BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

 

All information is at 31 August 2024 and unaudited.

Performance at month end with net income reinvested.

 

                                 One   Three  One  Three Five  Since
                                 month months year years years Launch*
                                 %     %      %    %     %     %

Sterling:

Share price                      -1.0  -0.8   5.4  33.0  36.6  143.4

Net asset value                  -1.0  2.0    5.8  32.6  45.5  168.6

Benchmark (NR)**                 0.9   4.4    5.1  13.9  9.2   89.0

MSCI Frontiers Index (NR)        -0.3  0.6    6.1  -3.4  6.5   80.2

MSCI Emerging Markets Index (NR) -0.7  2.6    10.9 -4.6  17.1  64.5

US Dollars:

Share price                      1.3   2.4    9.3  27.1  47.5  106.2

Net asset value                  1.3   5.3    9.7  26.7  57.1  127.2

Benchmark (NR)**                 3.2   7.7    9.0  8.7   17.8  60.5

MSCI Frontiers Index (NR)        2.0   3.9    10.1 -7.8  14.9  51.9

MSCI Emerging Markets Index (NR) 1.6   5.9    15.1 -8.9  26.3  38.7

 

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:                        203.94c

Net asset value - cum income:                          209.30c

Sterling:

Net asset value - capital only:                        155.17p

Net asset value - cum income:                          159.25p

Share price:                                           145.50p

Total assets (including income):                       £301.5m

Discount to cum-income NAV:                            8.6%

Gearing:                                               Nil

Gearing range (as a % of gross assets):                0-20%

Net yield*:                                            4.5%

Ordinary shares in issue**:                            189,325,748

Ongoing charges***:                                    1.38%

Ongoing charges plus taxation and performance fee****: 3.78%

 

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.5%, and includes the 2023 final dividend of 4.90 cents per share, declared on 30 November 2023, and paid to shareholders on 14 February 2024, and the 2024 interim dividend of 3.50 cents per share, declared on 31 May 2024, and paid to shareholders on 01 July 2024.

** Excluding 52,497,053 ordinary shares held in treasury.

***The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding performance fees, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for Year ended 30 September 2023.

**** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses and including performance fees but excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for Year ended 30 September 2023.

 

Sector           Gross market value    Country              Gross market value
Analysis         as a % of net assets  Analysis             as a % of net assets

Financials       46.5                  Indonesia            15.5

Industrials      11.8                  Saudi Arabia         15.4

Real Estate      11.0                  Philippines          9.2

Materials        10.5                  United Arab Emirates 8.5

Consumer Staples 8.2                   Kazakhstan           7.9

Communication    8.0                   Poland               5.8
Services

Energy           5.2                   Hungary              5.6

Consumer         5.1                   Thailand             5.4
Discretionary

Information      4.3                   Turkey               4.8
Technology

Health Care      1.5                   Pakistan             3.5

Utilities        0.2                   Kenya                3.4

                 -----                 Bangladesh           3.1

                 112.3                 Georgia              2.5

                 -----                 Qatar                2.5

Short Positions  -3.6                  Vietnam              2.5

                                       Greece               2.4

                                       Singapore            2.3

                                       Czech Republic       1.9

                                       Multi-International  1.9

                                       Egypt                1.8

                                       Malaysia             1.7

                                       Chile                1.6

                                       Colombia             1.5

                                       Cambodia             0.8

                                       Romania              0.8

                                                            -----

                                                            112.3

                                                            -----

                                                            -3.6
                                       Short positions
                                                            ----

*reflects gross market exposure from contracts for difference (CFDs).

 

Market Exposure
 

      30.09 31.10 30.11 31.12 31.01 29.02 31.03 30.04 31.05 30.06 31.07 31.08

      2023  2023  2023  2023  2024  2024  2024  2024  2024  2024  2024  2024

      %     %     %     %     %     %     %     %     %     %     %     %

Long  114.9 118.8 113.4 116.6 119.5 121.4 120.4 120.8 118.1 118.4 116.1 112.3

Short 3.0   3.1   4.6   4.7   3.6   3.5   2.7   2.3   2.4   2.9   3.5   3.6

Gross 117.9 121.9 118.0 121.3 123.1 124.9 123.1 123.1 120.5 121.3 119.6 115.9

Net   111.9 115.7 108.8 111.9 115.9 117.9 117.7 118.5 115.7 115.5 112.6 108.7

 

