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BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 December 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 | -1.7 | 1.0 | 2.0 | 9.0 | -1.2 | 97.5 |
| Net asset value | -2.5 | 0.0 | 5.7 | 26.2 | 14.9 | 122.7 |
| Benchmark (NR)** | -2.7 | -3.0 | 7.7 | 11.0 | 13.4 | 81.9 |
| MSCI Frontiers Index (NR) | -2.5 | -8.0 | -17.1 | -1.5 | -0.8 | 60.3 |
| MSCI Emerging Markets Index (NR) | -2.4 | 1.8 | -10.0 | 1.5 | 4.8 | 49.4 |
| US Dollars: | ||||||
| Share price | -0.7 | 8.8 | -9.4 | -1.0 | -12.0 | 53.0 |
| Net asset value | -1.6 | 7.8 | -6.1 | 14.5 | 2.3 | 72.3 |
| Benchmark (NR)** | -1.7 | 4.5 | -4.4 | 0.8 | 0.8 | 41.5 |
| MSCI Frontiers Index (NR) | -1.5 | -0.8 | -26.3 | -10.6 | -11.8 | 23.6 |
| MSCI Emerging Markets Index (NR) | -1.4 | 9.7 | -20.1 | -7.9 | -6.8 | 15.2 |
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: | 166.85c |
| Net asset value - cum income: | 172.31c |
| Sterling: | |
| Net asset value - capital only: | 138.71p |
| Net asset value - cum income: | 143.24p |
| Share price: | 129.00p |
| Total assets (including income): | £271.2m |
| Discount to cum-income NAV: | 9.9% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.4% |
| Ordinary shares in issue**: | 189,325,748 |
| Ongoing charges***: | 1.4% |
| 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 4.4% and includes the 2022 interim dividend of 2.75 cents per share, declared on 26 May 2022, and paid to shareholders on 24 June 2022 and the 2022 final dividend of 4.25 cents per share, declared on 8 December 2022, and payable to shareholders on 19 January 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 | 41.9 | Saudi Arabia | 18.2 | |
| Energy | 12.1 | Indonesia | 15.0 | |
| Consumer Discretionary | 11.2 | Vietnam | 8.4 | |
| Materials | 10.2 | United Arab Emirates | 8.1 | |
| Industrials | 10.1 | Kazakhstan | 7.7 | |
| Consumer Staples | 8.2 | Thailand | 7.3 | |
| Communication Services | 5.9 | Hungary | 5.7 | |
| Information Technology | 5.0 | Chile | 5.4 | |
| Real Estate | 4.4 | Malaysia | 4.8 | |
| Health Care | 1.7 | Poland | 4.4 | |
| ----- | Greece | 3.9 | ||
| 110.7 | Qatar | 3.9 | ||
| ----- | Argentina | 2.2 | ||
| Short positions | -4.9 | Panama | 2.2 | |
| ===== | Romania | 2.2 | ||
| Philippines | 2.0 | |||
| Peru | 1.9 | |||
| Georgia | 1.5 | |||
| Egypt | 1.5 | |||
| Colombia | 1.5 | |||
| Kuwait | 1.4 | |||
| Kenya | 0.8 | |||
| Ukraine | 0.7 | |||
| ----- | ||||
| Total | 110.7 | |||
| ----- | ||||
| Short positions | -4.9 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 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 % |
30.11 2022 % |
31.12 2022 % |
|
| Long | 108.4 | 110.7 | 111.1 | 110.6 | 107.9 | 106.1 | 107.3 | 107.3 | 106.2 | 107.4 | 106.2 | 110.7 |
| Short | 1.9 | 3.3 | 2.3 | 1.8 | 4.7 | 4.6 | 6.2 | 5.3 | 5.2 | 5.3 | 4.8 | 4.9 |
| Gross | 110.3 | 114.0 | 113.4 | 112.4 | 112.6 | 110.7 | 113.5 | 112.6 | 111.4 | 112.7 | 111.0 | 115.6 |
| Net | 106.5 | 107.4 | 108.8 | 108.8 | 103.2 | 101.5 | 101.1 | 102.0 | 101.0 | 102.1 | 101.4 | 105.8 |
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 | 4.4 |
| Emaar Properties | United Arab Emirates | 4.4 |
| Saudi National Bank | Saudi Arabia | 3.4 |
| Astra International | Indonesia | 3.3 |
| Genting Malaysia | Malaysia | 3.1 |
| Bank Mandiri | Indonesia | 2.9 |
| JSC Kaspi | Kazakhstan | 2.8 |
| FPT | Vietnam | 2.8 |
| Qatar Gas Transport | Qatar | 2.7 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company’s NAV returned -1.6% versus it’s benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which was down by 1.7% in December. For reference, the MSCI Emerging Markets Index ended the month down by 1.4% and the MSCI Frontier Markets Index was down by 1.5% over the same period. For the year to 31 December 2022, the Company is down by 6.1%, relative to a benchmark return of -4.4%. The MSCI Frontier Markets Index was down 26.3%, while MSCI Emerging Markets was down 20.1% (all performance figures are on a US Dollar basis with net income reinvested).
Frontier Markets had a mixed month – with Eastern Europe and parts of Latin America doing well while the Middle Eastern markets corrected. Turkey (+8.0%) was the best performing market during the month, followed by Poland (+7.6%). As in November, Eastern Europe continued to benefit from a sequential decrease in gas prices driven primarily by a warm start to the winter season in Europe. Qatar (-10.8%), the United Arab Emirates (-8.3%) and Saudi Arabia (-3.3%) were under pressure in December as energy prices retreated.
In terms of portfolio performance, Saudi grocery chain Abdullah Al Othaim (-10%) was the biggest detractor. While there wasn’t anything stock specific, broader consumer spend remains subdued in the Kingdom. Hungarian low-cost airline Wizz Air (-13%) also gave back some gains after very strong performance in the preceding two months. Polish bank Pekao (+11%) was the top contributor and the Company’s over-weight position was a significant contributor to relative performance. We believe the market’s view on the severity of European recession has shifted Vietnamese IT services provider, FPT Corp (+8%), did well as the market recovered from an extended sell-off in the Vietnamese stock market during 2022. FPT should benefit as a low-cost IT provider to an increasingly global clientele in a tough macro environment.
We made a few changes to the portfolio in December. We initiated a new position in Bank of Georgia given its attractive valuation and potential to substantially increase dividend payout. We added to Indonesian auto conglomerate Astra International on recent price weakness. The outlook for automotive sales remains supportive and the competitive advantages Astra has developed in the sector over many years should sustain. We also added to our Greek cement and building materials holding, Titan Cement. Titan has struggled with higher energy costs and margin pressures in 2022, but we believe the risk-reward for 2023 now looks compelling from those reversing. We took profits on some of the 2022 outperformers, in particular, Kazakh fintech platform Kaspi and Chilean bank Santander.
We see marked contrast in the monetary and fiscal policy decisions taken in small emerging/frontier and developed markets during 2022 and find significant value in currencies and equity markets across our investment opportunity set. We are optimistic over the long-term in our under-researched investment universe which should enable compelling alpha opportunities.
Sources:
1BlackRock as at 31 December 2022
2MSCI as at 31 December 2022
20 January 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.
