BlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, May 25
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 30 April 2018 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 | 0.9 | -0.9 | 15.9 | 61.4 | 85.7 | 107.4 |
| Net asset value | 0.9 | -0.9 | 17.2 | 46.4 | 87.3 | 103.1 |
| Benchmark (NR)** | 1.7 | 2.5 | 18.0 | 34.9 | 64.8 | 65.4 |
| MSCI Emerging Markets Index (NR) | 1.4 | -3.8 | 14.3 | 32.9 | 42.4 | 41.3 |
| US Dollars: | ||||||
| Share price | -0.9 | -4.0 | 23.4 | 44.9 | 64.7 | 83.9 |
| Net asset value | -0.9 | -4.0 | 24.8 | 31.3 | 66.1 | 79.8 |
| Benchmark (NR)** | -0.1 | -0.7 | 25.6 | 20.9 | 45.9 | 47.3 |
| MSCI Emerging Markets Index (NR) | -0.4 | -6.8 | 21.7 | 19.1 | 26.0 | 24.8 |
Sources: BlackRock and Standard & Poor's Micropal
* 17 December 2010.
** The Company's benchmark changed from MSCI Frontier Markets 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: | 213.23c |
| Net asset value - cum income: | 218.01c |
| Sterling: | |
| Net asset value - capital only: | 154.80p |
| Net asset value - cum income: | 158.27p |
| Share price: | 164.50p |
| Total assets (including income): | £308.6m |
| Premium to cum-income NAV: | 3.9% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 3.1% |
| Ordinary shares in issue: | 194,991,108 |
| 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 3.1% and includes the 2017 final dividend of 4.20 cents per share declared on 4 December 2017 and payable to shareholders on 9 February 2018 and the 2017 interim dividend of 2.70 cents per share announced on 25 May 2017 and paid to shareholders on 30 June 2017.
**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 Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | |
| Financials | 34.2 | Argentina | 10.9 | |
| Real Estate | 12.1 | Kuwait | 9.8 | |
| Materials | 11.7 | Vietnam | 7.4 | |
| Health Care | 11.2 | Egypt | 7.3 | |
| Consumer Staples | 10.9 | Saudi Arabia | 7.0 | |
| Consumer Discretionary | 10.6 | Nigeria | 6.6 | |
| Industrials | 9.2 | Romania | 6.5 | |
| Energy | 7.1 | Thailand | 6.3 | |
| Telecommunication Services | 4.5 | Indonesia | 5.4 | |
| Information Technology | 1.3 | Bangladesh | 3.6 | |
| Utilities | 0.4 | Greece | 3.5 | |
| ----- | Kazakhstan | 3.5 | ||
| Total | 113.2 | Qatar | 3.2 | |
| ----- | Ukraine | 3.1 | ||
| Short positions | -3.8 | Kenya | 3.0 | |
| ===== | United Arab Emirates | 3.0 | ||
| Malaysia | 2.8 | |||
| PAN-Middle East | 2.5 | |||
| Turkey | 2.3 | |||
| Philippines | 2.2 | |||
| Hungary | 2.0 | |||
| Poland | 2.0 | |||
| Slovenia | 1.8 | |||
| PAN-Asian | 1.7 | |||
| Sri Lanka | 1.3 | |||
| Tanzania | 1.3 | |||
| Morocco | 1.2 | |||
| Colombia | 1.0 | |||
| Estonia | 1.0 | |||
| ----- | ||||
| Total | 113.2 | |||
| ----- | ||||
| Short positions | -3.8 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.05 2017 % | 30.06 2017 % | 31.07 2017 % | 31.08 2017 % | 30.09 2017 % | 31.10 2017 % | 30.11 2017 % | 31.12 2017 % | 31.01 2018 % | 28.02 2018 % | 31.03 2018 % | 30.04 2018 % | |
| Long | 105.0 | 103.9 | 106.6 | 107.9 | 107.7 | 113.4 | 111.0 | 113.3 | 110.2 | 102.1 | 97.0 | 113.2 |
| Short | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 2.5 | 3.8 | 3.8 | 3.0 | 3.0 | 2.9 | 3.8 |
| Gross | 105.0 | 103.9 | 106.6 | 107.9 | 107.7 | 115.9 | 114.8 | 117.1 | 113.2 | 105.1 | 99.9 | 117.0 |
| Net | 105.0 | 103.9 | 106.6 | 107.9 | 107.7 | 110.9 | 107.2 | 109.5 | 107.2 | 99.1 | 94.1 | 109.4 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Astra International | Indonesia | 4.0 |
| The National Bank of Kuwait | Kuwait | 4.0 |
| Banco Macro | Argentina | 3.5 |
| YPF | Argentina | 3.4 |
| Industries of Qatar | Qatar | 3.2 |
| Indorama Ventures | Thailand | 3.2 |
| Halyk Savings Bank | Kazakhstan | 3.1 |
