BlackRock Frontiers Portfolio Update

 
TIDMBRFI 
 
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706) 
 
All information is at 30 September 2018 and unaudited. 
 
Performance at month end with net income reinvested. 
 
                                        One    Three     One    Three     Five    Since 
                                      month   months    year    years    years   Launch* 
                                          %        %       %        %        %         % 
 
Sterling: 
 
Share price                            -2.3     -3.6    -3.1     50.9     49.3      78.7 
 
Net asset value                        -2.6     -5.0    -4.0     43.9     53.0      77.5 
 
Benchmark (NR)**                       -0.3      2.8     5.3     50.5     58.6      61.2 
 
MSCI Frontiers Index (NR)              -0.4     -0.8    -5.1     35.7     43.0      46.4 
 
MSCI Emerging Markets Index (NR)       -0.9      0.1     2.0     64.8     48.3      36.5 
 
US Dollars: 
 
Share price                            -1.9     -4.8    -5.7     30.1     20.5      50.1 
 
Net asset value                        -2.3     -6.1    -6.6     24.0     23.4      48.8 
 
Benchmark (NR)**                        0.0      1.6     2.3     29.5     27.7      35.9 
 
MSCI Frontiers Index (NR)              -0.1     -2.0    -7.7     16.8     15.2      22.5 
 
MSCI Emerging Markets Index (NR)       -0.5     -1.1    -0.8     41.9     19.4      14.1 
 
Sources: BlackRock and Datastream 
* 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:                                                171.02c 
 
Net asset value - cum income:                                                  177.71c 
 
Sterling: 
 
Net asset value - capital only:                                                131.14p 
 
Net asset value - cum income:                                                  136.27p 
 
Share price:                                                                   139.75p 
 
Total assets (including income):                                               GBP273.4m 
 
Premium to cum-income NAV:                                                        2.6% 
 
Gearing:                                                                           nil 
 
Gearing range (as a % of gross assets):                                          0-20% 
 
Net yield*:                                                                       3.7% 
 
Ordinary shares in issue:                                                  200,616,108 
 
Ongoing charges**:                                                                1.4% 
 
Ongoing charges plus taxation and performance fee:                                1.6% 
 
*The Company's yield based on dividends announced in the last 12 months as at 
the date of the release of this announcement is 3.7% and includes the 2017 
final dividend of 4.20 cents per share declared on 4 December 2017 and paid to 
shareholders on 9 February 2018 and 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 
2017. 
 
Sector                          Gross market    Country                         Gross market 
Analysis                     value as a % of    Analysis                     value as a % of 
                                  net assets                                      net assets 
 
Financials                              29.6    Thailand                                10.2 
 
Real Estate                             15.7    Indonesia                                9.2 
 
Consumer Discretionary                  14.3    Vietnam                                  9.0 
 
Consumer Staples                        10.8    Argentina                                8.8 
 
Materials                               10.3    Egypt                                    7.7 
 
Health Care                              7.7    Romania                                  6.2 
 
Energy                                   7.6    Nigeria                                  5.9 
 
Telecommunication Services               5.8    United Arab Emirates                     5.6 
 
Industrials                              4.5    Kuwait                                   5.6 
 
Information Technology                   1.4    Ukraine                                  5.5 
 
                                       -----    Saudi Arabia                             5.1 
 
Total                                  107.7    Kazakhstan                               3.4 
 
                                       -----    Greece                                   3.3 
 
Short positions                         -7.7    Qatar                                    3.3 
 
                                       =====    Hungary                                  3.2 
 
                                                Malaysia                                 2.7 
 
                                                PAN-Africa                               2.4 
 
                                                Poland                                   2.4 
 
                                                Kenya                                    2.0 
 
                                                Philippines                              1.8 
 
                                                Tanzania                                 1.3 
 
                                                PAN-Asian                                1.2 
 
                                                Morocco                                  0.8 
 
                                                Sri Lanka                                0.5 
 
                                                Other Africa                             0.3 
 
                                                Bangladesh                               0.3 
 
                                                                                       ----- 
 
                                                Total                                  107.7 
 
                                                                                       ----- 
 
                                                Short positions                         -7.7 
 
                                                                                       ===== 
 
*reflects gross market exposure from contracts for difference (CFDs). 
 
