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OFFON

BLACKROCK FRONTIERS INVESTMENT TRUST PLC

(BRFI)
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BlackRock Frontiers Investment Trust : Portfolio Update

09/23/2021 | 09:31am EST

The information contained in this release was correct as at 31 August 2021.  Information on the Company’s up to date net asset values can be found on the London Stock Exchange Website at

https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 August 2021 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 6.9 6.3 37.9 0.0 22.6 82.9
Net asset value 7.5 7.6 40.2 11.1 32.7 102.5
Benchmark (NR)** 7.8 7.5 20.8 2.6 36.1 65.9
MSCI Frontiers Index (NR) 3.5 8.3 28.1 27.0 52.0 86.6
MSCI Emerging Markets Index (NR) 3.7 -0.1 17.8 25.2 56.1 72.4
US Dollars:
Share price 5.8 3.2 42.4 6.0 28.9 62.2
Net asset value 6.4 4.5 44.7 17.7 39.5 79.2
Benchmark (NR)** 6.7 4.1 24.2 8.6 43.0 47.6
MSCI Frontiers Index (NR) 2.5 4.9 31.6 34.5 59.7 64.7
MSCI Emerging Markets Index (NR) 2.6 -3.0 21.1 32.6 64.0 52.2

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: 183.29c
Net asset value - cum income: 186.23c
Sterling:
Net asset value - capital only: 133.18p
Net asset value - cum income: 135.31p
Share price: 124.50p
Total assets (including income): £256.2m
Discount to cum-income NAV: 8.0%
Gearing: nil
Gearing range (as a % of gross assets): 0-20%
Net yield*: 3.3%
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 3.3% and includes the 2020 final dividend of 4.25 cents per share declared on 11 December 2020 which paid on 12 February 2021. Also included is the 2021 interim dividend of 2.75 cents per share, announced on 01 June 2021 and paid to shareholders on 25 June 2021.

** Excluding 52,497,053 ordinary shares held in treasury.

***Calculated as a percentage of average net assets and using expenses, excluding Performance fees and interest costs for the year ended 30 September 2020.

Sector
Analysis
Gross market value as a % of net assets Country
Analysis
Gross market value as a % of net assets
Financials 34.8 Saudi Arabia 16.4
Consumer Discretionary 14.8 Indonesia 8.5
Industrials 12.5 Vietnam 8.4
Materials 11.9 Greece 8.2
Energy 10.7 Thailand 7.5
Consumer Staples 6.4 Kazakhstan 6.6
Real Estate 4.3 Hungary 5.7
Information Technology 3.4 Egypt 5.6
Health Care 2.6 Chile 5.5
Communication Services 1.4 Poland 4.9
Utilities 1.4 United Arab Emirates 4.7
----- Philippines 4.3
104.2 Malaysia 4.0
----- Romania 2.4
Short positions -0.6 Kenya 2.2
===== Ukraine 2.1
Peru 1.9
Pakistan 1.6
Panama 1.4
Turkey 1.3
Qatar 0.6
Nigeria 0.4
        -----
Total 104.2
-----
Short positions -0.6
=====

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

Market Exposure
 

30.09
 2020
    %
31.10
 2020
    %
30.11
 2020
    %
31.12
 2020
    %
31.01
 2021
    %
28.02
 2021
    %
31.03
 2021
    %
30.04
 2021
    %
31.05
 2021
    %
30.06
 2021
    %
31.07
 2021
    %
31.08
 2021
    %
Long 107.8 106.9 107.3 107.9 110.5 114.0 105.7 108.5 105.3 106.8 107.1 104.2
Short  0.0  0.0  0.0  1.1  1.1  4.5  3.4  2.5  2.3  4.6  2.3  0.6
Gross 107.8 106.9 107.3 109.0 111.6 118.5 109.1 111.0 107.6 111.4 109.4 104.8
Net 107.8 106.9 107.3 106.8 109.4 109.5 102.3 106.0 103.0 102.2 104.8 103.6

