Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 30 September 2017 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 -4.3 0.3 19.8 28.5 120.6 84.5
Net asset value -3.2 1.2 17.8 31.7 109.1 84.9
MSCI Frontiers Index (NR) -2.0 4.6 21.5 16.0 82.9 54.2
MSCI Emerging Markets Index (NR) -4.3 4.5 18.6 39.5 46.3 33.7
US Dollars:
Share price -0.4 3.6 23.7 6.4 83.6 59.2
Net asset value 0.8 4.6 21.6 9.0 73.9 59.3
MSCI Frontiers Index (NR) 2.0 8.0 25.5 -4.0 52.0 32.7
MSCI Emerging Markets Index (NR) -0.4 7.9 22.5 15.4 21.6 15.1

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.
 

At month end
Ordinary Shares
US Dollar
Net asset value - capital only: 192.16c
Net asset value - cum income: 196.96c
Sterling:
Net asset value - capital only: 143.24p
Net asset value - cum income: 146.82p
Share price: 149.00p
Total assets (including income): £261.1m
Premium to cum-income NAV: 1.5%
Gearing: nil
Gearing range (as a % of gross assets): 0-20%
Net yield*: 3.6%
Ordinary shares in issue: 177,868,108
Ongoing charges**: 1.4%
Ongoing charges plus taxation and performance fee: 2.4%

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.6% and includes the 2016 final dividend of 4.00 cents per share declared on 22 November 2016 and paid to shareholders on 17 February 2017 and the 2017 interim dividend of 2.70 cents per share announced on 25 May 2017 and paid to shareholders on 30 June 2017.

**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2016.
 

Sector
Analysis
Gross
assets(%)*
Country
Analysis
Gross
assets(%)*
Financials 35.9 Argentina 19.8
Consumer Staples 13.2 Kuwait 12.1
Energy 11.5 Vietnam 10.5
Health Care 9.9 Romania 9.5
Telecommunication Services 8.1 Egypt 7.2
Materials 7.3 Kazakhstan 7.0
Industrials 6.0 Morocco 6.0
Real Estate 5.5 Ukraine 5.2
Utilities 5.4 Sri Lanka 4.7
Information Technology 3.3 Bangladesh 4.2
Consumer Discretionary 1.6 Nigeria 4.0
        ----- Kenya 3.4
Total 107.7 Philippines 2.5
----- Eurasia 2.1
Short positions 0.0 Slovenia 2.1
===== Colombia 2.0
Estonia 2.0
Tanzania 1.8
PAN-LATAM 1.5
PAN-Middle East 0.1
-----
Total 107.7
-----
Short positions 0.0
=====

*reflects gross market exposure from contracts for difference (CFDs).

Market Exposure
 

31.10
 2016
    %
30.11
 2016
    %
31.12
 2016
    %
31.01
 2017
    %
28.02
 2017
    %
31.03
 2017
    %
30.04
 2017
    %
31.05
 2017
    %
30.06
 2017
    %
31.07
 2017
    %
31.08 2017
    %
  
30.09
 2017
    %
Long 106.4 102.3 108.4 115.0 115.8 112.1 108.9 105.0 103.9 106.6 107.9 107.7
Short  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0  0.0
Gross 106.4 102.3 108.4 115.0 115.8 112.1 108.9 105.0 103.9 106.6 107.9 107.7
Net 106.4 102.3 108.4 115.0 115.8 112.1 108.9 105.0 103.9 106.6 107.9 107.7


Ten Largest Equity Investments

Company Country of Risk % of gross assets
Mobile Telecommunications Kuwait 3.0
Grupo Financiero Galicia Argentina 3.0
Pampa Energia Argentina 2.9
Irsa Inversiones GDR Argentina 2.9
Halyk Savings Bank Kazakhstan 2.9
Equity Group Kenya 2.7
MHP Ukraine 2.6
Burgan Bank Kuwait 2.3
Square Pharmaceuticals Bangladesh 2.2
S.N.G.N Romgaz Romania 2.2


Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:

In September, the Company’s NAV rose by 0.8%(1) on a US Dollar basis with net income reinvested. Its benchmark, the MSCI Frontier benchmark rose by 2.0%(3)  whilst the MSCI Emerging Markets Index returned -0.4%(3) both on a US Dollar basis over the same period.

The Argentinean market continued to perform strongly in September, rising by 10.8%(1) and benefiting the absolute performance of the portfolio which holds nearly 20%(1) in the country. Performance was driven by banks. Banco Galicia and Grupo Supervielle followed the trend of their peers earlier in the summer and raised capital to allow them to continue to participate in the strong local loan demand. Given the multiples that the stocks are trading on, and the term structure in the local market, raising equity was earnings accretive for both these banks and both deals were oversubscribed. We added to positions in both of these banks in the placings.  

On the politics side, following a better than expected showing in the mandatory primaries in August, President Mauricio Macri’s business and reform friendly coalition has been improving its standing in the polls in the run up to the end of October elections. The expectations of strong growth and lower inflation for Argentina in 2018 provide a testament to the reform-oriented agenda of President Macri, who has opened up the economy and pushed market-friendly policies that have put Argentina back on track. With Macri’s political support strengthened and markets responding well, he will have the ability to advance new reforms and build on his successes as his second year in office ends.  

Vietnam (+4.3%)(1) also continued to perform strongly in September. In particular, food and beverage company, Masan Group (+16.0%)(1), rallied during the month as it announced a buyback of 10% of the outstanding shares, hence the overweight position in the stock contributed positively to portfolio returns.

In Kazakhstan, our off-benchmark holding in mobile operator, KCell (+36.5% over the month(1)), was a notable performer.  The company continued the positive momentum on the back of the guidance for the positive tariff revisions and more optimistic outlook in the second half of 2017. We have been trimming our position in the stock on the back of this strong recent performance.

Kenya (-4.0%)(1) declined in September.  The presidential elections held in August were annulled by the Supreme Court, describing the polls as “neither transparent nor verifiable” and blaming the country’s electoral commission for the shortcomings. The election is scheduled to be re-run on 26 October 2017, despite the withdrawal of Raila Odinga, the opposition candidate. We continue to hold positions in Equity Bank, in anticipation of a return to growth within the economy post the elections. 

In Romania (-3.2%)(1) banks declined on the back of talks on the potential introduction of a tax on bank assets. The discussions were around introducing a tax of around 0.2%-0.3%(2) on the banks’ assets, which although cancelled, still left the market nervous and sceptical on the back of the news.

A position in recent Latin American pharmaceutical Initial Public Offering (IPO), Biotoscana, also hurt performance as it fell more than 10%(1) during the month.  Post the end of the month, the company announced that it had agreed a new partnership with Eisai for four molecules: Halaven, Lenvima, Fycompa and Inovelon, and we believe that the company will continue to announce further deals showing the strength of its distribution model. 

Frontier Markets continue to exhibit strong Gross Domestic Product growth and low government debt levels, and represent an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world.

20 October 2017

ENDS

Latest information is available by typing www.blackrock.co.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

UK 100

Latest directors dealings