In terms of investing, managing director Mark Freeman said AFIC had shuffled its holdings during the recent market volatility and had taken advantage of capital raisings. However, he has now stopped buying and will remain patient given how far prices have risen since the March lows.
“We are fully invested now. We are just not seeing that value with the market where it is now. The stocks we wanted to buy more of, now they have recovered,” he said.
AFIC has a reputation for conservative, long-term investing in the top 200 companies. It only invests in Australian-listed companies and its major holdings include CSL, BHP, Wesfarmers, the big four banks, Sonic Healthcare, Fisher & Paykel Healthcare and Goodman Group.
During 2019-20 it completely sold out of Treasury Wine Estates and Suncorp Group and took advantage of “deeply discounted” capital raisings like Cochlear, Oil Search, NextDC, and Qube Holdings.
It also sold out of Scentre Group, Adelaide Brighton and Perpetual.
“Some of those companies have to make way for things that we wanted to add,” Mr Freeman said.
Treasury Wine was “a good business”, but AFIC decided to sell out after chief executive Michael Clarke announced his departure. It has also had concerns about its US strategy, increasing global competition and weaker results.
AFIC also told shareholders economic growth depends on suppressing COVID-19 in Australia and overseas.