BlackRock Frontiers Investment Trust plc (LON:BRFI) has provided its latest portfolio update.
The information contained in this release was correct as at 31 January 2021. Information on the Company’s up to date net asset values can be found on the London Stock Exchange Website at https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 January 2021 and unaudited.
Performance at month end with net income reinvested.
| One month % | Three months % | One year % | Three years % | Five years % | Since Launch* % | |
| Sterling: | ||||||
| Share price | 0.8 | 26.8 | 8.1 | -17.4 | 48.6 | 72.9 |
| Net asset value | -0.4 | 21.0 | 4.4 | -14.1 | 43.7 | 76.0 |
| Benchmark (NR)** | -1.1 | 10.0 | -5.5 | -7.5 | 41.7 | 49.2 |
| MSCI Frontiers Index (NR) | -0.1 | 4.0 | -2.2 | -1.7 | 50.7 | 59.8 |
| MSCI Emerging Markets Index (NR) | 2.6 | 13.8 | 22.8 | 17.9 | 108.0 | 73.2 |
| US Dollars: | ||||||
| Share price | 1.3 | 34.7 | 12.6 | -20.2 | 44.0 | 52.9 |
| Net asset value | 0.1 | 28.5 | 8.8 | -17.0 | 39.2 | 55.4 |
| Benchmark (NR)** | -0.7 | 16.9 | -1.6 | -10.7 | 37.2 | 32.5 |
| MSCI Frontiers Index (NR) | 0.4 | 10.5 | 1.9 | -5.0 | 45.9 | 40.7 |
| MSCI Emerging Markets Index (NR) | 3.1 | 20.9 | 27.9 | 13.9 | 101.4 | 52.5 |
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: | 162.83c |
| Net asset value – cum income: | 163.97c |
| Sterling: | |
| Net asset value – capital only: | 118.57p |
| Net asset value – cum income: | 119.40p |
| Share price: | 119.50p |
| Total assets (including income): | £288.0m |
| Premium to cum-income NAV: | 0.1% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.4% |
| Ordinary shares in issue**: | 241,210,518 |
| 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 4.4% and includes the 2020 final dividend of 4.25 cents per share declared on 11 December 2020 with a pay date of 12 February 2021. Also included is the 2020 interim dividend of 2.75 cents per share, announced on 28 May 2020 and paid to shareholders on 26 June 2020.
** Excluding 612,283 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 2020.
| Sector Analysis | Gross market value as a % of net assets* | Country Analysis | Gross market value as a % of net assets* | ||
| Financials | 31.1 | Indonesia | 12.6 | ||
| Consumer Discretionary | 15.9 | Saudi Arabia | 11.8 | ||
| Materials | 15.1 | Vietnam | 8.6 | ||
| Industrials | 13.5 | Philippines | 7.8 | ||
| Energy | 9.8 | Kazakhstan | 7.3 | ||
| Consumer Staples | 8.2 | Egypt | 7.1 | ||
| Real Estate | 5.9 | Thailand | 6.8 | ||
| Utilities | 3.3 | Greece | 6.5 | ||
| Communication Services | 3.0 | Chile | 5.1 | ||
| Health Care | 2.4 | Malaysia | 4.5 | ||
| Information Technology | 2.2 | Poland | 4.1 | ||
| —– | Turkey | 3.8 | |||
| 110.4 | Pakistan | 3.6 | |||
| —– | United Arab Emirates | 3.3 | |||
| Short positions | -1.1 | Qatar | 3.2 | ||
| ===== | Romania | 2.1 | |||
| Hungary | 1.9 | ||||
| Peru | 1.6 | ||||
| Colombia | 1.5 | ||||
| Pan Africa | 1.5 | ||||
| Pan-Emerging Europe | 1.4 | ||||
| Ukraine | 1.4 | ||||
| Panama | 1.4 | ||||
| Kenya | 1.2 | ||||
| Nigeria | 0.3 | ||||
| —– | |||||
| Total | 110.4 | ||||
| —– | |||||
| Short positions | -1.1 | ||||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 29.02 2020 % | 31.03 2020 % | 30.04 2020 % | 31.05 2020 % | 30.06 2020 % | 31.07 2020 % | 31.08 2020 % | 30.09 2020 % | 31.10 2020 % | 30.11 2020 % | 31.12 2020 % | 31.01 2021 % | |
| Long | 107.1 | 106.4 | 105.9 | 109.6 | 109.8 | 110.3 | 110.2 | 107.8 | 106.9 | 107.3 | 107.9 | 110.4 |
| Short | 3.8 | 2.5 | 2.6 | 2.5 | 1.5 | 1.1 | 0.0 | 0.0 | 0.0 | 0.0 | 1.1 | 1.1 |
| Gross | 110.9 | 108.9 | 108.5 | 112.1 | 111.3 | 111.4 | 110.2 | 107.8 | 106.9 | 107.3 | 109.0 | 111.6 |
| Net | 103.3 | 103.9 | 103.3 | 107.1 | 108.3 | 109.2 | 110.2 | 107.8 | 106.9 | 107.3 | 106.8 | 109.4 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets* |
