BlackRock Frontiers Investment Trust Plc - Portfolio Update

BlackRock Frontiers Investment Trust Plc - Portfolio Update

PR Newswire

LONDON, United Kingdom, June 27

 

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

 

All information is at 31 May 2024 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	1.0	-2.6	15.5	42.6	40.5	145.4
Net asset value	-2.2	-3.7	11.2	40.0	43.9	163.3
Benchmark (NR)**	-3.4	-3.9	2.9	17.3	7.0	81.1
MSCI Frontiers Index (NR)	2.0	4.2	11.8	4.0	13.0	79.1
MSCI Emerging Markets Index (NR)	-1.1	2.8	9.4	-7.1	17.9	60.3
US Dollars:
Share price	2.7	-2.0	18.6	28.1	42.0	101.4
Net asset value	-0.5	-3.1	14.2	25.8	45.4	115.8
Benchmark (NR)**	-1.8	-3.3	5.7	5.0	8.0	49.0
MSCI Frontiers Index (NR)	3.8	4.8	14.9	-6.9	14.1	46.2
MSCI Emerging Markets Index (NR)	0.6	3.5	12.4	-16.6	19.0	30.9

 

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:	194.42c
Net asset value - cum income:	202.26c
Sterling:
Net asset value - capital only:	152.70p
Net asset value - cum income:	158.86p
Share price:	149.50p
Total assets (including income):	£300.8m
Discount to cum-income NAV:	5.9%
Gearing:	Nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	4.4%
Ordinary shares in issue**:	189,325,748
Ongoing charges***:	1.38%
Ongoing charges plus taxation and performance fee****:	3.78%

 

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.4%, and includes the 2023 final dividend of 4.90 cents per share, declared on 30 November 2023, and paid to shareholders on 14 February 2024, and the 2024 interim dividend of 3.50 cents per share, declared on 31 May 2024, and to be paid to shareholders on 02 July 2024.

** 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 2023.

**** 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 2023.

 

Sector Analysis	Gross market value as a % of net assets		Country Analysis	Gross market value as a % of net assets
Financials	45.4		Saudi Arabia	15.6
Industrials	12.7		Indonesia	12.7
Energy	11.9		Kazakhstan	8.3
Materials	10.0		Philippines	8.2
Consumer Staples	9.1		United Arab Emirates	7.8
Real Estate	8.5		Hungary	7.3
Communication Services	7.1		Greece	6.1
Consumer Discretionary	6.8		Poland	6.1
Information Technology	4.9		Turkey	4.9
Health Care	0.9		Qatar	4.7
Utilities	0.8		Kenya	3.9
	-----		Thailand	3.9
	118.1		Argentina	3.5
	-----		Czech Republic	3.5
Short positions	-2.4		Pakistan	3.1
			Vietnam	3.1
			Malaysia	2.4
			Singapore	2.3
			Colombia	2.3
			Chile Multi-International Georgia Egypt Cambodia Bangladesh Romania Nigeria	1.8 1.7 1.3 1.1 1.1 0.7              0.5 0.2 ----- 118.1
				----
			Short positions	-2.4
				=====

 

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

 

Market Exposure
 

	30.06  2023     %	31.07  2023     %	31.08  2023     %	30.09  2023     %	31.10  2023     %	30.11  2023     %	31.12  2023     %	31.01  2024     %	29.02  2024     %	31.03  2024     %	30.04  2024     %	31.05  2024     %
Long	116.9	113.0	113.3	114.9	118.8	113.1	116.6	119.5	121.4	120.4	120.8	118.1
Short	4.0	3.0	3.0	3.0	3.1	4.6	4.7	3.6	3.5	2.7	2.3	2.4
Gross	120.9	116.0	116.3	117.9	121.9	118.0	121.3	123.1	124.9	123.1	123.1	120.5
Net	112.9	110.0	110.3	111.9	115.7	108.8	111.9	115.9	117.9	117.7	118.5	115.7

 

 

Ten Largest Investments

 

Company	Country of Risk	Gross market value as a % of net assets
Bank Central Asia	Indonesia	4.4
Emaar Properties	United Arab Emirates	4.2
Saudi National Bank	Saudi Arabia	4.2
Kaspi.Kz JCS	Kazakhstan	3.9
FPT	Vietnam	3.1
Wizz Air Holdings	Hungary	2.9
Jeronimo Martins	Poland	2.9
Athens International Airport	Greece	2.6
Vista Oil & Gas	Argentina	2.5
CP All	Thailand	2.5

 

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

The Company’s NAV fell by 0.5 % in May, outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which returned -1.8%. For reference, the MSCI Emerging Markets Index was up 0.6% while the MSCI Frontier Markets Index was up 3.8% over the same period. All performance figures are on a US Dollar basis with net income reinvested.

 

Emerging Markets posted flattish returns (+0.6%) in May, significantly underperforming Developed Markets (+4.5%). EMEA (-2.4%) underperformed against the broader index, with significant performance dispersion across markets. Egypt and Czech were the best performing EMEA markets in May up by 11.5% and 8.5%, respectively. Saudi Arabia (-7.4%) was the biggest laggard, mainly on oil price decline and news of government further selling down stake in Saudi Aramco. In Latin America, Argentina, Colombia and Peru all posted positive returns as rate cuts in Colombia and Peru were well received.

 

Several stock picks did well in May. The Polish supermarket chain Jeronimo Martins (+11.0%) was the best performing stock over the month, extending its strong run from April. Turkey exposure also added to performance through our holdings in gold mine operator Eldorado Gold (+13.3%) and Turkish commercial bank Türkiye İş Bankası (Isbank) (+12.5%). The former was supported by an increase in gold prices, as the commodity continues to rally despite a more hawkish Federal Reserve. Türkiye İş Bankası performed well on the back of investor confidence that Turkey will continue on its path of monetary orthodoxy. E-commerce company Kaspi (+9.0%) was another strong performer as it continues to find new pockets to expand its user base.

 

On the flipside, Bank of Georgia (-30.0%) was the worst performer. The stock detracted after the passing of the Georgian Foreign Agents bill, which requires media and non-governmental organisations with over 20% foreign funding to register as foreign agents, undergo strict audits or incur fines. We reduced our exposure to the name over the month and we are monitoring the situation closely. IT services company EPAM (-24.4%) was another detractor, as the weaker full year guidance continued to weigh on the stock. Indonesian retailer Mitra Adiperkasa (-19.3%) also detracted on concerns around earnings growth.

 

Over the course of May, we made some changes to the portfolio. We initiated a position in  Isbank in Turkey as we believe the bank will benefit once disinflation starts coming through in the country. We exited Chilean lithium producer SQM  given concerns of over-supply in the lithium market. We also reduced our exposure to the Philippines by exiting fast food restaurant chain Jollibee as we are cautious on their international growth ambitions.

 

As higher global rates continue to feed through into the real economy, we expect some moderation of demand in developed markets. We note slowing credit growth in particular in the US. In contrast, we continue to see improving activity levels in frontier and smaller emerging markets. With inflation falling across many countries within our universe, rate cuts have started to materialize in some areas of our universe. This is a good set up for domestically oriented economies to see a cyclical pick up. We remain positive on the outlook for small emerging and frontier markets versus developed markets, and we find significant value in currencies and equity markets across our investment opportunity set. Our investment universe, in absolute and relative terms, remains under-researched and we believe this should enable compelling alpha opportunities.

 

Sources:

1BlackRock as at 31 May 2024

2MSCI as at 31 May 2024

 

27 June 2024

 

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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