# BlackRock Frontiers Investment Trust: Strong performance in Eastern Europe and optimistic outlook for Emerging Markets

- Link: https://www.directorstalkinterviews.com/blackrock-frontiers-investment-trust-strong-performance-in-eastern-europe-and-optimistic-outlook-for-emerging-markets/4121119751
- Published: 2023-05-22T08:40:12+01:00
- Author: Amilia Stone

**BlackRock Frontiers Investment Trust plc** ([LON:BRFI](https://www.directorstalkinterviews.com/company/blackrock-frontiers-investment-trust-plc/brfi.l))
has announced its latest portfolio update.

All information is at **30 April 2023** and unaudited.

**You can discover more about the BlackRock Frontiers Investment Trust at [blackrock.com/uk/brfi](https://www.blackrock.com/uk/individual/products/investment-trusts/our-range/blackrock-frontiers-investment-trust/trust-information?siteEntryPassthrough=true&cid=aff:investmenttrusts2020:brfi:directorstalk:link)**

**Performance at month end with net income reinvested.**

|  | One
 month% | Threemonths% | One year% | Three years% | Five years% | Since Launch*% | 
| Sterling: |  |  |  |  |  |  | 
| Share price | 0.4 | -0.7 | 4.0 | 74.5 | 2.3 | 112.1 | 
| Net asset value | 2.5 | 2.6 | 2.1 | 78.0 | 16.1 | 135.8 | 
| Benchmark (NR)** | 1.3 | -1.9 | -8.9 | 35.3 | 8.3 | 79.2 | 
| MSCI Frontiers Index (NR) | -1.1 | -2.9 | -14.9 | 18.7 | -1.6 | 58.9 | 
| MSCI Emerging Markets Index (NR) | 0.2 | -3.9 | -3.8 | 17.4 | 7.1 | 51.3 | 
|  |  |  |  |  |  |  | 
| US Dollars: |  |  |  |  |  |  | 
| Share price | 2.0 | 1.3 | 4.2 | 74.0 | -6.5 | 71.9 | 
| Net asset value | 4.2 | 4.7 | 2.3 | 77.5 | 6.1 | 90.7 | 
| Benchmark (NR)** | 3.0 | 0.1 | -8.8 | 34.8 | -1.2 | 45.5 | 
| MSCI Frontiers Index (NR) | 0.5 | -0.8 | -14.8 | 18.3 | -10.2 | 28.1 | 
| MSCI Emerging Markets Index (NR) | 0.2 | -3.5 | -5.3 | 15.1 | -3.8 | 20.0 |

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: | 182.56c | 
| Net asset value – cum income: | 186.15c | 
| Sterling: |  | 
| Net asset value – capital only: | 145.25p | 
| Net asset value – cum income: | 148.10p | 
| Share price: | 135.00p | 
| Total assets (including income): | £280.4m | 
| Discount to cum-income NAV: | 8.8% | 
| Gearing: | nil | 
| Gearing range (as a % of gross assets): | 0-20% | 
| Net yield*: | 4.2% | 
| 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 4.2% and includes the 2022 interim dividend
of 2.75 cents per share, declared on 26 May 2022, and paid to shareholders on 24
June 2022 and the 2022 final dividend of 4.25 cents per share, declared on 8 December
2022, and payable to shareholders on 19 January 2023.

