BlackRock Frontiers Investment Trust plc (LON:BRFI) has announced its latest portfolio update.
All information is at 31 May 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 | 0.2 | -1.3 | 9.0 | 68.7 | 7.9 | 112.5 |
| Net asset value | 0.5 | 2.1 | 8.4 | 70.7 | 22.3 | 136.8 |
| Benchmark (NR)** | -3.2 | -2.7 | -8.3 | 24.7 | 7.5 | 73.5 |
| MSCI Frontiers Index (NR) | 0.8 | -1.3 | -8.1 | 10.9 | 5.5 | 60.2 |
| MSCI Emerging Markets Index (NR) | -0.3 | -2.2 | -6.9 | 10.5 | 3.8 | 46.5 |
| US Dollars: | ||||||
| Share price | -1.2 | 1.1 | 7.3 | 69.3 | 0.6 | 69.8 |
| Net asset value | -0.9 | 4.6 | 6.7 | 71.3 | 14.0 | 88.9 |
| Benchmark (NR)** | -3.2 | 1.0 | -8.6 | 26.7 | 1.5 | 40.9 |
| MSCI Frontiers Index (NR) | -0.6 | 1.0 | -9.6 | 11.2 | -1.7 | 27.3 |
| MSCI Emerging Markets Index (NR) | -1.7 | 0.2 | -8.5 | 10.8 | -3.3 | 16.5 |
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: | 178.45c |
| Net asset value – cum income: | 184.41c |
| Sterling: | |
| Net asset value – capital only: | 143.97p |
| Net asset value – cum income: | 148.78p |
| Share price: | 135.25p |
| Total assets (including income): | £281.7m |
| Discount to cum-income NAV: | 9.1% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.4% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.4% |
| 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 2022 final dividend of 4.25 cents per share, declared on 8 December 2022, and paid to shareholders on 19 January 2023, and the 2023 interim dividend of 3.10 cents per share, declared on 6 June 2023, and payable to shareholders on 7 July 2023.
** 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 2022.
**** 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 2022.
| Sector Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | |
| Financials | 37.0 | Indonesia | 17.2 | |
| Materials | 15.4 | Saudi Arabia | 15.4 | |
| Energy | 15.2 | Thailand | 12.0 | |
| Industrials | 13.0 | Vietnam | 8.2 | |
| Consumer Staples | 12.0 | United Arab Emirates | 8.0 | |
| Consumer Discretionary | 5.7 | Kazakhstan | 7.5 | |
| Information Technology | 5.6 | Hungary | 7.1 | |
| Communication Services | 4.5 | Chile | 6.7 | |
| Real Estate | 2.7 | Qatar | 4.3 | |
| Health Care | 1.8 | Greece | 3.8 | |
| —– | Poland | 3.5 | ||
| 112.9 | Colombia | 2.5 | ||
| —– | Egypt | 2.4 | ||
| Short positions | -3.6 | Argentina | 1.9 | |
| ===== | Philippines | 1.9 | ||
| Georgia | 1.7 | |||
| Peru | 1.6 | |||
| Malaysia | 1.5 | |||
| Turkey | 1.4 | |||
| Kuwait | 1.2 | |||
| Cambodia | 1.2 | |||
| Romania | 1.0 | |||
| Kenya | 0.6 | |||
| Ukraine | 0.3 | |||
| —– | ||||
| Total | 112.9 | |||
| —– | ||||
| Short positions | -3.6 | |||
| ===== | ||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 30.06 2022 % | 31.07 2022 % | 31.08 2022 % | 30.09 2022 % | 31.10 2022 % | 30.11 2022 % | 31.12 2022 % | 31.01 2023 % | 28.02 2023 % | 31.03 2023 % | 30.04 2023 % | 31.05 2023 % | |
| Long | 106.1 | 107.3 | 107.3 | 106.2 | 107.4 | 106.2 | 110.7 | 112.4 | 111.9 | 106.3 | 108.5 | 112.9 |
| Short | 4.6 | 6.2 | 5.3 | 5.2 | 5.3 | 4.8 | 4.9 | 5.1 | 3.9 | 3.9 | 3.8 | 3.6 |
| Gross | 110.7 | 113.5 | 112.6 | 111.4 | 112.7 | 111.0 | 115.6 | 117.5 | 115.8 | 110.2 | 112.3 | 116.5 |
| Net | 101.5 | 101.1 | 102.0 | 101.0 | 102.1 | 101.4 | 105.8 | 107.3 | 108.0 | 102.4 | 104.7 | 109.3 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Bank Central Asia | Indonesia | 5.0 |
| Astra International | Indonesia | 3.7 |
| PKO Bank Polski | Poland | 3.5 |
| Abdullah Al Othaim Markets | Saudi Arabia | 3.1 |
| Saudi Basic Industries Corp | Saudi Arabia | 3.1 |
| Bangkok Bank | Thailand | 3.1 |
| OTP Bank | Hungary | 3.1 |
| JSC Kaspi | Kazakhstan | 3.0 |
| FPT | Vietnam | 2.9 |
