BlackRock Frontiers Investment Trust plc (LON:BRFI) has provided its latest portfolio update.
All information is at 28 February 2021 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 | -1.9 | 8.9 | 17.2 | -17.5 | 36.9 | 69.6 |
| Net asset value | 1.3 | 6.7 | 14.1 | -13.4 | 39.9 | 78.3 |
| Benchmark (NR)** | -1.1 | -0.4 | 0.0 | -10.1 | 33.0 | 47.5 |
| MSCI Frontiers Index (NR) | -1.7 | 1.5 | -1.0 | -4.9 | 40.7 | 57.2 |
| MSCI Emerging Markets Index (NR) | -1.0 | 6.5 | 24.3 | 18.5 | 102.6 | 71.4 |
| US Dollars: | ||||||
| Share price | -0.1 | 14.0 | 28.3 | -16.2 | 37.4 | 52.7 |
| Net asset value | 3.2 | 11.7 | 24.9 | -12.1 | 40.4 | 60.3 |
| Benchmark (NR)** | -0.7 | 3.0 | 8.0 | -10.0 | 31.7 | 31.6 |
| MSCI Frontiers Index (NR) | 0.1 | 6.3 | 8.4 | -3.5 | 41.2 | 40.9 |
| MSCI Emerging Markets Index (NR) | 0.8 | 11.5 | 36.0 | 20.3 | 103.2 | 53.7 |
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: | 167.70c |
| Net asset value – cum income: | 169.15c |
| Sterling: | |
| Net asset value – capital only: | 119.96p |
| Net asset value – cum income: | 120.99p |
| Share price: | 117.25p |
| Total assets (including income): | £229.1m |
| Discount to cum-income NAV: | 3.1% |
| 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: | 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 4.5% and includes the 2020 final dividend of 4.25 cents per share declared on 11 December 2020 which paid on 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 | 31.9 | Saudi Arabia | 14.1 | ||
| Materials | 16.6 | Indonesia | 12.6 | ||
| Consumer Discretionary | 15.6 | Vietnam | 10.6 | ||
| Industrials | 13.0 | Kazakhstan | 8.0 | ||
| Energy | 11.0 | Thailand | 7.4 | ||
| Consumer Staples | 8.9 | Egypt | 6.8 | ||
| Real Estate | 5.4 | Greece | 6.3 | ||
| Information Technology | 3.3 | Philippines | 5.5 | ||
| Utilities | 3.0 | Chile | 5.0 | ||
| Communication Services | 2.7 | Malaysia | 4.2 | ||
| Health Care | 2.6 | Turkey | 4.0 | ||
| —– | United Arab Emirates | 3.9 | |||
| 114.0 | Poland | 3.9 | |||
| —– | Pakistan | 3.5 | |||
| Short positions | -4.5 | Qatar | 3.0 | ||
| ===== | Hungary | 2.2 | |||
| Peru | 2.0 | ||||
| Romania | 1.9 | ||||
| Panama | 1.6 | ||||
| Pan-Emerging Europe | 1.5 | ||||
| Ukraine | 1.5 | ||||
| Colombia | 1.4 | ||||
| Pan Africa | 1.4 | ||||
| Kenya | 1.2 | ||||
| Nigeria | 0.5 | ||||
| —– | |||||
| Total | 114.0 | ||||
| —– | |||||
| Short positions | -4.5 | ||||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 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 2020 % | 28.02 2020 % | |
| Long | 106.4 | 105.9 | 109.6 | 109.8 | 110.3 | 110.2 | 107.8 | 106.9 | 107.3 | 107.9 | 110.4 | 114.0 |
| Short | 2.5 | 2.6 | 2.5 | 1.5 | 1.1 | 0.0 | 0.0 | 0.0 | 0.0 | 1.1 | 1.1 | 4.5 |
| Gross | 110.9 | 108.9 | 108.5 | 112.1 | 111.3 | 111.4 | 110.2 | 107.8 | 106.9 | 107.3 | 109.0 | 118.5 |
| Net | 103.3 | 103.9 | 103.3 | 107.1 | 108.3 | 109.2 | 110.2 | 107.8 | 106.9 | 107.3 | 106.8 | 109.5 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets* |
| Mobile World | Vietnam | 3.8 |
| FPT | Vietnam | 3.3 |
| Bk Rakyat | Indonesia | 3.3 |
| JSC Kaspi | Kazakhstan | 3.1 |
| CP All PCL | Thailand | 3.1 |
| National Commercial Bank | Saudi Arabia | 3.1 |
| PTT Exploration & Production Public | Thailand | 3.0 |
| Yanbu National Petrochemical | Saudi Arabia | 2.8 |
| Tupras | Turkey | 2.6 |
| Sahara International Petrochemical | Saudi Arabia | 2.6 |
*These percentages reflect portfolio exposure gained from both the equity holdings and exposure through contracts for differences where relevant.
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company’s NAV returned +3.2%1 versus the Company’s benchmark (the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”)), which returned -0.7% in February2. For reference, the MSCI Emerging Markets Index ended the month +0.8% and the MSCI Frontier Markets Index +0.1%2 over the same period (all performance figures are on a US Dollar basis with net income reinvested).
February saw the hope of eventual reopening spread further through frontier markets. Whilst the majority of countries are still at early stages with their vaccination programs, frontier markets have started to price the expectation of reopening.
For emerging markets, February was a volatile month with markets driven by a rotation favouring cyclicality to the detriment of growth and momentum. The rotation was more muted within the smaller markets, but sufficient to see many of our “reopening” and more cyclical trades benefit. Indicators suggest that US household wealth actually rose substantially through 2020 and as a result of this pent-up demand, we expect to see a sharp acceleration in growth as the economy reopens. At the same time, what started as price rises due to supply side constraints in the commodities sector, has been met with this strong emergence of demand, causing the majority of both soft and hard commodities to reach prices that we haven’t seen for multiple years. There is, as yet, little sign of inflation picking up in the vast majority of markets, however, but we do expect some pick up over the next quarters.
Kazakhstan was the best performing country for the month. Uranium miner, Kazatomprom, rose 27% as investors concluded that a shift towards lower carbon sources of energy would likely results in an increased emphasis on nuclear energy, particularly in China, benefiting Uranium prices. Fintech, Kaspi rose 12% as the company continued to show very strong growth trends, building on its very high market share in payments in Kazakhstan. February was also a good month for Vietnam. IT outsourcer, FPT, rose 22% after reporting better than expected results, with profits up 13% compared with the previous year, despite the COVID impact. Soy milk producer, Quang Ngai Sugar, rose 14% following the increase in sugar prices in Vietnam.
Our position in wind energy stock, Terna Energy, was the weakest performer over the month, falling 14% as the company’s Texas operations froze in the abnormally cold weather. This meant that Terna was forced to purchase electricity on grid at extremely high prices to cover its contract obligations. Whilst this had a significant impact on the company, the maximum liability for this event is known and we continue to think the company offers a very interesting growth profile through its Greek assets.
We have increased our exposure our exposure to a number of companies which are currently benefiting from the strong trends in commodity prices, including Titan Cement and methanol producer, Sahara International Petrochemical. This has been funded from a reduction some of the exposure that we had to “carry” countries, those with greater debt loads, who are more reliant on foreign capital investment, such as Indonesia and the Philippines. We believe that frontier markets continue to look very attractive both on a relative and absolute basis, containing 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 28 February 2021
2MSCI as at 28 February 2021
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