Market Exposure 
 
        31.10  30.11  31.12  31.01  28.02  31.03  30.04  31.05  30.06  31.07  31.08  30.09 
         2017   2017   2017   2018   2018   2018   2018   2018   2018   2018   2018   2018 
                   %      %      %      %      %      %      %      %      %      %      % 
          % 
 
Long    113.4  111.0  113.3  110.2  102.1   97.0  113.2  119.5  116.2  113.9  107.7  107.7 
 
Short     2.5    3.8    3.8    3.0    3.0    2.9    3.8    4.2    4.7    5.1    6.4    7.7 
 
Gross   115.9  114.8  117.1  113.2  105.1   99.9  117.0  123.7  120.9  119.0  114.1  115.4 
 
Net     110.9  107.2  109.5  107.2   99.1   94.1  109.4  115.3  111.5  108.8  101.3  100.0 
 
Ten Largest Investments 
 
Company                                 Country of Risk        Gross market value as a 
                                                                       % of net assets 
 
Astra International                     Indonesia                                  4.6 
 
MHP                                     Ukraine                                    3.5 
 
Halyk Savings Bank                      Kazakhstan                                 3.3 
 
Ooredoo                                 Qatar                                      3.3 
 
Chemical Works of Gedeon Richter        Hungary                                    3.2 
 
Land & Houses Public Company Limited    Thailand                                   3.2 
 
YPF                                     Argentina                                  3.1 
 
Emaar Properties                        United Arab Emirates                       3.1 
 
Indorama Ventures                       Thailand                                   3.1 
 
Al Rajhi Bank (P-Note)                  Saudi Arabia                               3.0 
 
 
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the 
Investment Manager noted: 
 
In September the Company's NAV fell by 2.3%1 (on a US Dollar basis with net 
income reinvested) versus its benchmark, the MSCI New Frontier benchmark, which 
remained flat (0.0%2).  For reference, MSCI Emerging Markets Index ended the 
month down by 0.5%2 and MSCI Frontier Markets Index down by -0.1%2 (all 
performance figures are on a US Dollar basis with net income reinvested). 
 
Emerging and Frontier Market equities stabilised in September as the selloffs 
in Turkey and Argentina eased. Dispersion remains elevated as the combination 
of the gradual withdrawal of dollar liquidity, higher oil prices and political 
risk is leading to market movements more justified than others in our view, 
given their underlying economic fundamentals, fiscal and external account 
balances and policy choices.   Oil hitting $85 should generally be positive for 
our portfolio - opportunities exist in those parts of the market which have not 
responded as strongly to a rising oil price as we would expect - such as 
Nigeria and UAE (United Arab Emirates). 
 
Our holding in Ukrainian Steel company, Ferrexpo, was the biggest contributor 
to returns this month, rallying +30% on the month from low levels as the market 
recognized the strong cash flows that the company is generating at current iron 
ore pellet prices.  Also contributing to returns were positions in Vietnam, 
driven by our holding in electronics and grocery retailer, Mobile World Group. 

The Argentine market rebounded through the month, as the currency stabilized 
following the expanded IMF (International Monetary Fund) deal and move by the 
central bank to monetary aggregate targeting.  Our short positions in the 
Philippines added to returns as the market underperformed. 
 
Our positioning in Greece driven by our holdings in the financials Alpha Bank 
and National Bank of Greece were the largest detractors with both stocks down 
more than 20% on the month amid concerns around bank capital levels.  Returns 
were also hurt by positions in Egypt where the market fell post the 
announcement of higher than expected inflation numbers for August and concerns 
that inflation could trend even higher in September, which together with the 
rise in interest rates seen globally meant that investors thought it would be 
increasingly unlikely that interest rates would be cut this year. 
 
In terms of positioning we made few changes to the portfolio in September. We 
initiated a position in drinks company ThaiBev.  We believe the stock should 
benefit from a pickup in activity in Thailand, it trades at an attractive 
valuation relative to the Thai market and the market has heavily discounted the 
valuation of its acquisition of Sabeco, Vietnam's leading beer company.  We 
believe the business will be able to pay down its debt faster than the market 
expects due to stronger free cash flow generation.  Elsewhere we added to 
positions we like that have sold off such as IDH in Egypt and energy company 
Vivo.  We completed the exit of Yanbu National Petrochemical Company, a Saudi 
chemicals company, taking profits on a position which was up nearly 25% since 
entry in the last quarter of 2017. 
 
2018 has seen Emerging and Frontier Markets de-rate considerably and whilst 
weaker exchange rates and tighter financial conditions will affect growth, we 
do not expect a sharp slow-down and many countries have significantly improved 
external balances than in previous crises, creating significant pockets of 
value in our view.  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, 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. 
 
Sources: 
1BlackRock as at 30 September 2018 
2MSCI as at 30 September 2018 
 
18 October 2018 
 
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. 
 
 
 
END 
 

(END) Dow Jones Newswires

October 18, 2018 08:38 ET (12:38 GMT)