Ten Largest Investments

Company Country of Risk Gross market value as a % of net assets
National Commercial Bank Saudi Arabia 4.8
Kaspi Kazakhstan 3.7
FPT Vietnam 3.4
Saudi British Bank Saudi Arabia 3.4
Mobile World Vietnam 3.3
Emaar Properties United Arab Emirates 3.3
OTP Bank Hungary 2.9
CP All Thailand 2.9
United International Transport Saudi Arabia 2.6
Indocement Tunggal Prakarsa Indonesia 2.5



 

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

The Company’s NAV returned +6.4% versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which returned +6.7% in August. For reference, the MSCI Emerging Markets Index ended the month +2.6% and the MSCI Frontier Markets Index +2.5% over the same period (all performance figures are on a US Dollar basis with net income reinvested).

August saw our benchmark substantially outperform Emerging Markets, continuing a trend of outperformance which began mid-February.  Given the delay in vaccination rollouts, many frontier and emerging countries are now just starting to see the acceleration in economic activity which more developed countries have been enjoying through 2021. Continued high commodity prices are driving exports and helping to support trade balances in countries such as Chile, Saudi Arabia and Indonesia.  In contrast, emerging markets have been hurt by a substantial negative contribution from China (-13.3% QTD), where increased government regulations in the internet, education and financial sectors coupled with a slowdown in economic activity have weighed on sentiment.

Most countries in the universe finished August in the green, with Thailand (+11.5%) and Philippines (+11.4%) some of the best performing markets on the back of easing covid restrictions in many cases.  On the other hand, Pakistan (-4.9%) and Nigeria (-2.8%) were among the worst performers with sentiment hurt by both domestic politics and deteriorating economic conditions. 

In terms of contributors to performance over the month, the largest driver was stock selection in Saudi Arabia. Our holding in Saudi Arabian fitness centre Leejam Sports (+26.6%) did well on expectations of economic recovery as well as a rise in subscriptions. Indonesian construction materials company, Indocement (+29.9%), was another strong performer as the market started to look beyond Covid-19 in Indonesia in hope of recovery in cement demand. Mitra Adiperkasa [MAPI] (+21.3%), one of Indonesia’s largest lifestyle retailers, also performed well after reporting results which beat expectations.  The company also guided to seeing strong consumer demand as COVID restrictions eased and will start to ramp up their store roll out program. 

Primary detractors from performance in August were our holdings in the Ukraine – namely Ukrainian metals player Ferrexpo (-18.2%), which came under pressure from a normalization in iron ore prices. Similar to last month, tobacco company LT group (-12.1%) saw weaker than expected results following market share loss through COVID which they have struggled to regain.

We made a few changes to the portfolio in August. We added to our position in Hungarian bank OTP where we expect improvements in loan growth and fee income. In ASEAN, we added to Indocement on earlier price weakness as stock is trading below replacement value and we believe the cement cycle in Indonesia has troughed. We also added to Equity Bank in Kenya, as we see prospects of broad economic recovery which in turn should support asset quality. We reduced our position in Ferrexpo as commodity market tailwinds abated. We took profits in Saudi Arabian petrochemical company, Sipchem, where the investment thesis on methanol has played out. Similarly, we trimmed our holding in Kazakhstan-based fintech platform Kaspi which has performed very strongly year to date.

We recently hosted a virtual tour of select ASEAN companies particularly meeting a number of new companies which have demonstrated strong innovation over the last 2 years. In 2021 ASEAN countries have experienced the perfect storm of low natural immunity and low vaccination rate. We believe this is close to inflecting but a full reopening is likely still six months away. Our preference with ASEAN is for Vietnam followed by Indonesia, Philippines, Malaysia and Thailand respectively.

Overall, for countries that have stable macro environments and have made timely progress in vaccination rollouts, we believe the global macro recovery provides a favourable backdrop to recover lost economic productivity. Valuations in a lot of the frontier end emerging markets remain attractive relative to their own history and also relative to the more evolved markets. We believe our opportunity set is a compelling universe to generate alpha.

Sources:

1BlackRock as at 31 August 2021

2MSCI as at 31 August 2021

23 September 2021

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.


ę PRNewswire 2021
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