BlackRock Frontiers Investment Trust plc (LON:BRFI) has provided its latest portfolio update.
All information is at 31 January 2022 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 | -1.2 | 1.3 | 10.6 | 7.5 | 9.1 | 91.2 |
| Net asset value | 2.3 | 1.3 | 22.4 | 21.9 | 27.3 | 115.4 |
| Benchmark (NR)** | 4.3 | 3.4 | 18.1 | 5.3 | 26.3 | 76.2 |
| MSCI Frontiers Index (NR) | -2.6 | -4.6 | 17.8 | 29.4 | 34.0 | 88.2 |
| MSCI Emerging Markets Index (NR) | -1.0 | -2.0 | -5.0 | 20.8 | 39.7 | 64.4 |
| US Dollars: | ||||||
| Share price | -2.2 | -0.9 | 8.1 | 9.6 | 16.4 | 65.2 |
| Net asset value | 1.3 | -0.9 | 19.6 | 24.2 | 35.8 | 85.9 |
| Benchmark (NR)** | 3.3 | 1.2 | 15.4 | 7.4 | 34.7 | 52.8 |
| MSCI Frontiers Index (NR) | -3.5 | -6.6 | 15.1 | 32.0 | 42.8 | 61.9 |
| MSCI Emerging Markets Index (NR) | -1.9 | -4.1 | -7.2 | 23.2 | 49.0 | 41.5 |
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: | 188.09c |
| Net asset value – cum income: | 188.81c |
| Sterling: | |
| Net asset value – capital only: | 140.20p |
| Net asset value – cum income: | 140.74p |
| Share price: | 127.00p |
| Total assets (including income): | £266.5m |
| Discount to cum-income NAV: | 9.8% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 3.3% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.4% |
| Ongoing charges plus taxation and performance fee: | 2.4% |
*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.3% and includes the 2021 interim dividend of 2.75 cents per share, announced on 01 June 2021 and paid to shareholders on 25 June 2021. Also included is the 2021 final dividend of 4.25 cents per share, declared on 1 December 2021, with pay date 11 February 2022.
** Excluding 52,497,053 ordinary shares held in treasury.
***Calculated as a percentage of average net assets and using expenses, excluding Performance fees and interest costs for the year ended 30 September 2021.
| 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 | 18.4 | |
| Consumer Discretionary | 17.1 | Indonesia | 12.1 | |
| Industrials | 16.1 | Vietnam | 8.7 | |
| Materials | 10.2 | Thailand | 8.2 | |
| Consumer Staples | 6.2 | Greece | 7.4 | |
| Real Estate | 4.7 | United Arab Emirates | 7.2 | |
| Health Care | 4.2 | Egypt | 5.5 | |
| Information Technology | 3.0 | Malaysia | 5.4 | |
| Energy | 2.7 | Philippines | 5.2 | |
| Utilities | 1.4 | Poland | 4.6 | |
| Communication Services | 1.4 | Kazakhstan | 4.4 | |
| —– | Chile | 4.2 | ||
| 108.4 | Qatar | 3.5 | ||
| —– | Hungary | 2.9 | ||
| Short positions | -1.9 | Kenya | 2.1 | |
| ===== | Romania | 2.0 | ||
| Ukraine | 1.7 | |||
| Panama | 1.6 | |||
| Pakistan | 1.5 | |||
| Peru | 1.4 | |||
| Nigeria | 0.4 | |||
| —– | ||||
| Total | 108.4 | |||
| —– | ||||
| Short positions | -1.9 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 28.02 2021 % | 31.03 2021 % | 30.04 2021 % | 31.05 2021 % | 30.06 2021 % | 31.07 2021 % | 31.08 2021 % | 30.09 2021 % | 31.10 2021 % | 30.11 2021 % | 31.12 2021 % | 31.01 2022 % | |
| Long | 114.0 | 105.7 | 108.5 | 105.3 | 106.8 | 107.1 | 104.2 | 108.1 | 110.6 | 106.3 | 104.3 | 108.4 |
| Short | 4.5 | 3.4 | 2.5 | 2.3 | 4.6 | 2.3 | 0.6 | 0.4 | 0.4 | 0.4 | 1.0 | 1.9 |
| Gross | 118.5 | 109.1 | 111.0 | 107.6 | 111.4 | 109.4 | 104.8 | 108.5 | 111.0 | 106.7 | 105.3 | 110.3 |
| Net | 109.5 | 102.3 | 106.0 | 103.0 | 102.2 | 104.8 | 103.6 | 107.7 | 110.2 | 105.9 | 103.3 | 106.5 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Saudi National Bank | Saudi Arabia | 5.2 |
| Saudi British Bank | Saudi Arabia | 3.9 |
| Emaar Properties | United Arab Emirates | 3.7 |
| Bank Rakyat | Indonesia | 3.4 |
