BlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, February 20
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 January 2020 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 | -11.7 | -6.4 | -10.1 | -8.8 | 31.1 | 59.9 |
| Net asset value | -4.5 | -5.1 | -4.7 | -0.4 | 27.5 | 68.5 |
| Benchmark (NR)** | -3.7 | -2.9 | -5.7 | 13.2 | 31.9 | 57.9 |
| MSCI Frontiers Index (NR) | 0.4 | 3.8 | 12.3 | 16.3 | 35.6 | 63.4 |
| MSCI Emerging Markets Index (NR) | -4.2 | 0.4 | 3.6 | 19.8 | 41.9 | 41.1 |
| US Dollars: | ||||||
| Share price | -12.2 | -4.6 | -10.0 | -4.3 | 15.3 | 35.8 |
| Net asset value | -5.0 | -3.4 | -4.5 | 4.4 | 12.1 | 42.9 |
| Benchmark (NR)** | -4.2 | -1.1 | -5.5 | 18.6 | 15.8 | 34.6 |
| MSCI Frontiers Index (NR) | -0.1 | 5.7 | 12.6 | 21.9 | 19.0 | 38.1 |
| MSCI Emerging Markets Index (NR) | -4.7 | 2.3 | 3.8 | 25.5 | 25.0 | 19.3 |
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: | 157.31c |
| Net asset value - cum income: | 157.93c |
| Sterling: | |
| Net asset value - capital only: | 119.34p |
| Net asset value - cum income: | 119.80p |
| Share price: | 116.00p |
| Total assets (including income): | £289.7m |
| Discount to cum-income NAV: | 3.2% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 5.2% |
| Ordinary shares in issue: | 241,822,801 |
| 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 5.2% and includes the 2019 final dividend of 4.75 cents per share declared on 06 December 2019 with a pay date of 07 February 2020. 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 2019.
| Sector Analysis | Gross market value as a % of net assets* | Country Analysis | Gross market value as a % of net assets* | |
| Financials | 29.9 | Indonesia | 15.5 | |
| Consumer Staples | 16.0 | Thailand | 12.5 | |
| Consumer Discretionary | 15.2 | Egypt | 9.9 | |
| Materials | 12.5 | Saudi Arabia | 9.5 | |
| Real Estate | 12.0 | Vietnam | 9.3 | |
| Industrials | 10.3 | Philippines | 7.1 | |
| Energy | 7.9 | United Arab Emirates | 6.5 | |
| Communication Services | 3.6 | Malaysia | 4.9 | |
| Health Care | 2.0 | Pakistan | 4.9 | |
| Utilities | 1.8 | Kazakhstan | 4.7 | |
| Information Technology | 1.8 | Turkey | 4.0 | |
| ----- | Ukraine | 2.7 | ||
| 113.0 | Greece | 2.5 | ||
| Short positions | ----- | Nigeria | 2.5 | |
| -1.1 | Romania | 2.4 | ||
| ===== | PAN-Africa | 2.3 | ||
| Pan-Emerging Europe | 2.3 | |||
| Qatar | 2.2 | |||
| Chile | 2.0 | |||
| Poland | 2.0 | |||
| Kenya | 1.6 | |||
| Colombia | 1.4 | |||
| Argentina | 0.3 | |||
| ----- | ||||
| Total | 113.0 | |||
| ----- | ||||
| Short positions | -1.1 | |||
| ===== | ||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 28.02 2019 % | 31.03 2019 % | 30.04 2019 % | 31.05 2019 % | 30.06 2019 % | 31.07 2019 % | 31.08 2019 % | 30.09 2019 % | 31.10 2019 % | 30.11 2019 % | 31.12 2019 % | 31.01 2020 % | |
| Long | 112.9 | 113.1 | 116.0 | 111.0 | 114.1 | 117.0 | 111.5 | 110.1 | 108.0 | 107.8 | 108.0 | 113.0 |
| Short | 6.7 | 6.6 | 6.6 | 8.8 | 8.1 | 5.1 | 4.2 | 4.1 | 2.2 | 1.7 | 1.0 | 1.1 |
| Gross | 119.6 | 119.7 | 122.6 | 119.8 | 122.2 | 122.1 | 115.7 | 114.2 | 110.2 | 109.5 | 109.0 | 114.1 |
| Net | 106.2 | 106.5 | 109.4 | 102.2 | 106.0 | 111.9 | 107.3 | 106.0 | 105.8 | 106.1 | 107.0 | 111.9 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Astra International | Indonesia | 4.2 |
| Bank Mandiri | Indonesia | 3.7 |
| United International Transport | Saudi Arabia | 3.5 |
| Charoen Pokphand Food | Thailand | 3.0 |
| Vincom Retail | Vietnam | 2.9 |
| Eastern Tobacco | Egypt | 2.9 |
| Bank of the Philippine Islands | Philippines | 2.8 |
| Yanbu National Petrochemical | Saudi Arabia | 2.8 |
| Halyk Savings Bank | Kazakhstan | 2.7 |
