BlackRock Frontiers Investment Trust plc (LON:BRFI) has announced its portfolio update.
All information is at 31 December 2023 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 | 2.1 | -0.7 | 15.7 | 33.4 | 30.7 | 128.6 |
| Net asset value | 4.3 | 1.4 | 15.9 | 46.1 | 48.0 | 158.2 |
| Benchmark (NR)** | 3.7 | 1.4 | 0.4 | 21.1 | 13.6 | 82.7 |
| MSCI Frontiers Index (NR) | 2.3 | -0.5 | 5.3 | 5.6 | 17.7 | 68.8 |
| MSCI Emerging Markets Index (NR) | 3.2 | 3.3 | 3.6 | -8.3 | 19.7 | 54.8 |
| US Dollars: | ||||||
| Share price | 2.9 | 3.7 | 22.8 | 24.5 | 31.0 | 87.9 |
| Net asset value | 5.1 | 5.9 | 23.0 | 36.4 | 48.3 | 111.9 |
| Benchmark (NR)** | 4.5 | 6.0 | 6.4 | 12.9 | 13.7 | 50.6 |
| MSCI Frontiers Index (NR) | 3.0 | 4.0 | 11.6 | -1.6 | 17.8 | 38.0 |
| MSCI Emerging Markets Index (NR) | 3.9 | 7.9 | 9.8 | -14.5 | 19.8 | 25.6 |
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: | 197.52c |
| Net asset value – cum income: | 203.47c |
| Sterling: | |
| Net asset value – capital only: | 154.94p |
| Net asset value – cum income: | 159.60p |
| Share price: | 143.00p |
| Total assets (including income): | £302.2m |
| Discount to cum-income NAV: | 10.4% |
| 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 | 41.0 | Saudi Arabia | 15.2 | |
| Energy | 14.1 | Indonesia | 13.8 | |
| Industrials | 12.6 | United Arab Emirates | 8.6 | |
| Materials | 11.8 | Philippines | 7.5 | |
| Consumer Staples | 9.7 | Hungary | 7.1 | |
| Consumer Discretionary | 8.5 | Thailand | 6.7 | |
| Real Estate | 6.6 | Kazakhstan | 6.6 | |
| Communication Services | 6.3 | Poland | 5.9 | |
| Information Technology | 5.6 | Vietnam | 5.6 | |
| Health Care | 0.4 | Chile | 5.3 | |
| —– | Colombia | 4.1 | ||
| 116.6 | Qatar | 3.8 | ||
| —– | Malaysia | 3.3 | ||
| Short positions | -4.7 | Greece | 3.1 | |
| ===== | Multi-International | 2.8 | ||
| Turkey | 2.8 | |||
| Czech Republic | 2.5 | |||
| Georgia | 2.1 | |||
| Argentina | 1.9 | |||
| Peru | 1.8 | |||
| Romania | 1.4 | |||
| KuwaitUkraineOmanCambodiaKenyaBangladeshTotal | 1.11.01.00.80.40.4116.6 | |||
| —– | ||||
| Short positions | -4.7 | |||
| ===== | ||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.01 2023 % | 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 % | |
| Long | 112.4 | 111.9 | 106.3 | 108.5 | 112.9 | 116.9 | 113.0 | 113.3 | 114.9 | 118.8 | 113.1 | 116.6 |
| Short | 5.1 | 3.9 | 3.9 | 3.8 | 3.6 | 4.0 | 3.0 | 3.0 | 3.0 | 3.1 | 4.6 | 4.7 |
| Gross | 117.5 | 115.8 | 110.2 | 112.3 | 116.5 | 120.9 | 116.0 | 116.3 | 117.9 | 121.9 | 118.0 | 121.3 |
| Net | 107.3 | 108.0 | 102.4 | 104.7 | 109.3 | 112.9 | 110.0 | 110.3 | 111.9 | 115.7 | 108.8 | 111.9 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Saudi National Bank | Saudi Arabia | 4.7 |
| Bank Central Asia | Indonesia | 4.2 |
| Emaar Properties | United Arab Emirates | 3.4 |
| Ayala Land | Philippines | 3.2 |
| Epam Systems | Multi-International | 2.8 |
| Wizz Air Holdings | Hungary | 2.8 |
| FPT | Vietnam | 2.8 |
| Eldorado Gold | Turkey | 2.8 |
| Advanced Info Service | Thailand | 2.7 |
| CP All | Thailand | 2.7 |
Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz, representing the Investment Manager noted:
The Company’s NAV rose by 5.1% in December, outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which returned 4.5%. For reference, the MSCI Emerging Markets Index was up 3.9% while the MSCI Frontier Markets Index was up 3.0% over the same period. All performance figures are on a US Dollar basis with net income reinvested.
December was another strong month for many of our markets. Latin America was the best performing region, with Peru (+24.5%) and Colombia (+13.5%) performing best while Poland (+8.2%) led in EMEA. Market reaction was upbeat to the return of Donald Tusk as PM since a pro-EU coalition government under Tusk (a former president of the European Council) is expected to unblock EU funding earmarked for Poland. Qatar and Saudi Arabia were other notable outperformers in the region. In Asia, Thailand was the best performing market, up by 5.9%.
Several stock picks did well in December. Hungarian low-cost carrier Wizz Air (+18.2%) was the top performing stock for a second consecutive month, rebounding from previous lows. IT services company EPAM (+15.2%) also continued its strong run. Portfolio performance was further supported by our positioning in Latin America through our holding in Chilean natural resources company SQM (+20.6%) and Colombian bank Bancolombia (+13.9%). The former performed well in anticipation of and the announcement of the partnership with Codelco, which has extended their lease in the Atacama until 2060. On the other hand, the Kazakh payments and e-commerce company Kaspi (-9.8%) pulled back some of its gains after reaching an all-time high at the end of November.
Over the course of December, we made few changes to the portfolio. We initiated a position in Polish clothing manufacturer LPP as we are optimistic about the company’s ability to expand in Southern Europe and based on our view that declining rates will be supportive for consumption. We also topped up our holding in Hungarian oil and gas company MOL, a high yielding stock. We trimmed our positions in polish bank PKO and National Bank of Greece, on the back of strong performance. We exited our holding in Philippines based conglomerate LT Group, as we see downside risk to the company’s tobacco business volumes.
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 imminent 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 December 2023
2MSCI as at 31 December 2023
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
