BlackRock Frontiers Investment Trust plc (LON:BRFI) has provided its latest portfolio update.
All information is at 30 June 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 | -5.8 | -5.0 | 3.8 | 0.0 | 0.0 | 83.8 |
| Net asset value | -4.8 | -5.1 | 8.1 | 9.1 | 13.9 | 108.1 |
| Benchmark (NR)** | -6.5 | -6.7 | 12.3 | 0.7 | 20.9 | 77.0 |
| MSCI Frontiers Index (NR) | -1.8 | -6.5 | -6.0 | 6.6 | 16.1 | 71.2 |
| MSCI Emerging Markets Index (NR) | -3.1 | -4.0 | -15.0 | 6.6 | 19.1 | 52.5 |
| US Dollars: | ||||||
| Share price | -9.2 | -12.4 | -8.8 | -4.6 | -6.4 | 43.7 |
| Net asset value | -8.2 | -12.5 | -5.0 | 4.1 | 6.6 | 62.5 |
| Benchmark (NR)** | -9.9 | -14.0 | -1.3 | -3.9 | 13.0 | 38.9 |
| MSCI Frontiers Index (NR) | -5.3 | -13.8 | -17.3 | 1.7 | 8.5 | 33.3 |
| MSCI Emerging Markets Index (NR) | -6.6 | -11.4 | -25.3 | 1.7 | 11.4 | 18.8 |
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: | 160.59c |
| Net asset value – cum income: | 162.53c |
| Sterling: | |
| Net asset value – capital only: | 132.23p |
| Net asset value – cum income: | 133.83p |
| Share price: | 120.00p |
| Total assets (including income): | £253.4m |
| Discount to cum-income NAV: | 10.3% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.5% |
| 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 4.5% and includes the 2021 final dividend of 4.25 cents per share, declared on 1 December 2021, and paid to shareholders on 11 February 2022. Also included is the 2022 interim dividend of 2.75 cents per share, declared on 26 May 2022, and paid to shareholders on 24 June 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 | 35.9 | Saudi Arabia | 23.1 | ||
| Materials | 13.7 | Indonesia | 12.4 | ||
| Consumer Discretionary | 12.7 | United Arab Emirates | 9.2 | ||
| Industrials | 12.5 | Malaysia | 8.6 | ||
| Energy | 11.6 | Thailand | 7.5 | ||
| Consumer Staples | 7.1 | Vietnam | 7.5 | ||
| Real Estate | 4.6 | Kazakhstan | 6.2 | ||
| Information Technology | 3.8 | Greece | 4.8 | ||
| Utilities | 2.5 | Qatar | 4.4 | ||
| Health Care | 1.7 | Hungary | 4.0 | ||
| —– | Chile | 3.6 | |||
| 106.1 | Egypt | 2.6 | |||
| —– | Romania | 2.6 | |||
| Short positions | -4.6 | Philippines | 1.9 | ||
| ===== | Panama | 1.8 | |||
| Colombia | 1.7 | ||||
| Poland | 1.6 | ||||
| Kenya | 1.4 | ||||
| Peru | 0.5 | ||||
| Ukraine | 0.4 | ||||
| Nigeria | 0.3 | ||||
| —– | |||||
| Total | 106.1 | ||||
| —– | |||||
| Short positions | -4.6 | ||||
| ===== | |||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.07 2021 % | 31.08 2021 % | 30.09 2021 % | 31.10 2021 % | 30.11 2021 % | 31.12 2021 % | 31.01 2022 % | 28.02 2022 % | 31.03 2022 % | 30.04 2022 % | 31.05 2022 % | 30.06 2022 % | |
| Long | 107.1 | 104.2 | 108.1 | 110.6 | 106.3 | 104.3 | 108.4 | 110.7 | 111.1 | 110.6 | 107.9 | 106.1 |
| Short | 2.3 | 0.6 | 0.4 | 0.4 | 0.4 | 1.0 | 1.9 | 3.3 | 2.3 | 1.8 | 4.7 | 4.6 |
| Gross | 109.4 | 104.8 | 108.5 | 111.0 | 106.7 | 105.3 | 110.3 | 114.0 | 113.4 | 112.4 | 112.6 | 110.7 |
| Net | 104.8 | 103.6 | 107.7 | 110.2 | 105.9 | 103.3 | 106.5 | 107.4 | 108.8 | 108.8 | 103.2 | 101.5 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Saudi National Bank | Saudi Arabia | 4.8 |
| Emaar Properties | United Arab Emirates | 4.6 |
| Saudi British Bank | Saudi Arabia | 3.8 |
| Bank Rakyat | Indonesia | 3.7 |
| Genting Malaysia | Malaysia | 3.1 |
| Astra International | Indonesia | 2.9 |
| Qatar Gas Transport | Qatar | 2.9 |
| FPT | Vietnam | 2.8 |
| Yanbu National Petrochemical | Saudi Arabia | 2.7 |
