Portfolio Update

 

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

 

All information is at 30 June 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

2.3

2.9

18.3

60.2

17.2

117.4

Net asset value

2.3

5.3

16.4

67.0

29.7

142.2

Benchmark (NR)**

-0.4

-0.9

-1.0

22.1

11.8

75.3

MSCI Frontiers Index (NR)

-0.3

-0.7

-6.7

8.7

8.2

59.7

MSCI Emerging Markets Index (NR)

1.2

-1.9

-2.8

4.1

8.8

48.2

 

 

 

 

 

 

 

US Dollars:

 

 

 

 

 

 

Share price

4.9

5.8

24.0

64.9

13.0

78.2

Net asset value

4.9

8.3

22.0

71.9

25.0

98.2

Benchmark (NR)**

2.2

1.9

3.7

25.6

7.6

44.1

MSCI Frontiers Index (NR)

2.3

2.1

-2.3

11.8

4.2

30.2

MSCI Emerging Markets Index (NR)

3.8

0.9

1.7

7.1

4.7

20.9

 

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:

187.16c

Net asset value - cum income:

190.37c

Sterling:

 

Net asset value - capital only:

147.22p

Net asset value - cum income:

149.74p

Share price:

136.00p

Total assets (including income):

£283.5m

Discount to cum-income NAV:

9.2%

Gearing:

nil

Gearing range (as a % of gross assets):

0-20%

Net yield*:

4.3%

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 4.3% 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 payable 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

38.2

 

Saudi Arabia

16.7

Materials

15.2

 

Indonesia

16.0

Energy

15.1

 

Thailand

13.1

Consumer Staples

13.6

 

United Arab Emirates

8.2

Industrials

12.9

 

Hungary

8.0

Consumer Discretionary

6.6

 

Kazakhstan

7.8

Information Technology

5.0

 

Chile

7.0

Communication Services

4.7

 

Vietnam

6.3

Real Estate

3.9

 

Qatar

4.4

Health Care

1.7

 

Philippines

4.1

 

-----

 

Poland

4.0

 

116.9

 

Greece

3.4

 

-----

 

Colombia

2.7

Short positions

-4.0

 

Egypt

2.4

 

=====

 

Argentina

2.2

 

 

 

Peru

1.8

 

 

 

Georgia

1.6

 

 

 

Turkey

1.5

 

 

 

Malaysia

1.4

 

 

 

Cambodia

1.2

 

 

 

Kuwait

1.1

 

 

 

Romania

1.1

 

 

 

Kenya

0.6

 

 

 

Ukraine

0.3

 

 

 

 

        -----

 

 

 

Total

116.9

 

 

 

 

-----

 

 

 

Short positions

-4.0

 

 

 

 

=====

 

 

 

 

 

 

 

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

 

Market Exposure
 

 

31.07

 2022

    %

31.08

 2022

    %

30.09

 2022

    %

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

    %

Long

107.3

107.3

106.2

107.4

106.2

110.7

112.4

111.9

106.3

108.5

112.9

116.9

Short

 6.2

 5.3

 5.2

 5.3

4.8

4.9

5.1

3.9

3.9

3.8

3.6

4.0

Gross

113.5

112.6

111.4

112.7

111.0

115.6

117.5

115.8

110.2

112.3

116.5

120.9

Net

101.1

102.0

101.0

102.1

101.4

105.8

107.3

108.0

102.4

104.7

109.3

112.9

 

 

Ten Largest Investments

 

Company

Country of Risk

Gross market value as a % of net assets

 

 

 

Bank Central Asia

Indonesia

4.9

PKO Bank Polski

Poland

4.0

OTP Bank

Hungary

3.4

Astra International

Indonesia

3.2

Saudi National Bank

Saudi Arabia

3.1

Abdullah Al Othaim Markets

Saudi Arabia

3.1

Wizz Air Holdings

Hungary

3.0

Saudi Basic Industries Corp

Saudi Arabia

3.0

FPT

Vietnam

2.9

JSC Kaspi

Kazakhstan

2.9



 

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

The Company’s NAV is up by 4.9% in June, strongly outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which rose by 2.2%. For reference, the MSCI Emerging Markets Index is up by 3.8% while the MSCI Frontier Markets Index was up by 2.3% over the same period. All performance figures are on a US Dollar basis with net income reinvested.

 

In our universe, Latin American markets outperformed with countries like Argentina (+26%), Colombia (+14%) and Peru (+11%) all in positive territory. In Argentina, the market is optimistic about political change at the upcoming elections in October, with final presidential candidates being announced. Elsewhere, Eastern European countries Poland (+14%) and Hungary (+10) extended gains despite concerns of a weakening macro environment and increased volatility following Wagner Group's march on Moscow. On the other hand, Turkey fell -4.4% as the Lira depreciated by over 20% following May elections.

 

Stock picks in Saudi Arabia were the top contributor over the month with Saudi IT company ELM (+30%) being the best performing stock in June. The company has done well on the back of profit growth and re-rating from the digitization theme we are seeing in the Kingdom. Arabian Contracting Services, the Saudi advertising platform better known as Al Arabia (+24%), was another contributor. Elsewhere, bank exposure in Eastern Europe through polish bank PKO (+18%) also did well as the company is demonstrating stronger-than-expected underlying profitability. In Latin America, the Argentinian energy company Vista (+17%) posted strong performance. On the other hand, our position in Nagacorp (-16%), the Cambodian integrated-gambling resort operator, detracted. The recovery of Chinese travellers to pre-covid levels has been slower than expected.

 

We made some changes to the portfolio in June. We increased our exposure to the Philippines as the interest rate cycle is peaking. We initiated a position in Philippines' property developer Ayala Land as the stock has meaningfully corrected and as we see a potential turn in the local real estate cycle. We also added to Jollibee, the fast food restaurant chain, as we view the changes in management as overall positive for the firm. We reduced our exposure to Indonesia and locked in some profits by trimming our holding in Astra International, the auto conglomerate.

 

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 June 2023

2MSCI as at 30 June 2023

 

20 July 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.

 




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