AFIC profits rise on rate cuts

Australia's largest listed investment company says caution is needed on global weakness.

Australia's largest listed investment company has recorded a 10% rise in profit but says caution is needed in the local stock market.

Australian Foundation Investment Company (AFIC) made a net profit of $242.8 million in the 2012/13 financial year, up more than 10% from the previous year.

It said the Australian market benefited from a string of interest rate cuts during the year.

"The Australian market enjoyed strong returns for the year driven largely by the falling interest rate environment and the rising US market," the company said.

But, it said, both global and domestic markets had weakened recently and caution was needed.

"Whilst the present environment causes us to approach the upcoming year with some caution, we believe AFIC's portfolio is well-positioned, including having a strong level of cash to continue the process of investing in sound businesses with good long-term prospects when value is on offer," the company said.

It added that the return on its portfolio of holdings was 24.4% during the financial year, above the 22.8% recorded by the S&P/ASX 200 index.

The portfolio's performance was driven by major bank holdings and other high yielding stocks such as Telstra and Wesfarmers, it said.

The company will pay shareholders a final dividend of 14 cents a share, meaning investors would have received a total divided of 22 cents a share, fully franked, for the year.

AFIC shares were trading two cents higher at $5.58 following the release of the result

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