BlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, February 21
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 January 2019 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 | 1.5 | -15.0 | 53.0 | 41.9 | 77.9 |
| Net asset value | 1.3 | 1.7 | -13.7 | 44.4 | 39.9 | 76.8 |
| Benchmark (NR)** | 4.1 | 5.9 | 3.7 | 59.0 | 55.5 | 67.4 |
| MSCI Frontiers Index (NR) | 1.4 | 0.9 | -10.5 | 37.2 | 34.2 | 45.5 |
| MSCI Emerging Markets Index (NR) | 5.3 | 7.1 | -7.3 | 63.5 | 57.7 | 36.2 |
| US Dollars: | ||||||
| Share price | 5.1 | 4.6 | -21.3 | 42.0 | 13.8 | 50.8 |
| Net asset value | 4.7 | 4.7 | -20.1 | 34.0 | 12.2 | 49.6 |
| Benchmark (NR)** | 7.5 | 9.1 | -4.0 | 47.4 | 24.5 | 42.3 |
| MSCI Frontiers Index (NR) | 4.8 | 3.9 | -17.2 | 27.2 | 7.4 | 22.7 |
| MSCI Emerging Markets Index (NR) | 8.8 | 10.2 | -14.2 | 51.7 | 26.2 | 14.9 |
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 Ordinary Shares | |
| US Dollar | |
| Net asset value - capital only: | 172.33c |
| Net asset value - cum income: | 173.02c |
| Sterling: | |
| Net asset value - capital only: | 131.01p |
| Net asset value - cum income: | 131.53p |
| Share price: | 135.00p |
| Total assets (including income): | £316.2m |
| Premium to cum-income NAV: | 2.6% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.2% |
| Ordinary shares in issue: | 240,422,801 |
| 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 4.2% and includes the 2018 final dividend of 4.40 cents per share and special dividend of 1 cent per share, both of which were declared on 11 December 2018 and will be paid to shareholders on 7 February 2019. Also included is 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 2018.
| Sector Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | |
| Financials | 30.9 | Indonesia | 15.0 | |
| Consumer Discretionary | 15.8 | Argentina | 9.9 | |
| Real Estate | 15.3 | Malaysia | 8.8 | |
| Materials | 12.4 | Vietnam | 8.6 | |
| Consumer Staples | 10.0 | Egypt | 8.4 | |
| Health Care | 8.9 | Thailand | 8.1 | |
| Energy | 8.7 | United Arab Emirates | 8.0 | |
| Industrials | 6.9 | Kazakhstan | 6.6 | |
| Communication Services | 5.1 | Nigeria | 5.3 | |
| Information Technology | 1.1 | Romania | 4.7 | |
| ----- | Hungary | 3.7 | ||
| Total | 115.1 | Ukraine | 3.1 | |
| ----- | Philippines | 3.1 | ||
| Short positions | -7.3 | Kuwait | 3.0 | |
| ===== | Greece | 2.9 | ||
| Qatar | 2.7 | |||
| Poland | 2.5 | |||
| PAN-Africa | 2.4 | |||
| Saudi Arabia | 2.1 | |||
| Kenya | 2.0 | |||
| Tanzania | 1.4 | |||
| Turkey | 1.2 | |||
| PAN-Asian | 0.8 | |||
| Morocco | 0.8 | |||
| ----- | ||||
| Total | 115.1 | |||
| ----- | ||||
| Short positions | -7.3 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 28.02 2018 % | 31.03 2018 % | 30.04 2018 % | 31.05 2018 % | 30.06 2018 % | 31.07 2018 % | 31.08 2018 % | 30.09 2018 % | 31.10 2018 % | 30.11 2018 % | 31.12 2018 % | 31.01 2019 % | |
| Long | 102.1 | 97.0 | 113.2 | 119.5 | 116.2 | 113.9 | 107.7 | 107.7 | 107.8 | 108.1 | 109.3 | 115.1 |
| Short | 3.0 | 2.9 | 3.8 | 4.2 | 4.7 | 5.1 | 6.4 | 7.7 | 6.8 | 8.6 | 8.6 | 7.3 |
| Gross | 105.1 | 99.9 | 117.0 | 123.7 | 120.9 | 119.0 | 114.1 | 115.4 | 114.6 | 116.7 | 117.9 | 122.4 |
| Net | 99.1 | 94.1 | 109.4 | 115.3 | 111.5 | 108.8 | 101.3 | 100.0 | 101.0 | 99.5 | 100.7 | 107.8 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Banco Macro | Argentina | 4.5 |
| Astra International | Indonesia | 3.8 |
| Gedeon Richter | Hungary | 3.7 |
| Bk Rakyat | Indonesia | 3.1 |
| LT Group | Philippines | 3.0 |
| Zenith Bank | Nigeria | 3.0 |
