BlackRock Frontiers Investment Trust Plc - Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 29 February 2024 and unaudited.

Performance at month end with net income reinvested.

Onemonth%

Threemonths%

Oneyear%

Threeyears%

Fiveyears%

Since Launch*%

Sterling:

Share price

6.4

12.6

17.1

48.6

39.6

152.0

Net asset value

6.3

10.5

18.0

53.4

52.7

173.5

Benchmark (NR)**

4.0

7.0

5.7

26.7

14.9

88.5

MSCI Frontiers Index (NR)

0.7

4.2

5.9

9.4

18.6

71.9

MSCI Emerging Markets Index (NR)

5.5

3.9

4.1

-9.1

15.5

55.8

US Dollars:

Share price

5.7

12.5

22.3

34.5

32.8

105.5

Net asset value

5.6

10.4

23.3

38.9

45.3

122.7

Benchmark (NR)**

3.3

6.9

10.4

14.6

9.3

54.1

MSCI Frontiers Index (NR)

0.1

4.1

10.7

-1.0

12.8

39.5

MSCI Emerging Markets Index (NR)

4.8

3.8

8.7

-17.7

9.8

26.4

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.

** The Company’s benchmark changed from MSCI Frontier Markets Index to MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (net total return, USD) effective 1/4/2018. 

At month end

US Dollar

Net asset value - capital only:

206.83c

Net asset value - cum income:

208.74c

Sterling:

Net asset value - capital only:

163.50p

Net asset value - cum income:

165.01p

Share price:

153.50p

Total assets (including income):

£312.4m

Discount to cum-income NAV:

7.0%

Gearing:

Nil

Gearing range (as a % of gross assets):

0-20%

Net yield*:

4.1%

Ordinary shares in issue**:

189,325,748

Ongoing charges***:

1.38%

Ongoing charges plus taxation and performance fee****:

3.78%

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.1% and includes the 2023 interim dividend of 3.10 cents per share, declared on 6 June 2023, and paid to shareholders on 7 July 2023 and the 2023 final dividend of 4.90 cents per share, declared on 30 November 2023, and paid to shareholders on 14 February 2024.

** Excluding 52,497,053 ordinary shares held in treasury.

***The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding performance fees, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for Year ended 30 September 2023.

**** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses and including performance fees but excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for Year ended 30 September 2023.

Sector Analysis

Gross market value as a % of net assets

Country Analysis

Gross market value as a % of net assets

Financials

42.9

Saudi Arabia

18.4

Industrials

14.9

Indonesia

14.7

Energy

11.9

Philippines

10.3

Consumer Staples

10.5

Kazakhstan

7.9

Materials

10.2

United Arab Emirates

6.9

Consumer Discretionary

9.6

Hungary

6.9

Real Estate

8.4

Poland

6.2

Communication Services

6.4

Greece

6.0

Information Technology

5.8

Vietnam

5.9

Health Care

0.8

Thailand

5.3

-----

Chile

4.6

121.4

Qatar

4.2

-----

Czech Republic

3.9

Short positions

-3.5

Multi-International

2.8

=====

Georgia

2.4

Argentina

2.3

Colombia

2.2

Malaysia

2.0

Peru

2.0

Turkey

Romania

Cambodia

Ukraine

Bangladesh

Kenya

Pakistan

Total

1.8

1.4

0.9

0.8

0.8

0.5

             0.3

-----

121.4

               ----

Short positions

-3.5

=====

*reflects gross market exposure from contracts for difference (CFDs).

