BlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, June 3
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 30 April 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 | 4.5 | 3.0 | -11.7 | 41.1 | 41.5 | 83.2 |
| Net asset value | 0.7 | 3.1 | -10.3 | 40.7 | 40.5 | 82.2 |
| Benchmark (NR)** | 1.7 | 1.4 | 2.6 | 51.9 | 43.8 | 69.7 |
| MSCI Frontiers Index (NR) | 0.1 | 3.1 | -7.1 | 33.3 | 26.3 | 50.0 |
| MSCI Emerging Markets Index (NR) | 2.1 | 4.1 | 0.3 | 54.7 | 57.9 | 41.8 |
| US Dollars: | ||||||
| Share price | 4.6 | 2.0 | -16.3 | 25.7 | 9.5 | 53.9 |
| Net asset value | 0.7 | 2.1 | -15.0 | 25.3 | 8.7 | 52.8 |
| Benchmark (NR)** | 1.8 | 0.5 | -2.9 | 35.1 | 11.1 | 43.0 |
| MSCI Frontiers Index (NR) | 0.2 | 2.2 | -12.1 | 18.7 | -2.5 | 25.4 |
| MSCI Emerging Markets Index (NR) | 2.1 | 3.2 | -5.0 | 37.7 | 21.9 | 18.5 |
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: | 173.14c |
| Net asset value - cum income: | 176.72c |
| Sterling: | |
| Net asset value - capital only: | 132.81p |
| Net asset value - cum income: | 135.56p |
| Share price: | 139.00p |
| Total assets (including income): | £326.3m |
| Premium to cum-income NAV: | 2.5% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 4.6% |
| Ordinary shares in issue: | 240,672,801 |
| 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 4.6% and includes the 2018 final dividend of 4.40 cents per share and special dividend of 1.0 cents per share, both of which were declared on 11 December 2018 and were 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 | 31.1 | Indonesia | 14.6 | |
| Real Estate | 16.1 | United Arab Emirates | 9.6 | |
| Consumer Staples | 13.6 | Malaysia | 9.0 | |
| Consumer Discretionary | 13.1 | Vietnam | 8.9 | |
| Health Care | 9.4 | Egypt | 8.7 | |
| Industrials | 9.1 | Thailand | 8.7 | |
| Energy | 8.4 | Argentina | 7.6 | |
| Materials | 7.0 | Kazakhstan | 6.5 | |
| Communication Services | 5.9 | Romania | 5.7 | |
| Information Technology | 1.3 | Nigeria | 4.2 | |
| Utilities | 1.0 | Greece | 3.9 | |
| ----- | Saudi Arabia | 3.9 | ||
| 116.0 | Philippines | 3.1 | ||
| Short positions | ----- | Turkey | 3.1 | |
| -6.6 | Poland | 2.6 | ||
| ===== | Ukraine | 2.6 | ||
| PAN-Africa | 2.4 | |||
| Kuwait | 2.3 | |||
| Qatar | 2.3 | |||
| Kenya | 1.9 | |||
| Pakistan | 1.6 | |||
| Hungary | 1.5 | |||
| PAN-Asian | 0.7 | |||
| Morocco | 0.6 | |||
| ----- | ||||
| Total | 116.0 | |||
| ----- | ||||
| Short positions | -6.6 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 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 % | 28.02 2019 % | 31.03 2019 % | 30.04 2019 % | |
| Long | 119.5 | 116.2 | 113.9 | 107.7 | 107.7 | 107.8 | 108.1 | 109.3 | 115.1 | 112.9 | 113.1 | 116.0 |
| Short | 4.2 | 4.7 | 5.1 | 6.4 | 7.7 | 6.8 | 8.6 | 8.6 | 7.3 | 6.7 | 6.6 | 6.6 |
| Gross | 123.7 | 120.9 | 119.0 | 114.1 | 115.4 | 114.6 | 116.7 | 117.9 | 122.4 | 119.6 | 119.7 | 122.6 |
| Net | 115.3 | 111.5 | 108.8 | 101.3 | 100.0 | 101.0 | 99.5 | 100.7 | 107.8 | 106.2 | 106.5 | 109.4 |
Ten Largest Investments
Company | Country of Risk | Gross market value as a % of net assets |
| National Medical Care | Saudi Arabia | 3.5 |
| Banco Macro | Argentina | 3.4 |
| Bank Mandiri | Indonesia | 3.4 |
| Astra International | Indonesia | 3.2 |
| Vincom Retail | Vietnam | 3.1 |
| LT Group | Philippines | 3.1 |
| Eastern Tobacco | Egypt | 2.9 |
| Thai Beverage | Thailand | 2.8 |
| NMC Health | United Arab Emirates | 2.7 |
| Emaar Development | United Arab Emirates | 2.6 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company's NAV returned +0.7%1 versus its benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index ("Benchmark Index"), which returned +1.8%2. For reference, the MSCI Frontiers Index was broadly flat at +0.2%2, and the MSCI Emerging Markets Index returned +2.1%2 on a US Dollar basis (all performance figures are on a US Dollar basis with net income reinvested).
