Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 December 2018 and unaudited.

Performance at month end with net income reinvested.

	One  month	Three months	One  year	Three  years	Five  years	Since  Launch*
Ordinary Shares:
Sterling:
Share price	-2.3	-2.1	-12.5	48.0	40.4	74.9
Net asset value	-2.5	-1.7	-10.0	38.8	41.5	74.5
Benchmark (NR)**	-0.4	-0.2	0.3	47.9	51.9	60.9
MSCI Frontiers Index (NR)	-2.8	-2.0	-11.2	31.0	34.5	43.4
MSCI Emerging Markets Index (NR)	-2.5	-5.3	-9.3	50.9	41.1	29.3
US Dollars:
Share price	-2.5	-4.4	-17.6	28.0	8.1	43.4
Net asset value	-2.7	-4.0	-15.2	20.0	9.0	42.9
Benchmark (NR)**	-0.6	-2.6	-5.6	27.8	16.8	32.4
MSCI Frontiers Index (NR)	-2.9	-4.3	-16.4	13.2	3.4	17.2
MSCI Emerging Markets Index (NR)	-2.7	-7.5	-14.6	30.4	8.5	5.6
C Shares:						26.11.18
Sterling:
Share price	-2.5	n/a	n/a	n/a	n/a	-2.5
Net asset value	-2.6	n/a	n/a	n/a	n/a	-1.4
US Dollars:
Share price	-2.7	n/a	n/a	n/a	n/a	-3.2
Net asset value	-2.8	n/a	n/a	n/a	n/a	-2.1

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 Ordinary Shares
US Dollar
Net asset value - capital only:	164.50c
Net asset value - cum income:	170.65c
Sterling:
Net asset value - capital only:	129.17p
Net asset value - cum income:	133.99p
Share price:	136.75p
Total assets (including income):	£275.1m
Premium to cum-income NAV:	2.1%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	4.2%
Ordinary shares in issue:	205,316,108
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 3.8% and includes the 2018 final dividend of 4.40 cents per share and special dividend of 1 cent per share, both of which were declared on 11 December 2018 and will be paid to shareholders on 7 February 2019. Also included is the 2018 interim dividend of 3.00 cents per share announced on 17 May 2018 and paid to shareholders on 29 June 2018.

**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2018.

C Shares
US Dollar
Net asset value - capital only:	124.08c
Net asset value - cum income:	124.32c
Sterling:
Net asset value - capital only:	97.43p
Net asset value - cum income:	97.62p
Share price:	97.00p
Total assets (including income):	£43.9m
Discount to cum-income NAV:	0.6%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	nil
C Shares in issue:	44,927,580

On 15 January 2019 the Company announced that the C Share conversion ratio will be 0.7547 Ordinary shares for each C Share held on the record date of 11 January 2019.  On this basis a total of 33,906,693 Ordinary shares will be issued and admitted to trading on 21 January 2019.

The following relates specifically to the ordinary share portfolio.
 

Sector Analysis	Gross market value as a % of net assets		Country Analysis	Gross market value as a % of net assets
Financials	29.8		Indonesia	12.2
Real Estate	14.3		Vietnam	9.5
Consumer Discretionary	13.5		Egypt	9.1
Materials	12.4		Argentina	9.0
Consumer Staples	10.6		United Arab Emirates	7.2
Health Care	8.9		Thailand	6.6
Energy	7.7		Kazakhstan	6.5
Industrials	5.8		Nigeria	6.4
Communication Services	5.0		Romania	5.2
Information Technology	1.3		Malaysia	5.1
	-----		Ukraine	4.4
Total	109.3		Hungary	3.4
	-----		Kuwait	3.2
Short positions	-8.6		Greece	3.0
	=====		Qatar	2.9
			PAN-Africa	2.3
			Saudi Arabia	2.2
			Philippines	2.2
			Poland	2.0
			Colombia	1.8
			Kenya	1.8
			Tanzania	1.5
			PAN-Asian	0.9
			Morocco	0.9
				-----
			Total	109.3
				-----
			Short positions	-8.6
				=====

