BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 28 February 2017 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 | 1.1 | 12.7 | 43.1 | 33.0 | 118.2 | 77.3 |
| Net asset value | 2.4 | 10.0 | 36.0 | 38.2 | 99.6 | 73.3 |
| MSCI Frontiers Index (NR) | 0.7 | 9.6 | 26.7 | 28.7 | 70.2 | 41.5 |
| MSCI Emerging Markets Index (NR) | 4.2 | 9.4 | 45.0 | 40.2 | 26.0 | 22.7 |
| US Dollars: | ||||||
| Share price | 0.0 | 12.2 | 27.7 | -1.1 | 70.3 | 42.0 |
| Net asset value | 1.3 | 9.6 | 21.4 | 2.7 | 55.7 | 38.6 |
| MSCI Frontiers Index (NR) | -0.4 | 9.2 | 13.2 | -4.4 | 32.6 | 13.0 |
| MSCI Emerging Markets Index (NR) | 3.1 | 8.9 | 29.5 | 4.1 | -1.9 | -2.1 |
Sources: BlackRock and Standard & Poor's Micropal
* 17 December 2010.
| At month end Ordinary Shares | |
| US Dollar | |
| Net asset value - capital only: | 172.92c |
| Net asset value - cum income: | 173.75c |
| Sterling: | |
| Net asset value - capital only: | 138.96p |
| Net asset value - cum income: | 139.63p |
| Share price: | 145.25p |
| Total assets (including income): | £233.6m |
| Premium to cum-income NAV: | 4.0% |
| Gearing: | Nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 3.7% |
| Ordinary shares in issue: | 167,283,108 |
| Ongoing charges**: | 1.4% |
| Ongoing charges plus taxation and performance fee: | 2.4% |
*The Company's yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.7% and includes the 2016 final dividend of 4.00 cents per share declared on 22 November 2016 and paid to shareholders on 17 February 2017 and the 2016 interim dividend of 2.60 cents per share announced on 16 May 2016 and paid to shareholders on 1 July 2016.
**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2016.
| Sector Analysis | Gross assets(%)* | Country Analysis | Gross assets(%)* | ||
| Financials | 36.0 | Argentina | 16.6 | ||
| Consumer Staples | 18.3 | Kuwait | 11.5 | ||
| Telecommunication Services | 14.0 | Romania | 10.0 | ||
| Materials | 10.6 | Pakistan | 9.9 | ||
| Energy | 8.4 | Bangladesh | 8.5 | ||
| Health Care | 7.8 | Vietnam | 8.4 | ||
| Utilities | 6.7 | Kazakhstan | 8.1 | ||
| Information Technology | 6.0 | Sri Lanka | 6.6 | ||
| Industrials | 4.1 | Ukraine | 6.5 | ||
| Real Estate | 2.4 | Kenya | 5.4 | ||
| Consumer Discretionary | 1.5 | Morocco | 4.6 | ||
| ----- | Egypt | 4.2 | |||
| Total | 115.8 | Nigeria | 3.2 | ||
| ----- | Saudi Arabia | 2.7 | |||
| Short positions | 0.0 | Philippines | 2.1 | ||
| ===== | Estonia | 2.0 | |||
| Colombia | 1.7 | ||||
| Turkey | 1.7 | ||||
| Slovenia | 1.6 | ||||
| Caribbean | 0.5 | ||||
| ----- | |||||
| Total | 115.8 | ||||
| ----- | |||||
| Short positions | 0.0 | ||||
| ===== | |||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.03 2016 % | 30.04 2016 % | 31.05 2016 % | 30.06 2016 % | 31.07 2016 % | 31.08 2016 % | 30.09 2016 % | 31.10 2016 % | 30.11 2016 % | 31.12 2016 % | 31.01 2017 % | 28.02 2017 % | |
| Long | 108.1 | 109.2 | 108.8 | 110.5 | 103.4 | 105.7 | 104.0 | 106.4 | 102.3 | 108.4 | 115.0 | 115.8 |
| Short | 1.2 | 1.3 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Gross | 109.3 | 110.5 | 108.8 | 110.5 | 103.4 | 105.7 | 104.0 | 106.4 | 102.3 | 108.4 | 115.0 | 115.8 |
| Net | 106.9 | 107.9 | 108.8 | 110.5 | 103.4 | 105.7 | 104.0 | 106.4 | 102.3 | 108.4 | 115.0 | 115.8 |
Ten Largest Equity Investments
| Company | Country of Risk | % of gross assets |
| MCB Bank | Pakistan | 4.6 |
| Mobile Telecommunications | Kuwait | 4.3 |
| Pampa Energia | Argentina | 3.9 |
| Halyk Savings Bank | Kazakhstan | 3.7 |
| Banco Macro | Argentina | 3.6 |
| Square Pharmaceuticals | Bangladesh | 3.4 |
| Maroc Telecom | Morocco | 3.3 |
| S.N.G.N. Romgaz | Romania | 3.2 |
| Grupo Financiero Galicia | Argentina | 3.0 |
| Luxoft | Ukraine | 2.9 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
In February, the Company's NAV rose by 1.3%, while the MSCI Frontier benchmark fell by 0.4% (on a US Dollar basis with net income reinvested). On a 12-month basis, the Company outperformed the benchmark by 8.2%, returning 21.4% against the benchmark's 13.2%. The MSCI Emerging Markets Index rose by 3.1% and by 29.5% respectively, over the same periods.
After very strong performance in January, performance at the index level was more muted in February. Fund performance during the month was driven by stock specifics, with a number of different companies rising strongly during the month. Our off-benchmark positioning in Egyptian healthcare names performed well with Cleopatra Hospitals and Integrated Diagnostics gaining 21.4% and 20.2% respectively, with both stocks catching up with the strong Egyptian market performance that we have seen after the devaluation at the end of 2016. Whilst both companies will see short term margin compression on the back of the EGP devaluation, we believe that they will be able to recoup these margins and return to seeing strong revenue growth as the local economy normalises. Philippine conglomerate, LT Group, rose 13% on news that the government are looking to clamp down on tax avoidance by its competitors in the tobacco industry. Trading at one of the lowest levels globally on an enterprise value/stick basis, we believe that there is substantial upside to valuations for this stock. Transilvania Bank in Romania did well during the month with the stock rising 12% after announcing better than expected full year results. GDP growth in Romania has accelerated to 4.5% and the bank continues to benefit from normalisation of both the domestic and wider European economy. Argentinean software company Globant was another notable performer rising 10% during the month after reporting results in line with expectations, but reiterating the company's confidence that they will return to seeing 20% annual top line growth after disappointing numbers in the second half of 2016.
Our overall underweight to Nigeria (-7.2% relative) continued to benefit the fund as the country's FX issues persisted with the central bank's decision not to devalue the Naira any further resulting in a scarcity of USD available at the official rate, and a further surge in the dispersion between the official and black market exchange rates.
On the other hand, our overweight in Pakistani bank MCB weighed on performance, falling 6% as the company missed on headline net income results. The performance of this stock has been disappointing over the last year but we continue to believe that it is attractively valued and have maintained our position. Recent strong performer, Kuwait, saw a modest retrenchment in February with KIPCO, an investment holding company, detracting from Company returns.
Broadly, Frontier Markets continue to exhibit strong GDP growth and 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.
17 March 2017
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