Stocks in Greece and United Arab Emirates were the largest contributors to portfolio returns in April. Greek banks, National Bank of Greece (+25%) and Alpha Bank (+12%), added to returns as it seemed increasingly likely that one of the proposed government plans to aid bad loan reduction and rebuild bank balance sheets would be adopted. As of the end of April, National Bank of Greece had rallied >100% from its lows mid-January. NMC Health (+24%), a hospital operator with operations across the Middle East, contributed to performance as the stock rose on improved sentiment post over-sold levels in previous month.
The allocation to Argentina detracted from returns as the market was spooked by March inflation numbers being reported above expectations creating further pressure on the currency and increasing political pressure on President Macri given elections later this year. Our holdings in Argentine financial, Banco Macro (-11%), electric utility, Pampa Energia (-24%), and commercial real estate company, IRSA (-14%), all sold off. Our position in Indonesian coal supplier, Indo Tambangraya Megah (-13%), was an additional detractor as the stock declined as thermal coal prices fell.
Saudi Arabia performed well driven by inflows to the market due to the country joining the MSCI Index. Our holding in National Medical Care (+17%) had a strong month, reporting improved results and demonstrating good cost control. We maintain the view that the majority of the market is trading at overly expensive valuations and hence, we currently hold very little exposure to Saudi Arabia, something which detracted from relative performance during the month.
In terms of positioning the portfolio, we rotated exposures within Indonesia by taking profits in public real estate company, Pakuwon Jati, and adding to conglomerate, Astra International, reducing illiquid exposure within the portfolio. We also switched exposures within Indonesian financials on relative performance by selling Bank Rakyat Indonesia and buying Bank Mandiri. We reduced positions in Malaysian names, which hit our target prices and had contributed positively to returns of the Company through telecommunications company, Telekom Malaysia, and auto manufacturer, UMW Holdings.
During the month we travelled to the ASEAN region (Malaysia, Philippines and Thailand), as well as to the Central Asian region (Kazakhstan, Turkmenistan, Azerbaijan and Uzbekistan). Following our trip to Malaysia we downgraded growth expectations, despite the first switch in government since independence having been enacted more smoothly than initially expected. In Thailand we found some interesting stock-specific opportunities in some less well known companies. In the Philippines, we are more positive having addressed some concerns around the funding of its twin deficits, and in Kazakhstan, we believe there will be minimal impact from the recent political changes in near term with no pressure on volatility to rise in the market. We remain comfortable with our exposure to Kazakhstan, despite the political changes.
While emerging and frontier markets delivered a strong first quarter, indicators of market sentiment look far from overstretched particularly in the smaller markets in which we invest. We continue to position for a positive environment for emerging and frontier markets in aggregate, supported by a lower rate environment. Overall, the wide subset of countries that make up our investible universe 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, and on some of the lowest valuations in the world.
Sources:
1BlackRock as at 30 April 2019
2MSCI as at 30 April 2019
3 June 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
