BlackRock Frontiers Investment Trust NAV returned +3.2% outperforming its benchmark

BlackRock

BlackRock Frontiers Investment Trust plc (LON:BRFI) has provided its latest portfolio update.

All information is at 28 February 2021 and unaudited.

You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi

Performance at month end with net income reinvested.

One
 month
%
Three
months
%
One
 year
%
Three
 years
%
Five
 years
%
Since 
Launch*
%
Sterling:
Share price-1.98.917.2-17.536.969.6
Net asset value1.36.714.1-13.439.978.3
Benchmark (NR)**-1.1-0.40.0-10.133.047.5
MSCI Frontiers Index (NR)-1.71.5-1.0-4.940.757.2
MSCI Emerging Markets Index (NR)-1.06.524.318.5102.671.4
US Dollars:
Share price-0.114.028.3-16.237.452.7
Net asset value3.211.724.9-12.140.460.3
Benchmark (NR)**-0.73.08.0-10.031.731.6
MSCI Frontiers Index (NR)0.16.38.4-3.541.240.9
MSCI Emerging Markets Index (NR)0.811.536.020.3103.253.7

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:167.70c
Net asset value – cum income:169.15c
Sterling:
Net asset value – capital only:119.96p
Net asset value – cum income:120.99p
Share price:117.25p
Total assets (including income):£229.1m
Discount to cum-income NAV:3.1%
Gearing:nil
Gearing range (as a % of gross assets):0-20%
Net yield*:4.5%
Ordinary shares in issue**:189,325,748
Ongoing charges***:1.4%
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 4.5% and includes the 2020 final dividend of 4.25 cents per share declared on 11 December 2020 which paid on 12 February 2021. Also included is the 2020 interim dividend of 2.75 cents per share, announced on 28 May 2020 and paid to shareholders on 26 June 2020.

** Excluding 612,283 ordinary shares held in treasury.

***Calculated as a percentage of average net assets and using expenses, excluding Performance fees and interest costs for the year ended 30 September 2020.

Sector
Analysis
Gross market value as a % of net assets*Country
Analysis
Gross market value as a % of net assets*
Financials31.9Saudi Arabia14.1
Materials16.6Indonesia12.6
Consumer Discretionary15.6Vietnam10.6
Industrials13.0Kazakhstan8.0
Energy11.0Thailand7.4
Consumer Staples8.9Egypt6.8
Real Estate5.4Greece6.3
Information Technology3.3Philippines5.5
Utilities3.0Chile5.0
Communication Services2.7Malaysia4.2
Health Care2.6Turkey4.0
—–United Arab Emirates3.9
114.0Poland3.9
—–Pakistan3.5
Short positions-4.5Qatar3.0
=====Hungary2.2
Peru2.0
Romania1.9
Panama1.6
Pan-Emerging Europe1.5
Ukraine1.5
Colombia1.4
Pan Africa1.4
Kenya1.2
Nigeria0.5
        —–
Total114.0
—–
Short positions-4.5
=====

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

Market Exposure
 

31.03
 2020
    %
30.04
 2020
    %
31.05
 2020
    %
30.06
 2020
    %
31.07
 2020
    %
31.08
 2020
    %
30.09
 2020
    %
31.10
 2020
    %
30.11
 2020
    %
31.12
 2020
    %
31.01
 2020
    %
28.02
 2020
    %
Long106.4105.9109.6109.8110.3110.2107.8106.9107.3107.9110.4114.0
Short 2.5 2.6 2.5 1.5 1.1 0.0 0.0 0.0 0.0 1.1 1.1 4.5
Gross110.9108.9108.5112.1111.3111.4110.2107.8106.9107.3109.0118.5
Net103.3103.9103.3107.1108.3109.2110.2107.8106.9107.3106.8109.5

Ten Largest Investments

CompanyCountry of RiskGross market value as a % of net assets*
Mobile WorldVietnam3.8
FPTVietnam3.3
Bk RakyatIndonesia3.3
JSC KaspiKazakhstan3.1
CP All PCLThailand3.1
National Commercial BankSaudi Arabia3.1
PTT Exploration & Production PublicThailand3.0
Yanbu National PetrochemicalSaudi Arabia2.8
TuprasTurkey2.6
Sahara International PetrochemicalSaudi Arabia2.6

*These percentages reflect portfolio exposure gained from both the equity holdings and exposure through contracts for differences where relevant.

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

The Company’s NAV returned +3.2%1 versus the Company’s benchmark (the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”)), which returned -0.7% in February2. For reference, the MSCI Emerging Markets Index ended the month +0.8% and the MSCI Frontier Markets Index +0.1%2 over the same period (all performance figures are on a US Dollar basis with net income reinvested).

February saw the hope of eventual reopening spread further through frontier markets. Whilst the majority of countries are still at early stages with their vaccination programs, frontier markets have started to price the expectation of reopening.

For emerging markets, February was a volatile month with markets driven by a rotation favouring cyclicality to the detriment of growth and momentum. The rotation was more muted within the smaller markets, but sufficient to see many of our “reopening” and more cyclical trades benefit. Indicators suggest that US household wealth actually rose substantially through 2020 and as a result of this pent-up demand, we expect to see a sharp acceleration in growth as the economy reopens. At the same time, what started as price rises due to supply side constraints in the commodities sector, has been met with this strong emergence of demand, causing the majority of both soft and hard commodities to reach prices that we haven’t seen for multiple years. There is, as yet, little sign of inflation picking up in the vast majority of markets, however, but we do expect some pick up over the next quarters.

Kazakhstan was the best performing country for the month. Uranium miner, Kazatomprom, rose 27% as investors concluded that a shift towards lower carbon sources of energy would likely results in an increased emphasis on nuclear energy, particularly in China, benefiting Uranium prices. Fintech, Kaspi rose 12% as the company continued to show very strong growth trends, building on its very high market share in payments in Kazakhstan. February was also a good month for Vietnam. IT outsourcer, FPT, rose 22% after reporting better than expected results, with profits up 13% compared with the previous year, despite the COVID impact. Soy milk producer, Quang Ngai Sugar, rose 14% following the increase in sugar prices in Vietnam.

Our position in wind energy stock, Terna Energy, was the weakest performer over the month, falling 14% as the company’s Texas operations froze in the abnormally cold weather. This meant that Terna was forced to purchase electricity on grid at extremely high prices to cover its contract obligations. Whilst this had a significant impact on the company, the maximum liability for this event is known and we continue to think the company offers a very interesting growth profile through its Greek assets.

We have increased our exposure our exposure to a number of companies which are currently benefiting from the strong trends in commodity prices, including Titan Cement and methanol producer, Sahara International Petrochemical. This has been funded from a reduction some of the exposure that we had to “carry” countries, those with greater debt loads, who are more reliant on foreign capital investment, such as Indonesia and the Philippines. We believe that frontier markets continue to look very attractive both on a relative and absolute basis, containing some of the best valued companies globally with a number of markets still trading significantly below their average 10 year price to book valuations.

Sources:

1BlackRock as at 28 February 2021

2MSCI as at 28 February 2021

You can discover more about the BlackRock Frontiers Investment Trust at blackrock.com/uk/brfi

Find more news, interviews, share price & company profile here for:
BlackRock Frontiers Investment Trust plc

Good news travels fast (but only if you make that happen):

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook
Share on email
Email
Share on whatsapp
WhatsApp