Australian Foundation Investment Company (AFIC) has reduced the number of its total holdings from 85 to 71 over the past 12 months, selling out of Perpetual and AMP, the company said in an announcement to the Australian Stock Exchange (ASX).
Both Perpetual and AMP were excluded from AFIC’s portfolio due to the concerns about their ‘sustainable competitive advantage’, a term which was defined as unique assets producing strong returns on capital.
At the same time, the firm said the capital would be reinvested in quality companies to help increase its exposure to preferred companies.
The examples of such companies included Macquarie which was said to have competitive advantage in growing green energy opportunities with strong return on equity (ROE) and balance sheet.
AFIC said it was looking for the companies with strong management teams and board, predictable earnings, financial strength as well as those businesses which were able to grow over the long-term and deliver growing dividends.