Market Exposure  

31.03

 2023

    %

30.04

 2023

    %

31.05

 2023

    %

30.06

 2023

    %

31.07

 2023

    %

31.08

 2023

    %

30.09

 2023

    %

31.10

 2023

    %

30.11

 2023

    %

31.12

 2023

    %

31.01

 2024

    %

29.02

 2024

    %

Long

106.3

108.5

112.9

116.9

113.0

113.3

114.9

118.8

113.1

116.6

119.5

121.4

Short

3.9

3.8

3.6

4.0

3.0

3.0

3.0

3.1

4.6

4.7

3.6

3.5

Gross

110.2

112.3

116.5

120.9

116.0

116.3

117.9

121.9

118.0

121.3

123.1

124.9

Net

102.4

104.7

109.3

112.9

110.0

110.3

111.9

115.7

108.8

111.9

115.9

117.9

Ten Largest Investments

Company

Country of Risk

Gross market value as a % of net assets

Saudi National Bank

Saudi Arabia

5.0

Bank Central Asia

Indonesia

4.7

JSC Kaspi

Kazakhstan

3.4

Emaar Properties

United Arab Emirates

3.4

Ayala Land

Philippines

3.2

FPT

Vietnam

3.0

Abdullah Al Othaim Markets

Saudi Arabia

3.0

Etihad Etisalat

Saudi Arabia

2.9

Epam Systems

Multi-International

2.8

Wizz Air Holdings

Hungary

2.6

Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz, representing the Investment Manager noted: 

The Company’s NAV rose by 5.6% in February, significantly outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which returned 3.3%. For reference, the MSCI Emerging Markets Index was up by 4.8% while the MSCI Frontier Markets Index was up by 0.1% over the same period. All performance figures are on a US Dollar basis with net income reinvested.

Emerging markets more broadly almost fully recovered from January weakness, gaining 4.6% in February and broke their four-month streak to marginally outperform DM (+4.1%) by +0.5%. EMEA finished the month up by 1.6%, with high degrees of dispersion across the region. Saudi Arabia (+6.6%) was a net winner with very strong performance from the small and mid-cap space and expectations that OPEC+ voluntary production cuts would extend into 2Q, supporting the oil price. Central Europe continued to print robust returns with Poland (+6.3%) and Greece (+3.4%). Latin American markets lagged the rest of emerging markets, finishing the month flat (-0.5%).

February was a strong month for the fund and several stock picks across a variety of different markets did well. Both Nagacorp (36.4%) and Bank of Georgia (+23.3%) were two very strong perfromers. Cambodian integrated gambling resort operator NagaCorp did well on expectation of improved outbound Chinese travel. Bank of Georgia share price rose following news of the company’s acquisition of Armenian bank Ameriabank, which will allow Bank of Georgia to access the rapidly growing Armenian market. Kazakhstan exposure also did well through bank Halyk (+20.1%) and e-commerce company Kaspi (+12.5%). The latter rallied after releasing full year numbers with net profit up 60% year on year under-pinned by strong growth across all business verticals, and an improvement in e-commerce take-rate.

On the flipside, the Fund’s Turkey exposure through gold mine operator Eldorado Gold (-15.3%) was the biggest detractor amid rate cut expectations being pushed out in the US which negatively affected sentiment on gold price. Since then gold has rallied which should support the stock. Advanced Info Systems (-7.4%), the Thai telecom services provider saw its share price correct on weak Q423 result. However, we maintain conviction in the name as we see underlying operating trends  support out medium-term investment view. Ukrainian iron ore pellet producer Ferrexpo (-17.5%) was another detractor as the dividend announced in January was cancelled due to legal claims overhang.

Over the course of February, we made some changes to the portfolio. We rotated some of our bank exposure in Indonesia by exiting Bank Mandiri and adding to Bank Central Asia given its relatively stronger funding franchise. We also exited our holding in Colombian oil producer Ecopetrol as our investment case had largely played out.

We believe global markets are starting to feel the impact of higher interest rates, noting slowing credit growth in particular as evidence that a demand slowdown is imminent in developed markets. When combined with a Chinese economy which is struggling to find its footing we find it difficult to see where a meaningful pick up in global growth will come from. In contrast we see better fundamentals in frontier and smaller emerging markets. Monetary tightening across much of our universe was ahead of that in developed markets, particularly in Latin America and Eastern Europe. With inflation falling across many countries within our universe, rate cuts have started to materialize. This is a good set up for domestically oriented economies to see a cyclical pick up. Our investment universe, in absolute and relative terms, remains under-researched and we believe this should enable compelling alpha opportunities.

Sources:

1BlackRock as at 29 February 2024

2MSCI as at 29 February 2024

25 March 2024

ENDS

Latest information is available by typing www.blackrock.com/uk/brfi on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on BlackRock’s website (or any other website) is incorporated into, or forms part of, this announcement.