| MCB Bank | Pakistan | 2.7 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:
The Company's NAV returned -5.0%1 versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index ("Benchmark Index"), which returned -4.2% in January2. For reference, the MSCI Emerging Markets Index ended the month -4.7% and MSCI Frontier Markets Index -0.1%2 over the same period (all performance figures are on a US Dollar basis with net income reinvested).
Our holdings in Nigeria were the top contributors to returns in January driven by strong performance from the banks (Zenith Bank +11% and United Bank for Africa +11%). The bank dividend yields currently compare very favourably to interest rates that domestic savers can access. Our position in Kazakh financial Halyk Savings Bank (+9.0%) was an additional contributor. Our holdings in Pakistan also contributed positively, driven by holdings in MCB Bank (+2.8%) and HUB Power(+4.5%). Pakistan has seen a substantial narrowing of its trade deficit over the last year, reducing pressure on its currency.
The largest detractor from returns this month were our holdings in the Philippines driven by holdings in tobacco (LT Group -18.5%) and tourism (Bloombery Resorts -20.4%). While the Philippines market has been a weak performer, we remain overweight. We continue to see strong underlying fundamentals such as healthy loan growth which should help banks earnings, while the central bank still has room to further cut rates in our view. Our holding in Vietnam mall operator Vincom Retail (-12.0%) was an additional detractor as Coronavirus fears hit the region. We reduced our exposure to the market given the risk of a slowdown in activity in Vietnam if the virus spreads. Ukraine protein company MHP also detracted (-13.4%) after a case of bird flu was detected in the country.
The highest conviction country positions in the Company are Egypt, Vietnam and Pakistan; while we remain underweight Saudi Arabia, Malaysia and Kuwait. We made a few changes to the portfolio in January. We are tracking the Coronavirus outbreak closely, paying attention to the impact on consumption as well as the impact of supply chain disruption on production and the effect these are likely to have on China's H1 GDP. We don't foresee market volatility resulting from the outbreak disrupting the medium-term positive set up for emerging and frontier equities and we are using market movement to add to our high conviction positions. Elsewhere, we have been trimming Nigerian exposure into strength and are increasingly concerned about Turkey given signs of intervention in the currency market, as policymakers try to fight what we believe is an inevitable currency devaluation.
We still see significant value in the smaller emerging and frontier markets and believe a number of these countries are set up for a strong year in 2020. We see the markets are well supported by the lower rate environment and improved local and global liquidity. Emerging market equities have lagged with the earnings yield not following the decline in bond yields. The asset class should also get some help from foreign exchange rates and we note that many emerging market currencies look to have broken out in recent weeks. We also note that many stocks in our universe are trading at extremely low valuations, which we view as an opportunity to invest in a wide subset of countries which exhibit good growth and have low government debt levels. We continue to look for companies with strong cash flow and high dividend yields, trading on some of the lowest valuations in the world.
Sources:
1BlackRock as at 31 January 2020
2MSCI as at 31 January 2020
21 February 2020
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.
