For investors seeking opportunities beyond traditional emerging markets, BlackRock Frontiers Investment Trust (LON:BRFI) presents a compelling case. By avoiding the largest and most widely researched economies, BRFI focuses on underexplored frontier markets with high growth potential. Managed by Sam Vecht, Emily Fletcher, and Sudaif Niaz, the trust has built a strong track record of delivering attractive risk-adjusted returns while maintaining a high dividend yield of 4.8%.
A Unique Approach to Emerging Markets
BRFI stands apart by avoiding large emerging markets like China, India, and Brazil, which typically dominate global portfolios. Instead, it invests in smaller, faster-growing economies, leveraging BlackRock’s extensive research capabilities to identify promising opportunities. According to Sarah Godfrey, analyst at Capital Access Group, this approach allows investors to gain exposure to markets that could become “the economic powerhouses of tomorrow.”
“BlackRock Frontiers Investment Trust continues to stand out as an established player in an underserved space with increasingly few routes in for international investors,” says Godfrey.
Strong Performance and Diversification
Despite economic uncertainties, BRFI has outperformed its peers in the AIC Global Emerging Markets sector over three, five, and ten years. With an investment universe spanning over 40 markets, it offers a rare opportunity to diversify away from Western economies.
Its recent shift into smaller markets like Pakistan, Bangladesh, and Kenya reflects its ability to capitalise on low valuations and improving economic fundamentals. These nations, often overlooked by global investors, offer strong growth prospects, and BRFI’s managers have actively increased their exposure.
“Investing away from the herd can also offer compelling value: BRFI’s portfolio P/E valuation is currently just 8x, compared to more than 30x on average for the ‘Magnificent 7’ US tech stocks, yet its holdings are on average growing their earnings by 10-15% a year,” notes Godfrey.
Attractive Dividend Yield and Investor Benefits
A major appeal of BRFI is its dividend yield of 4.8%, the highest among its peers. Many frontier market companies generate strong cash flows, allowing them to offer higher-than-average dividend payouts.
Additionally, BRFI provides a five-yearly redemption opportunity, ensuring investors can exit close to net asset value (NAV). The next opportunity will be in 2026, providing an added layer of flexibility.
On a Final Note
With a strong track record, diversified portfolio, and attractive dividend yield, BlackRock Frontiers Investment Trust remains an excellent option for investors looking beyond mainstream emerging markets. Its focus on under-researched, high-growth economies provides a unique investment opportunity, and Sarah Godfrey highlights its ongoing appeal:
“A long-term track record of outperformance versus more generalist emerging markets funds suggests there are good gains to be found by investing away from the herd.”
For those seeking diversification and exposure to the next generation of emerging economies, BRFI stands out as a compelling choice.
