BlackRock Frontiers Investment Trust plc (LON:BRFI) has announced its latest portfolio update.
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
All information is at 30 September 2023 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 | -0.3 | 5.9 | 17.7 | 75.1 | 28.8 | 130.2 |
| Net asset value | 0.3 | 5.1 | 14.4 | 80.6 | 43.4 | 154.6 |
| Benchmark (NR)** | 0.2 | 2.7 | -3.9 | 31.3 | 11.7 | 80.1 |
| MSCI Frontiers Index (NR) | -0.1 | 6.2 | -2.6 | 11.5 | 15.8 | 69.6 |
| MSCI Emerging Markets Index (NR) | 1.1 | 1.1 | 2.2 | 0.5 | 9.8 | 49.9 |
| US Dollars: | ||||||
| Share price | -4.0 | 1.7 | 28.8 | 65.4 | 20.7 | 81.1 |
| Net asset value | -3.4 | 0.9 | 25.1 | 70.6 | 34.4 | 100.0 |
| Benchmark (NR)** | -3.5 | -1.4 | 5.0 | 23.9 | 4.5 | 42.1 |
| MSCI Frontiers Index (NR) | -3.8 | 2.0 | 6.5 | 5.3 | 8.4 | 32.8 |
| MSCI Emerging Markets Index (NR) | -2.6 | -2.9 | 11.7 | -5.1 | 2.8 | 17.3 |
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: | 186.72c |
| Net asset value – cum income: | 192.06c |
| Sterling: | |
| Net asset value – capital only: | 152.98p |
| Net asset value – cum income: | 157.35p |
| Share price: | 144.00p |
| Total assets (including income): | £298.0m |
| Discount to cum-income NAV: | 8.5% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.1% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.36% |
| Ongoing charges plus taxation and performance fee****: | 1.36% |
*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.1% 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 paid 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 | 39.1 | Saudi Arabia | 15.4 | |
| Industrials | 15.2 | Indonesia | 14.3 | |
| Energy | 13.7 | United Arab Emirates | 8.5 | |
| Materials | 11.3 | Thailand | 8.4 | |
| Consumer Staples | 10.6 | Kazakhstan | 7.6 | |
| Information Technology | 7.3 | Philippines | 7.3 | |
| Communication Services | 6.6 | Hungary | 5.9 | |
| Consumer Discretionary | 6.0 | Vietnam | 5.8 | |
| Real Estate | 4.7 | Chile | 5.5 | |
| Health Care | 0.4 | Malaysia | 4.7 | |
| —– | Qatar | 4.7 | ||
| 114.9 | Poland | 4.2 | ||
| —– | Colombia | 3.3 | ||
| Short positions | -3.0 | Multi-International | 2.6 | |
| ===== | Argentina | 2.1 | ||
| Turkey | 2.0 | |||
| Georgia | 2.0 | |||
| Czech Republic | 2.0 | |||
| Greece | 1.5 | |||
| Peru | 1.3 | |||
| Romania | 1.2 | |||
| Kuwait | 1.1 | |||
| Cambodia | 1.0 | |||
| Egypt | 1.0 | |||
| Ukraine | 0.6 | |||
| Kenya | 0.5 | |||
| Bangladesh | 0.4 | |||
| —– | ||||
| Total | 114.9 | |||
| —– | ||||
| Short positions | -3.0 | |||
| ===== | ||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.10 2022 % | 30.11 2022 % | 31.12 2022 % | 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 % | |
| Long | 107.4 | 106.2 | 110.7 | 112.4 | 111.9 | 106.3 | 108.5 | 112.9 | 116.9 | 113.0 | 113.3 | 114.9 |
| Short | 5.3 | 4.8 | 4.9 | 5.1 | 3.9 | 3.9 | 3.8 | 3.6 | 4.0 | 3.0 | 3.0 | 3.0 |
| Gross | 112.7 | 111.0 | 115.6 | 117.5 | 115.8 | 110.2 | 112.3 | 116.5 | 120.9 | 116.0 | 116.3 | 117.9 |
| Net | 102.1 | 101.4 | 105.8 | 107.3 | 108.0 | 102.4 | 104.7 | 109.3 | 112.9 | 110.0 | 110.3 | 111.9 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Bank Central Asia | Indonesia | 4.6 |
| Saudi National Bank | Saudi Arabia | 4.2 |
| JSC Kaspi | Kazakhstan | 3.2 |
| Bank Mandiri | Indonesia | 3.1 |
| Astra International | Indonesia | 3.0 |
| Emaar Properties | United Arab Emirates | 2.9 |
| FPT | Vietnam | 2.8 |
| CP All | Thailand | 2.8 |
| Saudi Basic Industries Corporation | Saudi Arabia | 2.8 |
| Advanced Info Service | Thailand | 2.8 |
Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz, representing the Investment Manager noted:
The Company’s NAV fell by 3.4% in September, marginally outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which fell by 3.5%. For reference, the MSCI Emerging Markets Index was down by 2.6% while the MSCI Frontier Markets Index was down by 3.8% over the same period. All performance figures are on a US Dollar basis with net income reinvested.
Performance was weak for several of the markets in our universe in September. A strong rally in Oil was not able to lead emerging market equities into positive territory as September was mostly dominated by a risk-off sentiment. In Latin America, all countries posted negative returns except for Colombia (+4.5%). European markets also lagged with Poland and Greece down by 11.2% and 10.4% respectively. On the other hand, the United Arab Emirates (UAE) (+4.5%) was amongst the top performers over the month, buoyed by a booming property market.
Several stock picks did well in September. Nak Kazatomprom (41.7%), the Kazakh uranium producer, was the best performing stock. Uranium prices have surged over the past year as nuclear power re-emerges as an alternative energy source to fossil fuel. Gulf International Services (+11.4%), the Qatar-based oil services holding company, continued its strong run and was another contributor over the month. Elsewhere in our universe, Argentina exposure through energy company Vista (+13.6%) also helped performance. We are seeing an impressive growth in shale production and the company is expected to double production over the next few years. On the other hand, the Hungarian low-cost carrier Wizz Air (-18.3%) was the biggest detractor in September. Along with other airlines, they are impacted by the Pratt & Whitney engine issue headlines. We think the market is misunderstanding the impact of this on financials and the company has significant competitive advantages and is trading at cheap multiples.
We made some changes to the portfolio in September. We re-initiated a position in Bloomberry Resorts, a Philippines based resort and casino operator, on the view that strong volume growth will continue and that leverage is likely to fall from current levels. Elsewhere in Asia, we initiated a new position in Pentamaster which is positioned for strong growth from services it provides to silicon carbide chip manufacturers. We reduced our exposure to Thailand on the view that the new government is unlikely to implement any economic reform. In Europe, we took profits in Hungarian bank OTP.
We believe global markets are still adjusting to a significantly higher cost of capital and remain vulnerable to unexpected hiccups such as the liquidity crisis in the regional banking space in the US. However, 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 we believe this could enable potentially compelling alpha opportunities.
Sources:
1BlackRock as at 30 September 2023
2MSCI as at 30 September 2023
You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi
