BlackRock Frontiers Investment Trust plc (LON:BRFI) has announced its latest portfolio update.
All information is at 28 February 2023 and unaudited.
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
Performance at month end with net income reinvested.
| One month % | Three months % | One year % | Three years % | Five years % | Since Launch* % | |
| Sterling: | ||||||
| Share price | 0.7 | 7.1 | 12.1 | 48.8 | 4.8 | 115.3 |
| Net asset value | 0.9 | 1.5 | 11.7 | 48.3 | 12.5 | 131.9 |
| Benchmark (NR)** | -2.4 | -4.6 | -0.7 | 20.9 | 8.7 | 78.3 |
| MSCI Frontiers Index (NR) | -0.8 | -1.2 | -9.8 | 2.3 | -1.8 | 62.3 |
| MSCI Emerging Markets Index (NR) | -4.9 | -2.1 | -6.1 | 8.6 | 3.6 | 49.8 |
| US Dollars: | ||||||
| Share price | -0.9 | 9.0 | 1.3 | 41.1 | -7.8 | 68.0 |
| Net asset value | -0.8 | 3.3 | 0.9 | 40.7 | -1.0 | 80.7 |
| Benchmark (NR)** | -4.0 | -3.0 | -10.4 | 14.6 | -4.5 | 39.5 |
| MSCI Frontiers Index (NR) | -2.5 | 0.4 | -18.6 | -3.1 | -13.7 | 26.0 |
| MSCI Emerging Markets Index (NR) | -6.5 | -0.5 | -15.3 | 2.9 | -9.0 | 16.3 |
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: | 174.94c |
| Net asset value – cum income: | 176.33c |
| Sterling: | |
| Net asset value – capital only: | 144.50p |
| Net asset value – cum income: | 145.65p |
| Share price: | 137.00p |
| Total assets (including income): | £275.7m |
| Discount to cum-income NAV: | 5.9% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.1% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.4% |
| Ongoing charges plus taxation and performance fee****: | 1.4% |
*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 2022 interim dividend of 2.75 cents per share, declared on 26 May 2022, and paid to shareholders on 24 June 2022 and the 2022 final dividend of 4.25 cents per share, declared on 8 December 2022, and payable to shareholders on 19 January 2023.
** 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 2022.
**** 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 2022.
| Sector Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | |
| Financials | 41.4 | Saudi Arabia | 17.8 | |
| Energy | 14.0 | Indonesia | 17.2 | |
| Consumer Discretionary | 11.6 | Vietnam | 8.7 | |
| Materials | 10.9 | Kazakhstan | 7.6 | |
| Industrials | 10.5 | Thailand | 7.5 | |
| Consumer Staples | 10.2 | Hungary | 6.9 | |
| Information Technology | 5.4 | United Arab Emirates | 6.1 | |
| Communication Services | 3.7 | Chile | 5.9 | |
| Real Estate | 2.6 | Greece | 5.3 | |
| Health Care | 1.6 | Malaysia | 4.6 | |
| —– | Poland | 3.4 | ||
| 111.9 | Egypt | 2.7 | ||
| —– | Qatar | 2.6 | ||
| Short positions | -3.9 | Argentina | 2.5 | |
| ===== | Philippines | 2.1 | ||
| Panama | 2.1 | |||
| Peru | 1.7 | |||
| Georgia | 1.6 | |||
| Colombia | 1.6 | |||
| Romania | 1.4 | |||
| Kuwait | 1.3 | |||
| Kenya | 0.7 | |||
| Ukraine | 0.6 | |||
| —– | ||||
| Total | 111.9 | |||
| —– | ||||
| Short positions | -3.9 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.03 2022 % | 30.04 2022 % | 31.05 2022 % | 30.06 2022 % | 31.07 2022 % | 31.08 2022 % | 30.09 2022 % | 31.10 2022 % | 30.11 2022 % | 31.12 2022 % | 31.01 2023 % | 28.02 2023 % | |
| Long | 111.1 | 110.6 | 107.9 | 106.1 | 107.3 | 107.3 | 106.2 | 107.4 | 106.2 | 110.7 | 112.4 | 111.9 |
| Short | 2.3 | 1.8 | 4.7 | 4.6 | 6.2 | 5.3 | 5.2 | 5.3 | 4.8 | 4.9 | 5.1 | 3.9 |
| Gross | 113.4 | 112.4 | 112.6 | 110.7 | 113.5 | 112.6 | 111.4 | 112.7 | 111.0 | 115.6 | 117.5 | 115.8 |