| United International Transport | Saudi Arabia | 2.7 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company NAV returned -8.2% versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which fell by 9.9% in June. For reference, the MSCI Emerging Markets Index ended the month down 5.3% and the MSCI Frontier Markets Index returned -6.6% over the same period. On an YTD basis, the Benchmark Index has held up reasonably well -6% versus the MSCI Emerging Markets -18% and MSCI World -20% (all performance figures are on a US Dollar basis with net income reinvested).
Overall, most countries ended the month in the red. Emerging Markets under-performed Frontier Markets this month as recession fears permeated commodity prices. This was most visible in Latin America, where Colombia (-29%), Chile (-19%), and Peru (-17%) saw the biggest drawdowns. For Colombia, June was an important month given the election on 19th, where radical left-wing candidate Petro won the second round, adding a layer of political concern.
Elsewhere, Greece (-14%) had a difficult month on regional energy security and recession concerns. In South-east Asia, the Philippines market fell 14%. The June inflation print there was 6% vs 5.4% in the previous month. Inflation continues to run well above central bank Bangko Sentral ng Pilipinas’s maximum 4% target range and we remain concerned on currency and activity in the country.
The Company benefited from its exposure to Saudi Arabia which remains a beneficiary of the higher oil price environment. Pharmaceutical company Nahdi Medical (+1%) was additive during the month on a relative basis. In the UAE, Air Arabia (+3.5%) continued to benefit from the rebound in travel momentum in the region. Meanwhile, Hungarian airline Wizz Air (-43%) was the biggest detractor given concerns regarding the company’s needs for a fresh equity injection. In Greece, our holding in National Bank of Greece (-22%) was a detractor. We continue to like the name as the bank benefits from a longer dated funding profile and the Greek economy should remain resilient from tourism resurgence.
We made a few changes to the portfolio in June. We are cautious on risk assets and continue to lean defensive in the portfolio. We started to trim our exposure to Indonesia given our concerns on commodity prices and underlying inflation in the economy. We added to Halyk Bank, which derated in the aftermath of the Russia-Ukraine crisis but remains operationally strong and the Kazakh economy remains supported by the high oil price. We trimmed our holding in IT Services Provider, FPT in Vietnam, on strong performance. We initiated a position in ELM in Saudi Arabia, a G2C and G2B e-service provider that we believe has a broad runway to grow in the Kingdom. In Eastern Europe, we initiated a position in Polish bank PKO as it should be a beneficiary of higher interest rates in Poland as the central bank tries to manage inflation. We exited our holding in Philippines’ ports operator ICT on strong performance and our view that it has reaped a disproportionate short-term benefit from regional logistical constraints.
While we remain cautious on markets in near-term from recession concerns, we are optimistic over the long-term as our under-researched investment universe should allow for compelling alpha opportunities.
Sources:
1BlackRock as at 30 June 2022
2MSCI as at 30 June 2022
19 July 2022
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
