David Grace, Senior Portfolio Manager at Australian Foundation Investment Company (AFIC), details the firm’s disciplined long-term investment philosophy. Founded in 1928, AFIC focuses on high-quality large-cap equities and avoids short-term market timing. It targets companies with durable pricing power, strong cash flow, and capable management—selling only when long-term returns are compromised.
Grace explained AFIC’s dual mandate: to deliver attractive total returns and maintain a stable, growing stream of fully franked dividends. During the COVID downturn, the company drew on its franking credit reserves to sustain dividends, even as many ASX 200 companies cut theirs by up to 30%.
Diversification is central to AFIC’s risk management, with portfolio exposure across growth stocks, quality cyclicals, defensive stalwarts, and reliable income plays such as banks, REITs, and Telstra. Rather than pivoting in response to volatility, AFIC uses market sell-offs to increase exposure to its highest conviction holdings.
Looking ahead, persistent uncertainty in global markets and company earnings is noted. Despite that, AFIC remains focused on long-term value and strong business fundamentals.