| MHP | Ukraine | 3.1 |
| Land & Houses plc | Thailand | 3.1 |
| Emaar Properties | United Arab Emirates | 3.0 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
In April, the Company's NAV fell by 0.9%* (on a US Dollar basis with net income reinvested) versus its benchmark the MSCI New Frontier benchmark, which fell by 0.1%**. For reference, its previous benchmark (the MSCI Frontiers Index) fell by 3.1%**, and the MSCI Emerging Markets Index fell by 0.4%** (performance figures on a US Dollar basis, over the same period).
April continued to see increased volatility in the markets, the sustained sell-off and general risk-off sentiment gathered momentum, fuelled by trade war concerns and US sanctions on Russia. New Frontier Markets (Emerging Markets minus the top 8 largest countries + Frontier Markets + Saudi Arabia) saw better performance than Frontier Markets and Emerging Markets, once again showing the benefit of a more diversified index as historically top performing Frontier Markets of Vietnam and Argentina had a poor month falling by 9% and 5% respectively, which weighed on the Frontier Markets Index given their high weights.
Post the recent vote to expand the investment universe, the Company has initiated some positions in these new countries. These new positions were substantial drivers of performance over the month. For example, our new positions in Greek banks, such as National Bank of Greece, was one of the strongest contributors to performance as they rallied in April on the back of rumours that Greek banks had passed their recent European Central Bank's stress test.
Our entry into a position in Sapura Energy, a Malaysian oil services company, was also beneficial to performance as the stock rose by 10% post acquisition following the company's announcement of both better than expected results and substantial new contract wins.
However, the month wasn't all about the new positions - our long held position in LT Group, the Philippine conglomerate, also rose by 9% after it reported better than expected results in its tobacco segment as cigarette prices rose substantially on continued market normalisation following the acquisition of Philippine cigarette marker Mighty by Japan Tobacco last year.
We are seeing some signs globally of increased liquidity tightness on the back of the US rate rises. Post month end, this led to significant market corrections in a number of carry countries, i.e. those countries which run significant Twin deficits which need to be funded from abroad, such as Turkey, Argentina and Indonesia.
In particular, our allocation to Argentina was one the main detractors from performance in April. The sell-off in Argentina was prompted by the central bank's decision to cut rates despite higher than expected inflation. Combined with Argentina's high current account deficit of 5% (one of the largest across emerging markets), this put the country in a position that was vulnerable to the vagaries of global bond markets. As such, the currency and bond markets reacted negatively to this and whilst the central bank initially tried to defend the currency through spending reserves, they quickly realised that this was unsustainable and shifted to more orthodox methods by increasing interest rates by nearly 13%, reducing the fiscal deficit target and finally by going to the International Monetary Fund.
Our overweight to Vietnam also detracted as the market sold off as investors took profit post strong performance in the market.
Despite the sell off and increased market concerns in 2018, we think that the expanded New Frontier Markets 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.
25 May 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 Kazakhstan
