash flow assets produ
Slide 10: Investment approach: what we look for continued
As does our investment approach which offers a diversified portfolio of quality stocks – what we look for continued For personal use only Businesses that can Nursery stocks Look to buy when we grow over the long – developing the see long term value term, producing preceding attributes growing divide
Slide 11: ESG is integrated into our investment framework
In looking for quality companies for long term investment ESG is integrated into our investment framework For personal use only • Invest in companies that have strong governance and risk management processes that include environmental and social risks. • We are seeking remunerations plans and outcom
Slide 12: Markets and the Portfolio
For personal use only Markets and the Portfolio Shareholder Presentation March 2021 11
Slide 13: Market and key sector performance – Year to February 2021
Market and key sector performance – Year to 28 February 2021 For personal use only Source: FactSet Includes dividends, but not franking. Shareholder Presentation March 2021 12
Slide 14: Relative portfolio performance, including franking
Relative portfolio performance, including franking* – returns to 28 February 2021 For personal use only AFIC portfolio returns have a lower level of volatility (Beta of 0.91) than the Index. Returns include growing/stable fully franked dividends over a 10 year period. Shareholder Presentation March
Slide 15: Observations from the recent reporting season
Observations from the recent reporting season For personal use only • Generally strong profits, with many companies above expectations. • Better-than-expected margins have been the main driver of the upside earnings surprise. • Companies have done a good job in reducing costs, which is positive for
Slide 16: Top holdings – February 2021
Top 30 holdings – 28 February 2021 Total Portfolio 61 Holdings Rank Company % of Portfolio For personal use only 1 BHP Group* 8.5 2 Commonwealth Bank of Australia 8.1 3 CSL 7.2 4 Westpac Banking Corporation 4.6 5 Wesfarmers 4.5 6 Macquarie Group 3.9 7 Transurban Group 3.8 8 National Australia Bank 3
Slide 17: Top holdings – February 2021 continued
Top 30 holdings – 28 February 2021 continued Total Portfolio 61 Holdings Rank Company % of Portfolio For personal use only 11 Australia and New Zealand Banking Group 2.8 12 Mainfreight 2.5 13 Telstra Corporation 2.1 14 James Hardie Industries 2.1 15 Amcor 2.1 16 Sydney Airport 1.9 17 Reece 1.6 18 Ra
Slide 18: Top holdings – February 2021 continued
Top 30 holdings – 28 February 2021 continued Total Portfolio 61 Holdings Rank Company % of Portfolio For personal use only 21 Goodman Group 1.4 22 Qube Holdings 1.4 23 Coles Group 1.4 24 Fisher & Paykel Healthcare Corporation 1.3 25 Xero 1.3 26 Resmed Inc 1.2 27 Seek 1.2 28 Brambles 1.2 29 CarsalesC
Slide 19: Closing Remarks
For personal use only Closing Remarks Shareholder Presentation March 2021 18
Slide 20: Current market
Current market ASX 200 firms trade at an average forward PE High PE firms trade at an average forward PE For personal use only 18.2x, which is 27% above the 20-yr average 42.3x, which is 77% above the 20-yr average Times Times Source: Goldman Sachs Global Investment Research, FactSet. Source: Goldma
Slide 21: Current market continued
Current market continued For personal use only 10 year bond rates in Australia have lifted recently AUD/USD vs iron ore price, both of which have lifted AUD/USD Cents Iron Ore Per cent Source: FactSet Source: FactSet Shareholder Presentation March 2021 20
Slide 22: Outlook
Outlook For personal use only The Australian Full impact of Market valuations US fiscal stimulus These factors have economy economic conditions for many companies likely to be very already caused appears to be on company earnings still high, although supportive of global sector/stock rotations emerg
Slide 23: AFIC's share price was trading at a 7% premium to the NTA
AFIC’s share price was trading at a 7% premium to the NTA at 28 February 2021 For personal use only Shareholder Presentation March 2021 22
Slide 24: Questions
For personal use only Questions Shareholder Presentation March 2021 23
Slide 25: For personal use only
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