BlackRock Frontiers Investment Trust plc (LON:BRFI) has announced its portfolio update.
All information is at 31 January 2024 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 | 3.6 | 10.1 | 10.8 | 37.0 | 33.1 | 136.8 |
| Net asset value | -0.4 | 6.2 | 11.9 | 46.2 | 45.5 | 157.3 |
| Benchmark (NR)** | -0.8 | 4.2 | -0.8 | 21.5 | 8.3 | 81.2 |
| MSCI Frontiers Index (NR) | 1.1 | 6.2 | 4.3 | 6.8 | 17.3 | 70.7 |
| MSCI Emerging Markets Index (NR) | -4.5 | 2.0 | -6.2 | -14.7 | 8.5 | 47.8 |
| US Dollars: | ||||||
| Share price | 3.5 | 15.6 | 14.6 | 27.1 | 28.9 | 94.4 |
| Net asset value | -0.5 | 11.5 | 15.8 | 35.6 | 40.9 | 110.8 |
| Benchmark (NR)** | -0.9 | 9.4 | 2.6 | 12.6 | 4.8 | 49.2 |
| MSCI Frontiers Index (NR) | 1.0 | 11.5 | 7.9 | -0.9 | 13.6 | 39.4 |
| MSCI Emerging Markets Index (NR) | -4.6 | 7.0 | -2.9 | -20.9 | 5.1 | 20.7 |
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: | 196.15c |
| Net asset value – cum income: | 197.64c |
| Sterling: | |
| Net asset value – capital only: | 154.04p |
| Net asset value – cum income: | 155.21p |
| Share price: | 144.25p |
| Total assets (including income): | £293.8m |
| Discount to cum-income NAV: | 7.1% |
| Gearing: | Nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.4% |
| 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 4.4% 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 payable 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 | 45.4 | Saudi Arabia | 17.4 | |
| Energy | 14.0 | Indonesia | 13.8 | |
| Materials | 11.5 | United Arab Emirates | 8.6 | |
| Consumer Staples | 10.4 | Philippines | 8.2 | |
| Industrials | 10.1 | Poland | 7.6 | |
| Consumer Discretionary | 8.8 | Kazakhstan | 7.5 | |
| Real Estate | 7.4 | Hungary | 7.1 | |
| Communication Services | 5.7 | Vietnam | 5.7 | |
| Information Technology | 5.6 | Thailand | 5.6 | |
| Health Care | 0.6 | Chile | 4.5 | |
| —– | Colombia | 4.3 | ||
| 119.5 | Qatar | 4.0 | ||
| —– | Czech Republic | 4.0 | ||
| Short positions | -3.6 | Greece | 3.4 | |
| ===== | Multi-International | 2.7 | ||
| Turkey | 2.7 | |||
| Argentina | 2.2 | |||
| Georgia | 2.1 | |||
| Peru | 1.8 | |||
| Malaysia | 1.5 | |||
| RomaniaUkraineCambodiaBangladeshKenyaKuwaitOman Total | 1.31.00.70.50.50.5 0.3—–119.5 | |||
| —– | ||||
| Short positions | -3.6 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 28.02 2023 % | 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 % | |
| Long | 111.9 | 106.3 | 108.5 | 112.9 | 116.9 | 113.0 | 113.3 | 114.9 | 118.8 | 113.1 | 116.6 | 119.5 |
| Short | 3.9 | 3.9 | 3.8 | 3.6 | 4.0 | 3.0 | 3.0 | 3.0 | 3.1 | 4.6 | 4.7 | 3.6 |
| Gross | 115.8 | 110.2 | 112.3 | 116.5 | 120.9 | 116.0 | 116.3 | 117.9 | 121.9 | 118.0 | 121.3 | 123.1 |
| Net | 108.0 | 102.4 | 104.7 | 109.3 | 112.9 | 110.0 | 110.3 | 111.9 | 115.7 | 108.8 | 111.9 | 115.9 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Saudi National Bank | Saudi Arabia | 5.1 |
| Bank Central Asia | Indonesia | 4.3 |
| Emaar Properties | United Arab Emirates | 3.3 |
| Abdullah Al Othaim Markets | Saudi Arabia | 3.3 |
| Ayala Land | Philippines | 3.3 |
| FPT | Vietnam | 2.8 |
| Epam Systems | Multi-International | 2.7 |
| Eldorado Gold | Turkey | 2.7 |
| Advanced Info Service | Thailand | 2.7 |
| 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 fell by 0.5% in January, outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which returned -0.9%. For reference, the MSCI Emerging Markets Index was down -4.6% while the MSCI Frontier Markets Index was up 1.0% over the same period. All performance figures are on a US Dollar basis with net income reinvested.
Emerging markets had a tough start to the year, with many of our markets down in January. In Latin America, all markets except Colombia (+1.9%) posted negative returns. Chile was the weakest market within the region as metals prices declined and the pace of interest rate cuts was slower than expected. In Asia, the Philippines (+1.0%) was the only equity market in our universe to finish the month in positive territory. On the other hand, a selection of markets in EMEA were bright spots over the month where performance was led by Turkey (+10.3%). Egypt (+19.7%) and Greece (+5.9%) were also up, the latter helped by positive earnings revisions.
Several stock picks did well in January. Indonesian bank Bank Syariah (+30.7%) was the top performing stock, having delivered strong profit growth in the last quarter of 2023. MBC Group (129.6%), the Saudi state-owned media conglomerate, was another contributor as the shares jumped following the company’s IPO earlier in the month. Portfolio performance was also supported by our holding in Bloomberry Resorts (11.8%), a Philippines based resort and casino operator. The company’s share price increased in anticipation of a new resort opening. Argentina exposure through energy company Vista (+11.0%) also helped performance.
On the flipside, Chilean lithium producer SQM (-30.1%) was the largest detractor. Lithium prices continue to struggle due to oversupply, but we believe that they have reached cash cost support levels, which should lead to supply curtailments. In addition, SQM faced disruptions in its operations due to roadblocks caused by local community protests, which have now been resolved. Hungarian low-cost carrier Wizz Air (-10.1%) also detracted, pulling back some of its more recent gains. Astra International (-11.5%), the Indonesian conglomerate, also weighed on portfolio performance in January.
Over the course of January, we made some changes to the portfolio. We rotated some of our Indonesian exposure by exiting food industry company Indofoods and initiated a position in Ciputra, an Indonesian property developer with broad based exposure to the country. We reduced our underweight to Saudi Arabia by topping up our holding in grocery operator Al Othaim as the name has lagged the broader Saudi market. We exited our holding in Malaysia Airports as the size of the anticipated tariff hike and the recovery in passengers may disappoint the market.
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 ongoing 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 31 January 2024
2MSCI as at 31 January 2024
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