| Thai Beverage Plc | Thailand | 2.8 |
| Ooredoo | Qatar | 2.7 |
| MHP | Ukraine | 2.7 |
| Siam Commercial Bank | Thailand | 2.7 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
January was marked by a rebound across risk assets as investor flows picked up following the fourth quarter 2018 sell-off. The MSCI World Index ended the month up by 7.7%. Emerging Markets led returns with the MSCI Emerging Markets Index gaining 8.7%, supported by a more dovish Federal Reserve and positive headlines surrounding trade tensions between China and the US. Frontier Markets lagged with the MSCI Frontiers Index gaining only 4.8% in aggregate. The Company's NAV returned 4.7% in January, versus its benchmark, the MSCI Frontiers Index, returned which rose by 7.5% (all performance figures are on a US Dollar basis with income reinvested).
Argentina (+20%) was one the month's top performing markets with lender Banco Macro (+31%) and energy producer YPF (+22%) among January's largest contributors. Investor confidence has started to come through as interest rates and currency have showed signs of stabilizing, providing a foundation for the economy to rebound from the recent downturn. Indonesian retailer, Mitra Adiperkasa (+28%), and Thai Beverage (+21%) performed well, supported by currency appreciation against the US Dollar and net positive market flows. Kenyan lender, Equity Bank (+19%), rounds out the month's top contributors.
Alternatively, our holdings in Romania were January's largest detractors. The market declined -10.3% as a number of adverse policy developments persisted from early December. Banks were among the worst affected as a number of proposed state revenue-enhancing measures are planned that could adversely impact EPS (earnings per share). The most recent draft budget did not cite estimates for the bank tax adding to investor uncertainty. Positions in Banca Transilvania (-21%) and BRD (-14%) also weighed on our performance during the month. Broadly, financials positions were the largest detractors as the macro-sensitive positions moved in tandem with weak market performance. Nigeria (-6%) has been affected by concerns over upcoming presidential elections; United Bank of Africa was down -11% on the month. Similarly, Greece's Alpha Bank was down -21% on concerns over NPE (non-performing exposure) reduction plans. UAE (United Arab Emirates) developer, EMAAR Development (-9%), rounds out the month's main detractors.
In terms of positioning, we are continuing to add to Indonesia as we expect the market to react positively to a weaker US Dollar, specifically initiating a position in Bank Rakyat. We have also added to our holdings in Argentina as the market shows signs of stabilizing. On the other hand, we exited our Bancolombia position, as lower oil prices will make it more difficult to see proper fiscal consolidation.
We continue to position the portfolio for a lower interest rate, weaker US Dollar and lower global growth environment and see 2019 shaping up to be a year characterised by weaker developed market equity markets, while a lower rate environment sets up the ability for Emerging and Frontier Markets to outperform, contrary to expectations. In aggregate the wide subset of countries that make up our investible universe continue to exhibit strong GDP (gross domestic profit) 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:
*BlackRock as at 31 January 2019
**MSCI as at 31 January 2019
21 February 2019
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