| Mobile World | Vietnam | 2.9 |
| JSC Kaspi | Kazakhstan | 2.9 |
| PTT Exploration & Production Public | Thailand | 2.8 |
| Emaar Properties | United Arab Emirates | 2.8 |
| Indocement Tunggal Prakarsa | Indonesia | 2.8 |
| CP All PCL | Thailand | 2.6 |
| Eastern Tobacco | Egypt | 2.5 |
| LT Group | Philippines | 2.4 |
| United International Transport | Saudi Arabia | 2.4 |
| National Commercial Bank | Saudi Arabia | 2.3 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
BlackRock Frontiers Investment Trust’s NAV returned +0.1%1 versus the Company’s benchmark (the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”)), which returned -0.7% in January2. For reference, the MSCI Emerging Markets Index ended the month +3.1% and the MSCI Frontier Markets Index +0.4%2 over the same period (all performance figures are on a US Dollar basis with net income reinvested).
January saw mixed news. Many emerging economies continued to see a rebound in activity, whilst those in the western world were mainly plunged into further lock downs following a second wave of Covid-19. Concerns that emerged mid-month around new Covid-19 variants tempered the very strong market moves that we had seen in the first half of the month.
Smaller markets tended to fare better in January, catching up with the strong performance we had seen in larger markets at the end of last year, notably UAE (+12%), Egypt (+8%) and Pakistan (+5%).
Having seen fairly muted returns to our Egyptian positions in 2020, our patience has finally seen some reward. Eastern Tobacco rose 15% after reporting results that beat expectations with the company showing strong cost control. Orascom Construction rose 14% after signing a Memorandum of Understanding with the Egyptian government to develop the first high speed rail line system in the country, an order value of $3bn.
Positions in Vietnam also performed well. Our long standing holding in Mobile World Group reached a new all-time high after reporting better than expected results showing that it’s grocery division had grown to reach 20% of total sales. Tech company, FPT (+6%) also reported better than expected results on the back of a number of contract wins in their software outsourcing division.
On the opposite side of the ledger, increased Covid-19 restrictions have had a negative impact on a number of positions. Saudi Arabian gym operator, Leejam fell 8% as they were forced to close all their gyms for 10 days and the National Bank of Greece fell 14% giving up some of the 150% rally it had seen over the previous 2 months as lockdown restrictions were extended through January.
Over the month we rotated the portfolio somewhat, taking some profits in stocks which have recovered exceptionally well such as Ukrainian miner Ferrexpo and Panamanian airline Copa, whilst also adding new positions in stocks that are yet to see such a recovery such as Colombian Financial Bancolombia and Emirati real estate developer, Emaar Properties.
We continue to be positioned for a rebound in global economic activity which we expect to see over the next six months. We believe that the combination of strong liquidity, easy financial conditions and high levels of disposable income is a very powerful mix for earnings growth, a factor that has been scarce in emerging markets for an extended period. Even now, despite the strong bounce, we believe that frontier and small emerging markets contain some of the best valued companies globally with a number of markets still trading significantly below their average 10 year price to book valuations.
Sources:
1BlackRock as at 31 January 2021
2MSCI as at 31 January 2021
18 February 2020
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
