Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 October 2022 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	-0.8	1.4	2.8	13.7	0.3	94.1
Net asset value	-0.4	2.7	4.3	24.8	17.7	121.8
Benchmark (NR)**	0.1	2.8	10.2	15.5	19.9	87.8
MSCI Frontiers Index (NR)	-7.2	-6.6	-18.1	2.6	2.4	61.6
MSCI Emerging Markets Index (NR)	-6.1	-9.2	-17.9	-1.9	-1.4	37.8
US Dollars:
Share price	2.3	-4.1	-13.7	1.1	-12.9	43.9
Net asset value	2.8	-2.9	-12.4	11.1	2.1	64.2
Benchmark (NR)**	3.3	-2.7	-7.4	2.7	3.9	39.7
MSCI Frontiers Index (NR)	-4.3	-11.6	-31.2	-8.7	-11.2	19.3
MSCI Emerging Markets Index (NR)	-3.1	-14.1	-31.0	-12.7	-14.5	1.8

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:	160.12c
Net asset value - cum income:	164.28c
Sterling:
Net asset value - capital only:	139.06p
Net asset value - cum income:	142.68p
Share price:	126.75p
Total assets (including income):	£270.1m
Discount to cum-income NAV:	11.2%
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 2021 final dividend of 4.25 cents per share, declared on 1 December 2021, and paid to shareholders on 11 February 2022. Also included is the 2022 interim dividend of 2.75 cents per share, declared on 26 May 2022, and paid to shareholders on 24 June 2022.

** 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	42.1		Saudi Arabia	23.5
Energy	10.9		Indonesia	13.8
Consumer Discretionary	9.9		Malaysia	7.9
Materials	9.3		Kazakhstan	7.4
Industrials	9.0		United Arab Emirates	6.7
Consumer Staples	8.0		Thailand	6.2
Communication Services	5.8		Vietnam	5.7
Real Estate	4.7		Greece	4.7
Information Technology	4.6		Hungary	4.6
Health Care	1.6		Qatar	4.5
Utilities	1.5		Poland	3.7
	-----		Chile	3.6
	107.4		Romania	2.2
	-----		Panama	2.1
Short positions	-5.3		Philippines	1.9
	=====		Peru	1.8
			Kuwait	1.5
			Colombia	1.5
			Argentina	1.4
			Egypt	1.4
			Kenya	0.9
			Ukraine	0.4
				-----
			Total	107.4
				-----
			Short positions	-5.3
				=====

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

Market Exposure
 

	30.11  2021   %	31.12  2021   %	31.01  2022   %	28.02  2022   %	31.03  2022    %	30.04  2022   %	31.05  2022   %	30.06  2022   %	31.07  2022   %	31.08  2022   %	30.09  2022    %	31.10  2022   %
Long	106.3	104.3	108.4	110.7	111.1	110.6	107.9	106.1	107.3	107.3	106.2	107.4
Short	0.4	1.0	1.9	3.3	2.3	1.8	4.7	4.6	6.2	5.3	5.2	5.3
Gross	106.7	105.3	110.3	114.0	113.4	112.4	112.6	110.7	113.5	112.6	111.4	112.7
Net	105.9	103.3	106.5	107.4	108.8	108.8	103.2	101.5	101.1	102.0	101.0	102.1

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
Bank Rakyat	Indonesia	5.0
Emaar Properties	United Arab Emirates	4.7
Saudi National Bank	Saudi Arabia	4.2
PKO Bank Polski	Poland	3.7
JSC Kaspi	Kazakhstan	3.4
Qatar Gas Transport	Qatar	3.1
Saudi Telecom	Saudi Arabia	3.1
Astra International	Indonesia	3.0
Abdullah Al Othaim Markets	Saudi Arabia	2.9
Saudi British Bank	Saudi Arabia	2.9

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

The Company’s NAV returned +2.8% versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which was up by 3.3% in October. For reference, the MSCI Emerging Markets Index ended the month down by 3.1% and the MSCI Frontier Markets Index fell by 4.1% over the same period (all performance figures are on a US Dollar basis with net income reinvested).

Eastern Europe was the strongest performing region this month with Turkey (+23%), followed by Poland (+16%), Hungary (+15%) and Greece (+14%). These markets performed strongly as European gas prices rolled over from storage capacity filling up and also the European winter was off to an unusually warm start. Elsewhere, the Middle East performed positive as oil exporters UAE (+4%) and Saudi Arabia (+3%) were buoyed by oil price surge following OPEC+’s production cuts. On other end, Vietnam (-14%), was one of the worst performing markets driven by the government’s crackdown on the property financing market.

The Company benefited from its exposure to Eastern Europe. Polish bank PKO (+24%) did well as net interest margins and loan growth continued to tick up. The news flow on regulatory measures also seems to have peaked in Poland. National Bank of Greece (+22%) was another strong contributor, benefitting from better macro prospects and repricing from interest rates. Greek renewable power utility Terna (+15%) rallied on rumours of a buyout by Australian investment group First Sentier. Outside of Eastern Europe. Kaspi (+13%), a fintech super-app in Kazakhstan posted strong earnings results across all three verticals: payments, marketplace and banking. Meanwhile, the Company’s exposure to Vietnam was the key detractor, with both Vietnam Technological and Commercial Bank (-28%) and IT services operator FPT Corp (-10%) selling off with the broader Vietnamese equity market. Saudi grocery store operator Abdullah Al Othaim (-8%) reversed some of its recent gains.

We made a few changes to the portfolio in October. We added to our Indonesian holdings, Bank Rakyat and conglomerate Astra International. The medium-term prospects for Indonesia look promising; prior concerns about monetary policy were appeased by recent central bank hikes, and Indonesia is evolving from a primarily upstream extractive economy into a more value additive one given government incentives to process abundant natural resources for export. We also added to oil and gas refiner MOL in Hungary which trades on an attractive valuation. More generally, with the Hungarian central bank raising rates to 18% in mid-October, the country looks well positioned for global carry investors. We initiated a position in energy company Vista, which owns assets in the famous Vaca Muerta shale formation in Argentina. The company should benefit from higher hydrocarbon prices and an increase in export volumes. We reduced positions in Indocement, a cement producer in Indonesia, as the post-COVID rebound in volumes has disappointed. We also booked profits in Chilean lithium producer Albemarle.

We see marked contrast in the monetary and fiscal policy decisions that have been taken in small emerging/frontier and developed markets during 2022 and find significant value in currencies and equity markets across these smaller countries. We are optimistic over the long-term in our under-researched investment universe which should allow for compelling alpha opportunities.
 

Sources:

¹BlackRock as at 31 October 2022

²MSCI as at 31 October 2022

16 November 2022

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.