BlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, August 22
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 July 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 | 5.1 | 5.5 | -1.6 | 26.9 | 37.7 | 93.2 |
| Net asset value | 4.5 | 9.4 | 3.2 | 32.1 | 48.1 | 99.3 |
| Benchmark (NR)** | 3.5 | 7.2 | 10.7 | 49.5 | 43.1 | 81.9 |
| MSCI Frontiers Index (NR) | 6.5 | 14.1 | 11.2 | 39.7 | 33.7 | 71.1 |
| MSCI Emerging Markets Index (NR) | 2.7 | 3.6 | 4.8 | 38.2 | 51.1 | 46.9 |
| US Dollars: | ||||||
| Share price | 1.1 | -0.9 | -8.1 | 17.2 | 0.1 | 52.4 |
| Net asset value | 0.5 | 2.7 | -3.6 | 22.0 | 7.6 | 56.9 |
| Benchmark (NR)** | -0.4 | 0.7 | 3.3 | 37.9 | 3.8 | 44.0 |
| MSCI Frontiers Index (NR) | 2.5 | 7.1 | 3.8 | 28.8 | -3.0 | 34.4 |
| MSCI Emerging Markets Index (NR) | -1.2 | -2.7 | -2.2 | 27.4 | 9.6 | 15.4 |
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: | 173.52c |
| Net asset value - cum income: | 178.35c |
| Sterling: | |
| Net asset value - capital only: | 141.72p |
| Net asset value - cum income: | 145.66p |
| Share price: | 144.00p |
| Total assets (including income): | £350.6m |
| Discount to cum-income NAV: | 1.1% |
| 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 2019 interim dividend of 3.00 cents per share announced on 30 May 2019 and paid to shareholders on 28 June 2019.
**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 | 28.4 | Indonesia | 14.7 | |
| Real Estate | 14.5 | United Arab Emirates | 10.6 | |
| Consumer Staples | 13.6 | Thailand | 9.5 | |
| Industrials | 13.1 | Vietnam | 9.0 | |
| Consumer Discretionary | 12.3 | Egypt | 8.9 | |
| Energy | 10.0 | Argentina | 6.7 | |
| Materials | 9.1 | Malaysia | 6.4 | |
| Health Care | 7.1 | Kazakhstan | 6.0 | |
| Communication Services | 4.9 | Philippines | 5.1 | |
| Utilities | 2.6 | Saudi Arabia | 4.9 | |
| Information Technology | 1.4 | Turkey | 4.2 | |
| ----- | Romania | 4.0 | ||
| 117.0 | Pakistan | 3.5 | ||
| Short positions | ----- | Nigeria | 3.4 | |
| -5.1 | Greece | 2.8 | ||
| ===== | Chile | 2.7 | ||
| Qatar | 2.5 | |||
| Ukraine | 2.3 | |||
| Colombia | 2.1 | |||
| Poland | 2.0 | |||
| PAN-Africa | 2.0 | |||
| Kenya | 1.8 | |||
| Kuwait | 0.9 | |||
| PAN-Asian | 0.7 | |||
| Morocco | 0.3 | |||
| ----- | ||||
| Total | 117.0 | |||
| ----- | ||||
| Short positions | -5.1 |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 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 % | 31.05 2019 % | 30.06 2019 % | 31.07 2019 % | |
| Long | 107.7 | 107.7 | 107.8 | 108.1 | 109.3 | 115.1 | 112.9 | 113.1 | 116.0 | 111.0 | 114.1 | 117.0 |
| Short | 6.4 | 7.7 | 6.8 | 8.6 | 8.6 | 7.3 | 6.7 | 6.6 | 6.6 | 8.8 | 8.1 | 5.1 |
| Gross | 114.1 | 115.4 | 114.6 | 116.7 | 117.9 | 122.4 | 119.6 | 119.7 | 122.6 | 119.8 | 122.2 | 122.1 |
| Net | 101.3 | 100.0 | 101.0 | 99.5 | 100.7 | 107.8 | 106.2 | 106.5 | 109.4 | 102.2 | 106.0 | 111.9 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Bank Mandiri | Indonesia | 3.5 |
| Vincom Retail | Vietnam | 3.2 |
| Charoen Pokphand Food | Thailand | 3.2 |
| Astra International | Indonesia | 3.0 |
| National Medical Care | Saudi Arabia | 3.0 |
| Emaar Development | United Arab Emirates | 3.0 |
| Banco Macro | Argentina | 3.0 |
| Semen Indonesia | Indonesia | 2.8 |
| LT Group | Philippines | 2.8 |
| Koza Altin | Turkey | 2.8 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company's NAV returned +0.5%1 versus its benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index ("Benchmark Index), which was down 0.4% in July2. For reference, the MSCI Frontiers Index was up 2.5%2, and the MSCI Emerging Markets Index was down 1.7%2 on a US Dollar basis, over the same period (all performance figures are on a US Dollar basis with net income reinvested).
Our allocation to United Arab Emirates was the largest contributor to returns in July driven by our holdings in real estate companies Emaar Development (+18.7%) and Emaar (+23.7%) Properties, which rallied as the market began to realize the deep value in both names. Positioning in Thailand was another positive contributor. Our holding in Telecom company Total Access Communication rose 12.5% as the stock responded well to recent earnings results and a view that the competitive environment is becoming more benign. We have been trimming the stock on this strength. In Vietnam, retailer Mobile World Investment Corporation (+15.2%) and mall operator Vincom Retail (+9.4%) were additional contributors driven by solid earnings results and increased investor interest in Vietnam given ongoing US China trade issues.
Our positioning in Argentina gave back some performance in July, driven by our holdings in Energy company YPF (-9.0%) and financial Banco Macro (-4.9%). We had been trimming Argentina into strength last month, while we remained overweight into the primary elections. Our holding in Nigerian financial Zenith Bank (-8.2%) was an additional detractor, as was pan-African Energy company Vivo Energy (-12.9%). While both stocks performed poorly over the last year, we remain positive on both. Our holding in Malaysian Tobacco company BAT Malaysia (-21.5%) negatively impacted performance following disappointing earnings results which saw higher costs and slower than expected growth in the legal tobacco market, post a government crackdown on the black market.
Portfolio manager, Emily Fletcher, visited Argentina in July. Our view has been that the elections in October would be a crucial test for the country and we had been cautiously optimistic about President Macri's chances of a second term. We believed that a continuation of a Macri government would be positive for the market as the country would move further along the path of economic normalization. Post month end, Macri surprisingly performed very poorly in primary elections and the market fell substantially.
We have been adding selectively to positions in the Philippines and Thailand, having changed our long-standing negative stance on the Philippines. While the country appeared to be late cycle and moved into twin fiscal and current account deficits, the market underperformed significantly, and pressure on the external accounts is subsiding. Meanwhile the Philippines is maintaining a strong structural growth rate of ~6% real GDP growth and has room to cut interest rates to stimulate activity cyclically. In Thailand, we are less optimistic on the market in aggregate but continue to find some interesting stock specific opportunities.
We see significant value in the smaller emerging and frontier markets and believe that the markets are well supported by the lower rate environment. We note that many stocks in our investible universe are trading at extreme valuations, in many cases at less than 4x PE. We view such deep value as an opportunity to invest in a wide subset of countries which exhibit good growth, have low government debt levels, and are home to companies with strong cash flow and high dividend yields, trading on some of the lowest valuations in the world.
Sources:
1BlackRock as at 31 July 2019
2MSCI as at 31 July 2019
22 August 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