 

Ten Largest Investments

 

Company                  Country of Risk      Gross market value as a % of net
                                              assets

Bank Central Asia        Indonesia            5.0

Emaar Properties         United Arab Emirates 4.4

Saudi National Bank      Saudi Arabia         4.1

Kaspi.Kz JCS             Kazakhstan           3.9

Ayala Land               Philippines          3.2

PT Bank Negara Indonesia Indonesia            3.1

CP ALL                   Thailand             2.8

Etihad Etisalat          Saudi Arabia         2.6

OTP Bank                 Hungary              2.6

PZU                      Poland               2.6

 

Commenting on the markets, Sam Vecht, Emily Fletcher and Sudaif Niaz, representing the Investment Manager noted:
 

The Company’s NAV rose by 1.3% in August, underperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which returned +3.2%. For reference, the MSCI Emerging Markets Index was up 1.6% while the MSCI Frontier Markets Index gained 2.0% over the same period. All performance figures are on a US Dollar basis with net income reinvested. 1

 

Emerging markets posted modest gains of 1.6%, continuing to underperform Developed Markets (+2.5%). The month began with a sharp equity sell-off driven by two macro events: a weaker-than-expected US labour market report, raising recession fears, and a BOJ (Bank of Japan) rate hike that led to a sharp appreciation of the JPY and a carry trade unwind. This resulted in the largest intraday spike in the VIX (volatility index) since 1990. Despite these initial shocks, Emerging Markets recovered as US recession fears eased with better growth and inflation data. A declining US dollar provided a tailwind for Emerging Markets. ASEAN (Association of Southeast Asian Nations) markets were notable outperformers in August.

 

Although stock selection had a negative impact on the overall portfolio returns, certain stocks performed well. The largest contributor to returns was our holding in Ayala Land (+24.4%), the Philippine's based property developer. The stock price rose as a result of a beat on Q2 presales. Another positive contributor was our holding in Sea Ltd (+19.2%), a Singapore based global consumer internet company, which rose on the back of strong Q2 results. Bank Negara (+13.3), the Indonesian bank, also performed well. Another bank that did well was Metrobank (+11.2%) in Malaysia.

 

On the flipside, Hungarian low-cost carrier Wizz Air (-28.6%) extended its losses from July and was the largest detractor for the second month in a row. Turkish commercial bank Türkiye İş Bankası (-14.3%) also fell alongside the Turkish market. Frontken (-10.3%), a Malaysia-based company specialising in services provided to the semiconductor industry, was another detractor after delivering disappointing Q2 results from weakness in their energy subsidiary in Malaysia. We continue to like the stock and believe the confluence of one-off negatives in Q2 will likely mark the low point in earnings.

 

We made few changes to the portfolio in August. We increased our exposure to Bangladesh through initiating a position in commercial bank BRAC Bank, reflecting our positive macro view on the country post the government change. We also added to our holding in Astra International, increasing our exposure to this Indonesian economy proxy. We believe threat from new Chinese auto OEMs (original equipment manufacturer) is well priced into the stock’s historically low valuation. Elsewhere, we reduced our exposure to Hungarian oil and gas company, MOL. The stock has been a strong contributor to the fund over the last couple of years on strong dividends. We also exited National Bank of Greece as share price reached our fair value estimate.

 

As higher global rates continue to feed through into the real economy, we expect some moderation of demand in developed markets. We note slowing credit growth in particular in the US. In contrast, we continue to see improving activity levels in some frontier and smaller emerging markets. With inflation falling across many countries within our universe, rate cuts have started to materialize in some countries. This is a good set up for domestically oriented economies to see a cyclical pick up. We remain positive on the outlook for small emerging and frontier markets relative developed markets, and we find significant value in currencies and equity markets across our investment opportunity set. Our investment universe, in absolute and relative terms, remains under-researched and we believe this should enable compelling alpha opportunities.

 

Sources:

1 BlackRock as at 31 August 2024

 

24 September 2024

 

ENDS

 

Latest information is available by typing www.blackrock.com/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.

 

Release