| Bank Mandiri | Indonesia | 2.8 |
Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz, representing the Investment Manager noted:
The Company’s NAV is down by 0.9% in May, strongly outperforming its benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which fell by 3.2%. For reference, the MSCI Emerging Markets Index was down by 1.7% while the MSCI Frontier Markets Index was down by 0.6% over the same period. All performance figures are on a US Dollar basis with dividends reinvested.
Greece rallied 8.7% and was the best performing market. Financials led the surge, up by 15% in May and 42% YTD. Greece held general elections on 21 May, new democracy, led by Prime Minister Mitsotakis picked up 41% of the vote versus Syriza’s 20%, significantly ahead of polling expectations. It was an action-packed month in Frontier markets, with Thailand and Turkey also holding general elections. Thailand held elections on 14th May to elect 500 members of the House of Representatives. The pro-liberal opposition party, Move Forward (MF) won the most seats (151), followed by Pheu Thai (PT) (141). The military-backed incumbent party, Bhumjaithai, came in third with 68 seats. Uncertainty persists with regards to MF’s ability to form a government, but if it materializes, we believe it could mark a positive turning point towards stronger long-term growth prospects for the Thai economy. The Thai market was fairly muted, down by 3% for the month. Further west, Turkey (-1.6%) held elections in mid-May, where President Erdogan, who has been in power for twenty years, secured another five-year term. We do not have any direct exposure to Turkey and will likely remain on the side-lines till the external imbalances have cleared up. However, we do have some exposure via our holding in Eldorado Gold Corporation. This is a Canadian gold mining firm with several operations in Turkey, and the position reflects our positive view on gold. Elsewhere, most countries in the Middle East and in Latin America also finished the month in the red.
The Company outperformed strongly over the month. Stock picks in Indonesia were the top contributor. Indonesian retailer Mitra Adiperkasa (+27%) rallied after a bout of short-term profit taking in April. Consumer confidence indicators in Indonesia remain robust. Kazakhstan’s Halyk Bank (+13%) was also a big contributor. The bank recently reinstated significant dividend payouts after complying with new regulations; it trades on approximately 15% dividend yield today. National Bank of Greece (+18%) also did well. On the other side, Thai oil and gas company PTT (-15%) detracted from performance.
We made few changes to the portfolio in May. We increased our exposure to Thailand as we believe the election results can be a significant positive if MF forms the government, and the country should also continue to benefit from a recovery in tourism. We topped up holdings in Bangkok Bank, Airports of Thailand and hospital operator BDMS. We took profits in National Bank of Greece. We exited pan-American airline Copa as the stock reached out target price following a strong earnings release.
We believe global markets and economies are still adjusting to a significantly higher cost of capital. Through the last few years, we have observed a marked contrast in the monetary and fiscal policy decisions taken in small emerging/frontier markets versus developed markets and this keeps us optimistic on our opportunity set. Our investment universe, in absolute and relative terms, remains under-researched and this should enable compelling alpha opportunities.
Sources:
1BlackRock as at 31 May 2023
2MSCI as at 31 May 2023
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
