BlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, October 21
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 30 September 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 | -0.6 | -3.6 | -0.9 | 15.0 | 23.4 | 77.1 |
| Net asset value | 0.1 | -3.1 | 4.1 | 17.7 | 31.5 | 84.7 |
| Benchmark (NR)** | -1.4 | -2.9 | 5.8 | 35.3 | 29.2 | 70.6 |
| MSCI Frontiers Index (NR) | -3.1 | 2.1 | 12.0 | 29.2 | 23.4 | 64.0 |
| MSCI Emerging Markets Index (NR) | 0.7 | -1.1 | 3.7 | 25.5 | 47.6 | 41.5 |
| US Dollars: | ||||||
| Share price | 0.6 | -6.7 | -6.3 | 9.2 | -6.0 | 40.6 |
| Net asset value | 1.2 | -6.2 | -1.6 | 11.7 | 0.2 | 46.4 |
| Benchmark (NR)** | -0.2 | -6.0 | 0.0 | 28.4 | -1.8 | 35.9 |
| MSCI Frontiers Index (NR) | -2.0 | -1.1 | 5.9 | 22.6 | -6.2 | 29.6 |
| MSCI Emerging Markets Index (NR) | 1.9 | -4.2 | -2.0 | 19.0 | 12.2 | 11.8 |
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: | 161.17c |
| Net asset value - cum income: | 166.41c |
| Sterling: | |
| Net asset value - capital only: | 130.79p |
| Net asset value - cum income: | 135.04p |
| Share price: | 132.00p |
| Total assets (including income): | £325.0m |
| Discount to cum-income NAV: | 2.3% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 5.0% |
| 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 5.0% 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 | 23.0 | Indonesia | 13.1 | |
| Consumer Staples | 14.2 | Thailand | 12.1 | |
| Industrials | 13.6 | Egypt | 10.2 | |
| Consumer Discretionary | 13.3 | Vietnam | 9.9 | |
| Real Estate | 13.3 | United Arab Emirates | 9.1 | |
| Energy | 10.0 | Malaysia | 5.8 | |
| Materials | 9.9 | Philippines | 5.6 | |
| Health Care | 5.2 | Kazakhstan | 5.2 | |
| Communication Services | 4.0 | Turkey | 5.2 | |
| Utilities | 1.8 | Saudi Arabia | 4.6 | |
| Information Technology | 1.8 | Romania | 4.1 | |
| ----- | Pakistan | 3.9 | ||
| 110.1 | Nigeria | 3.7 | ||
| Short positions | ----- | Greece | 3.0 | |
| -4.1 | Colombia | 2.3 | ||
| ===== | PAN-Africa | 2.3 | ||
| Ukraine | 2.2 | |||
| Qatar | 2.2 | |||
| Chile | 1.9 | |||
| Argentina | 1.7 | |||
| Kenya | 1.1 | |||
| Poland | 0.7 | |||
| Morocco | 0.2 | |||
| ----- | ||||
| Total | 110.1 | |||
| ----- | ||||
| Short positions | -4.1 | |||
| ===== | ||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 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 % | 31.08 2019 % | 30.09 2019 % | |
| Long | 107.8 | 108.1 | 109.3 | 115.1 | 112.9 | 113.1 | 116.0 | 111.0 | 114.1 | 117.0 | 111.5 | 110.1 |
| Short | 6.8 | 8.6 | 8.6 | 7.3 | 6.7 | 6.6 | 6.6 | 8.8 | 8.1 | 5.1 | 4.2 | 4.1 |
| Gross | 114.6 | 116.7 | 117.9 | 122.4 | 119.6 | 119.7 | 122.6 | 119.8 | 122.2 | 122.1 | 115.7 | 114.2 |
| Net | 101.0 | 99.5 | 100.7 | 107.8 | 106.2 | 106.5 | 109.4 | 102.2 | 106.0 | 111.9 | 107.3 | 106.0 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Astra International | Indonesia | 3.5 |
| Charoen Pokphand Food | Thailand | 3.2 |
| Vincom Retail | Vietnam | 3.1 |
| PTT Global Chemical | Thailand | 3.1 |
| Eastern Tobacco | Egypt | 3.0 |
| LT Group | Philippines | 2.9 |
| Mobile World | Vietnam | 2.7 |
| Emaar Development | United Arab Emirates | 2.6 |
| Orascom Construction | Egypt | 2.6 |
| Bank of the Philippine Islands | Philippines | 2.5 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company's NAV returned +1.2%1 versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index ("Benchmark Index"), which was down 0.2% in August2. For reference, the MSCI Frontiers Index was down 2.0%2, and the MSCI Emerging Markets Index was up 1.9% over the same period (all performance figures are on a US Dollar basis with net income reinvested).
Stock selection in Chile, Egypt and UAE (United Arab Emirates), were among the largest contributors to Company's returns in September. Chilean airline, LatAm Airlines (+33%), was the month's top performer, benefitting from regional competitor Avianca's bankruptcy, and a recent bid from Delta to acquire a 20% stake of the company. Egypt saw a re-rating, supported by falling inflation which has allowed the central bank to cut rates. Positions in tobacco, namely Eastern Co. (+13%), and construction firm, Orascom Construction (+15%), contributed positively, the latter of which posted strong half yearly results and continues to see a build-up in their order book. UAE hospital operator, NMC (+10%), performed well on the back of positive half yearly results, which show better cash flow conversion and improvements in corporate governance.
On the other hand, Thai, Kazakh, and Indonesian positioning detracted the most over the month. Thai staple name, CP Foods (-11%), detracted amid weak chicken prices. Indonesian cement producer, Semen Indonesia (-9%), fell back from recent highs. Kazakh uranium miner, Kazatamprom (-12%), also weighed on returns as the parent company announced a placing of shares in the market.
The first half of September brought a significant style rotation in equity markets, most stark in the US with a multiple standard deviation move over a matter of days. The move in Emerging Markets, though more muted, was notable. Positioning remained relatively unchanged, however, we did make some notable stock specific trades through September. In Poland, we exited exiting copper miner, KGHM, on concerns of global growth deterioration and also sold our position in Alior Bank, as corporate asset quality issues persist. On the other hand, we rotated capital into Thai petrochemical company, PTT Global Chemical where we think valuation has hit trough levels and the dividend yield remains attractive. We added a new position in the Philippines, Bloomberry Resorts, an integrated casino, entertainment and hotel complex. The Philippines is one of our preferred countries from a macro perspective where we think that economic growth will be supported by recent rate cuts and RRR (reserve requirement ratio) cuts by the BSP (The Bangko Sentral) and a number of stocks look attractively valued.
We see significant value in the smaller emerging and frontier markets and see the markets well supported by the lower rate environment. We note that a lot of stocks in our universe are trading at extreme valuations, which we view 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 30 September 2019
2MSCI as at 30 September 2019
21 October 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.