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

Market Exposure
 

	31.01  2018     %	28.02  2018     %	31.03  2018     %	30.04  2018     %	31.05  2018     %	30.06  2018     %	31.07  2018     %	31.08  2018     %	30.09  2018     %	31.10  2018     %	30.11  2018     %	31.12  2018     %
Long	110.2	102.1	97.0	113.2	119.5	116.2	113.9	107.7	107.7	107.8	108.1	109.3
Short	3.0	3.0	2.9	3.8	4.2	4.7	5.1	6.4	7.7	6.8	8.6	8.6
Gross	113.2	105.1	99.9	117.0	123.7	120.9	119.0	114.1	115.4	114.6	116.7	117.9
Net	107.2	99.1	94.1	109.4	115.3	111.5	108.8	101.3	100.0	101.0	99.5	100.7

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
Astra International	Indonesia	4.7
Banco Macro	Argentina	4.3
Gedeon Richter	Hungary	3.4
MHP	Ukraine	3.0
Ooredoo	Qatar	2.9
Zenith Bank	Nigeria	2.8
Halyk Savings Bank	Kazakhstan	2.8
Siam Commercial Bank	Thailand	2.6
United Bank of Africa	Nigeria	2.5
Orascom Construction	Egypt	2.4

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

December was marked by a sharp selloff in developed market equities and rising volatility with MSCI World Index finishing the month down by 7.6%.  In contrast Emerging and Frontier Markets held up better.   The Company’s NAV returned -2.2%¹ versus its benchmark, the MSCI New Frontier Index, which fell by 0.6%². For reference its previous benchmark, the MSCI Frontiers Index, fell by 2.9%², and the MSCI Emerging Markets Index fell by 2.6%², over the same period (all performance figures are on a US Dollar basis with income reinvested).

The best performing stock during the month was Saudi hospital operator, National Medical Care (+18.4%), a position which we continue to believe is attractively valued.  However, we exited all other positions in Saudi Arabia, selling our position in Rajhi Bank during the month.  With the market up by 2.2% this month, the large (10.7%) underweight position that we hold relative to the index detracted from relative performance.  Despite the further 8% fall in the oil price in December, and nearly 40% fall over the fourth quarter, the Saudi market was flat, notably outperforming other global markets.  At $60/bbl oil price, Saudi Arabia is forecast to run a 10% budget deficit in 2019, showing little evidence of the long promised fiscal reform.  With the market trading on a forward PE (price to earnings ratio) of 14x, a significant premium to Emerging Markets, we maintain our view that there are better opportunities elsewhere. 

The Company’s holdings in Malaysia also added to returns through Telecom Malaysia (+15.6%) and auto manufacturer, UMW (+9.6%), as did our short positioning in the Philippines.  Pan-African fuel station operator, Vivo, further rallied from very oversold levels after the announcement last month that Morocco is not looking to regulate fuel prices. 

Our positioning in Romania, Indonesia and UAE (United Arab Emirates) detracted.  In Romania our positions in financials, BRD (-18.2%), and Banco Transilvania (-15.3%) as well as Energy company Romgaz (-17.5%) detracted from performance as the government announced new budget proposals which included a new banking tax and gas price limits.  Our Indonesian holdings, which contributed strongly in November, gave back some gains this month due to market rotation.  Our positioning in the UAE was an additional detractor during the month.  Within the UAE we hold positions in Emaar Properties and Emaar Development.  Trading at lows since 2012, we believe that the stocks are at significant discounts to their fair value, given their status and land bank within the country.  In terms of positioning we made few changes to the portfolio in December. As well as reducing our exposure to Saudi Arabia, we continued to adjust positioning in Indonesia, reflective of it being one of our preferred countries for 2019.  Elsewhere we added more exposure to Vietnam, which we think will be a winner from greater trade outsourcing from China.

We continue to position for a lower interest rate, weaker US Dollar and lower global growth environment and see 2019 shaping up to be a year characterised by weaker developed market equity markets, while a lower rate environment sets up the ability for Emerging and Frontier Markets to outperform, contrary to expectations.   In aggregate the wide subset of countries that make up our investible universe continue to exhibit strong GDP (Gross Domestic Product) growth, have low government debt levels, representing an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world.

Sources:
1. BlackRock as at 31 December 2018
2. MSCI as at 31 December 2018

21 January 2019

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 Kazakhstan