| Mobile World | Vietnam | 3.3 |
| National Bank of Greece | Greece | 3.2 |
| United International Transport | Saudi Arabia | 3.1 |
| FPT | Vietnam | 3.0 |
| OTP Bank | Hungary | 2.9 |
| Leejam Sports | Saudi Arabia | 2.8 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company’s NAV returned +1.3% versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which returned +3.3% in January. For reference, the MSCI Emerging Markets Index ended the month down 1.9% and the MSCI Frontier Markets Index returned -3.5% over the same period.
Over the month, our financials positioning greatly helped performance. In Saudi Arabia – Saudi British Bank (+22%), Saudi National Bank (+15%) outperformed on expectations of a broad, global normalization of interest rate policy, particularly in the US. The banks also continue to see strong loan growth. In a similar vein, National Bank of Greece (+17%) was another key contributor given sensitivity to interest rate expectations as the work out of historic problematic NPE exposure is finally reaching its conclusion for the Greek banking sector. Peruvian bank, Credicorp (+17%), also had a strong month, showing loan growth acceleration as the economy normalized. The bank has reported much lower provisions following COVID shutdowns than analysts were originally expecting.
Our allocation in Kazakhstan was the biggest detractor – across Kaspi (-27%), Halyk Bank(-21%), and Kazatomprom (-15%). In early January, Kazakh stocks sold off after a fuel price hike triggered significant violent protests in the capital. In response, Kazakh security forces were brought in, with some backing from Russian troops. The government also reshuffled some key political appointments in an attempt to appease public ire, and the stocks bounced off their lows. Ukrainian iron ore producer, Ferrexpo (-26%), also detracted over concerns of an escalation in tensions at the Russia/Ukraine borders. We bought into weakness as we continue to like the fundamentals and expect iron ore pellet premiums to persist. The company is also well positioned to participate in green steel initiatives. Frontken (-21%), Malaysian foundry equipment cleaner, also detracted, falling alongside the global tech sector. We believe that the outlook for the company is solid and topped up into weakness.
We made a few changes to the portfolio in January. We topped up positions in Frontken Malaysia and Indonesian cement producer, Indocement, as we continue to like ASEAN and see upside from a post-COVID recovery in the region. We topped up UAE real estate play, Emaar Properties, as we see continued strength in the Dubai property market and are encouraged by positive house price and volume trends. We upped our position in Chilean retailer Falabella, which has underperformed for most of last year and is showing strong retail sales trends. We trimmed overall positions (Saudi National Bank, Solutions) in Saudi Arabia to book profits. Similarly, we also trimmed Credicorp.
Overall, for countries that have stable macro environments and have made timely progress in vaccination rollouts, we believe the global macro recovery provides a favourable backdrop to recover lost economic productivity. Valuations in a lot of the frontier end emerging markets remain attractive relative to their own history and also relative to the more evolved markets. We believe our opportunity set is a compelling universe to generate alpha.
Sources:
1BlackRock as at 31 January 2022
2MSCI as at 31 January 2022
21 February 2022
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