| Net | 108.8 | 108.8 | 103.2 | 101.5 | 101.1 | 102.0 | 101.0 | 102.1 | 101.4 | 105.8 | 107.3 | 108.0 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Bank Central Asia | Indonesia | 5.0 |
| Astra International | Indonesia | 3.6 |
| PKO Bank Polski | Poland | 3.4 |
| National Bank of Greece | Greece | 3.2 |
| Saudi National Bank | Saudi Arabia | 3.2 |
| OTP Bank | Hungary | 3.1 |
| Abdullah Al Othaim Markets | Saudi Arabia | 3.0 |
| Genting Malaysia | Malaysia | 3.0 |
| JSC Kaspi | Kazakhstan | 2.9 |
| FPT | Vietnam | 2.9 |
Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz, representing the Investment Manager noted:
The Company’s NAV was down by 0.8% in February, outperforming its benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which fell by 4.0%. For reference, the MSCI Emerging Markets Index ended the month down by 6.5% and the MSCI Frontier Markets Index was down by 2.5% over the same period. All performance figures are on a US Dollar basis with net income reinvested.
Markets across the board gave back gains after a strong January. In emerging markets, China was the key driver as US-China tensons re-escalated and expectations lowered around growth targets in the National People’s Congress. Parts of the frontier complex were also impacted by the spillover of Chinese sentiment – particularly South-East Asia where Vietnam (-11%), Thailand (-9%), Malaysia (-7%) and the Philippines (-5%). In Eastern Europe, we saw continued positive momentum from January, with Greece up by 9%. The picture in the Middle East was more mixed; Saudi Arabia (-7%) notably edged lower led by its banking sector. The Turkish market rallied in February despite the recent tragic earthquakes in the south of the country as the government announced explicit support for the stock market. We currently have no exposure in Turkey.
In terms of portfolio performance, National Bank of Greece (+19%) was the top performer. The stock has continued to do well in a rising rate environment and benefited from strong loan growth. Mitra Adiperkasa rose by 14% on back of improved consumer sentiment in Indonesia. Vista Energy (+13%) did well as it reported strong results and shared an optimistic outlook with the market. Saudi grocery operator, Abdullah Al Othaim (+10%), was also additive given strong operating results and as the company returned capital to shareholders as it continues to sell off non-core real estate assets.
On the other side, Vietnamese exposure detracted from performance, both brokerage SSI Securities (-17%) and Vietnam Technological and Commercial Bank (-14%) fell in line with the broader Vietnamese market. Resort operator Genting Malaysia (-10%) also hurt relative returns as cash generation remained weak.
We made a few changes to the portfolio in February. We took some profit in Emaar Properties and PKO Bank. We recycled our Saudi Arabia financials exposure into more preferred petrochemicals and oil services companies. We also added to Abdullah Al Othaim. We exited Ukrainian iron ore producer Ferrexpo over concerns of further escalation in the Russia-Ukraine conflict.
Our team sees a marked contrast in the monetary and fiscal policy decisions taken in small emerging/frontier versus developed markets in the post pandemic years and find significant value in currencies and equity markets across our investment opportunity set. We are optimistic over the long-term in our under-researched investment universe which should enable compelling alpha opportunities.
Sources:
1BlackRock as at 28 February 2023
2MSCI as at 28 February 2023
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
