Australian Foundation Investment Company (AFIC) says the share market looks fully valued at present given that the Australian economic growth is slowing down.
AFIC on Monday booked a half year net profit of $137.0 million, up 3.7 per cent from the profit of $132.08 million in the prior corresponding period.
"The domestic economy is facing a period of transition with declining levels of investment spending in the resources sector, further fiscal tightening, and low levels of business and consumer confidence likely to produce subdued growth," AFIC said in a statement on Monday.
AFIC said ongoing low interest rates and a lower Australian dollar might provide some support to economic activity, but sustained growth would depend on reforms leading to improved productivity and business confidence.
"Against this backdrop, we perceive the Australian equity market to be currently fully valued," AFIC said.
"We remain on the lookout for attractive long-term investment opportunities but are prepared to be patient at this point."
AFIC said the half year profit was boosted by demerger dividends of $11 million received from the packaging giant Amcor and pallets distributor Brambles.
The prior corresponding period's result included $8.3 million in gains on the market value of Hastings Diversified Utilities Fund which was taken over.
AFIC said the key contributors to its performance in the first half of the financial year were high yielding stocks such as the major banks, Telstra and Wesfarmers; and improving mining stocks such as BHP Billiton and Rio Tinto.
Shares in AFIC were two cents higher at $6.27 at 1252 AEDT.
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