BlackRock Frontiers Portfolio Update
May 19 2023 - 8:46AM
UK Regulatory
TIDMBRFI
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 30 April 2023 and unaudited.
Performance at month end with net income reinvested.
One Three One Three Five Since
month months year years years Launch*
% % % % % %
Sterling:
Share price 0.4 -0.7 4.0 74.5 2.3 112.1
Net asset value 2.5 2.6 2.1 78.0 16.1 135.8
Benchmark (NR)** 1.3 -1.9 -8.9 35.3 8.3 79.2
MSCI Frontiers Index (NR) -1.1 -2.9 -14.9 18.7 -1.6 58.9
MSCI Emerging Markets Index (NR) 0.2 -3.9 -3.8 17.4 7.1 51.3
US Dollars:
Share price 2.0 1.3 4.2 74.0 -6.5 71.9
Net asset value 4.2 4.7 2.3 77.5 6.1 90.7
Benchmark (NR)** 3.0 0.1 -8.8 34.8 -1.2 45.5
MSCI Frontiers Index (NR) 0.5 -0.8 -14.8 18.3 -10.2 28.1
MSCI Emerging Markets Index (NR) 0.2 -3.5 -5.3 15.1 -3.8 20.0
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: 182.56c
Net asset value - cum income: 186.15c
Sterling:
Net asset value - capital only: 145.25p
Net asset value - cum income: 148.10p
Share price: 135.00p
Total assets (including income): £280.4m
Discount to cum-income NAV: 8.8%
Gearing: nil
Gearing range (as a % of gross assets): 0-20%
Net yield*: 4.2%
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 4.2% and includes the 2022
interim dividend of 2.75 cents per share, declared on 26 May 2022, and paid to
shareholders on 24 June 2022 and the 2022 final dividend of 4.25 cents per
share, declared on 8 December 2022, and payable to shareholders on 19 January
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 Gross market Country Gross market value as
Analysis value as a % of Analysis a % of net assets
net assets
Financials 38.5 Indonesia 17.4
Industrials 14.5 Saudi Arabia 15.5
Energy 14.5 United Arab Emirates 8.1
Materials 13.6 Kazakhstan 8.0
Consumer Staples 10.2 Vietnam 7.8
Information Technology 5.4 Thailand 7.4
Communication Services 4.4 Hungary 7.4
Consumer Discretionary 3.2 Chile 5.9
Real Estate 2.6 Greece 4.3
Health Care 1.6 Poland 3.5
----- Qatar 3.1
108.5 Colombia 2.7
----- Argentina 2.5
Short positions -3.8 Egypt 2.3
===== Philippines 1.9
Panama 1.9
Peru 1.7
Georgia 1.7
Malaysia 1.5
Kuwait 1.3
Romania 1.0
Kenya 0.7
Cambodia 0.6
Ukraine 0.3
-----
Total 108.5
-----
Short positions -3.8
=====
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
31.05 30.06 31.07 31.08 30.09 31.10 30.11 31.12 31.01 28.02 31.03 30.04
2022 2022 2022 2022 2022 2022 2022 2022 2023 2023 2023 2023
% % % % % % % % % % % %
Long 107.9 106.1 107.3 107.3 106.2 107.4 106.2 110.7 112.4 111.9 106.3 108.5
Short 4.7 4.6 6.2 5.3 5.2 5.3 4.8 4.9 5.1 3.9 3.9 3.8
Gross 112.6 110.7 113.5 112.6 111.4 112.7 111.0 115.6 117.5 115.8 110.2 112.3
Net 103.2 101.5 101.1 102.0 101.0 102.1 101.4 105.8 107.3 108.0 102.4 104.7
Ten Largest Investments
Company Country of Risk Gross market value as a
% of net assets
Bank Central Asia Indonesia 5.1
Astra International Indonesia 3.9
PKO Bank Polski Poland 3.5
Saudi Basic Industries Corp Saudi Arabia 3.2
Abdullah Al Othaim Markets Saudi Arabia 3.2
JSC Kaspi Kazakhstan 3.1
OTP Bank Hungary 3.0
Bank Mandiri Indonesia 2.9
Wizz Air Holdings Hungary 2.9
Halyk Savings Bank Kazakhstan 2.8
Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz,
representing the Investment Manager noted:
The Company's NAV was up by 4.2% in April, strongly outperforming its
benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi
Arabia Index ("Benchmark Index") which was up by 3%. For reference, the MSCI
Emerging Markets Index had relatively muted performance and returned 0.2% while
the MSCI Frontier Markets Index was up by 0.5% over the same period. All
performance figures are on a US Dollar basis with net income reinvested.
The Company's outperformance was primarily driven by country allocation
particularly in Eastern Europe where gas prices moved close to the lowest
levels since the beginning of the energy crisis boosting hopes of a stronger
economic recovery and buoying equity markets. Oil prices also retreated to near
levels seen before Russia's invasion of Ukraine. This decline in energy prices
and commodities at large should help temper the outlook for global inflation.
We observe a growing consensus around peak US interest rates. A gradual
reversal from here should bode positively for emerging markets, with the caveat
of an unexpectedly severe recession in the US.
In our universe, Eastern European markets were the top performers, notably
Poland (+13%), supported by strong earnings from the banking sector and
optimism surrounding the consumer recovery. Elsewhere, Indonesia (+7%) did well
from the gradual structural shift underway in its balance of payments from
downstream nickel exports. On the other hand, equity markets in Turkey (-5%)
and Thailand (-3%) were challenged given increased political uncertainty from
general elections in both countries in May.
Several stock picks did well in April. It is encouraging to see earnings
delivery and capital return by our holdings starting to reflect in market
valuations. Polish Bank PKO (+17%) was the top performer following strong
earnings results. Indonesian auto conglomerate Astra International (+15%)
performed well given good results, and importantly, improved capital returns
via larger than anticipated dividend payment. Kazakh bank Halyk (+16%) also
contributed positively during the month on back of strong results and capital
return. On the other side, Colombian bank Bancolombia was the weakest link
(-12%) from the unexpected dismissal of the country's finance minister. Mitra
Adiperkasa (-7%) was the second worst performer; we believe this is from
short-term profit taking as the Indonesian consumer confidence remains robust.
We made few changes to the portfolio in April. We trimmed our exposure to
Colombia following news of the change in finance minister. We took some profits
across a few names such as Saudi grocery operator Al Othaim which had an
outsized move on heels of a bonus stock dividend and also in Argentinian energy
company Vista on strong performance.
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 this should enable
compelling alpha opportunities.
Sources:
1BlackRock as at 30 April 2023
2MSCI as at 30 April 2023
19 May 2023
ENDS
Latest information is available by typing www.blackrock.com/uk/brfi on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV
terminal). Neither the contents of the Manager's website nor the contents of
any website accessible from hyperlinks on BlackRock's website (or any other
website) is incorporated into, or forms part of, this announcement.
END
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