** 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
2022.

**** 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 2022.

| **Sector
Analysis
 | Gross market value as a % of net assets |  | Country
Analysis
 | Gross market value as a % of net assets | 
|  |  |  |  |  | 
| Financials | 38.5 |  | Indonesia | 17.4 | 
| Industrials | 14.5 |  | Saudi Arabia | 15.5 | 
| Energy | 14.5 |  | United Arab Emirates | 8.1 | 
| Materials | 13.6 |  | Kazakhstan | 8.0 | 
| Consumer Staples | 10.2 |  | Vietnam | 7.8 | 
| Information Technology | 5.4 |  | Thailand | 7.4 | 
| Communication Services | 4.4 |  | Hungary | 7.4 | 
| Consumer Discretionary | 3.2 |  | Chile | 5.9 | 
| Real Estate | 2.6 |  | Greece | 4.3 | 
| Health Care | 1.6 |  | Poland | 3.5 | 
|  | —– |  | Qatar | 3.1 | 
|  | 108.5 |  | Colombia | 2.7 | 
|  | —– |  | Argentina | 2.5 | 
| Short positions | -3.8 |  | Egypt | 2.3 | 
|  | ===== |  | Philippines | 1.9 | 
|  |  |  | Panama | 1.9 | 
|  |  |  | Peru | 1.7 | 
|  |  |  | Georgia | 1.7 | 
|  |  |  | Malaysia | 1.5 | 
|  |  |  | Kuwait | 1.3 | 
|  |  |  | Romania | 1.0 | 
|  |  |  | Kenya | 0.7 | 
|  |  |  | Cambodia | 0.6 | 
|  |  |  | Ukraine | 0.3 | 
|  |  |  |  |         —– | 
|  |  |  | Total | 108.5 | 
|  |  |  |  | —– | 
|  |  |  | Short positions | -3.8 | 
|  |  |  |  | ===== |

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

**Market Exposure**
 

|  | 31.05
 2022    % | 30.06 2022    % | 31.07 2022    % | 31.08 2022    % | 30.09 2022    % | 31.10 2022    % | 30.11 2022    % | 31.12 2022    % | 31.01 2023    % | 28.02 2023    % | 31.03 2023    % | 30.04 2023    % | 
| Long | 107.9 | 106.1 | 107.3 | 107.3 | 106.2 | 107.4 | 106.2 | 110.7 | 112.4 | 111.9 | 106.3 | 108.5 | 
| Short |  4.7 |  4.6 |  6.2 |  5.3 |  5.2 |  5.3 | 4.8 | 4.9 | 5.1 | 3.9 | 3.9 | 3.8 | 
| Gross | 112.6 | 110.7 | 113.5 | 112.6 | 111.4 | 112.7 | 111.0 | 115.6 | 117.5 | 115.8 | 110.2 | 112.3 | 
| Net | 103.2 | 101.5 | 101.1 | 102.0 | 101.0 | 102.1 | 101.4 | 105.8 | 107.3 | 108.0 | 102.4 | 104.7 |

Ten Largest Investments

| **Company** | **Country of Risk** | **Gross market value as a % of net assets** | 
|  |  |  | 
| Bank Central Asia | Indonesia | 5.1 | 
| Astra International | Indonesia | 3.9 | 
| PKO Bank Polski | Poland | 3.5 | 
| Saudi Basic Industries Corp | Saudi Arabia | 3.2 | 
| Abdullah Al Othaim Markets | Saudi Arabia | 3.2 | 
| JSC Kaspi | Kazakhstan | 3.1 | 
| OTP Bank | Hungary | 3.0 | 
| Bank Mandiri | Indonesia | 2.9 | 
| Wizz Air Holdings | Hungary | 2.9 | 
| Halyk Savings Bank | Kazakhstan | 2.8 |

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

The Company’s NAV was up by 4.2% in April, strongly outperforming its benchmark,
the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“
Benchmark Index”) which was up by 3%. For reference, the MSCI Emerging Markets Index
had relatively muted performance and returned 0.2% while the MSCI Frontier Markets
Index was up by 0.5% over the same period. All performance figures are on a US Dollar
basis with net income reinvested.

The Company’s outperformance was primarily driven by country allocation particularly
in Eastern Europe where gas prices moved close to the lowest levels since the beginning
of the energy crisis boosting hopes of a stronger economic recovery and buoying 
equity markets. Oil prices also retreated to near levels seen before Russia’s invasion
of Ukraine. This decline in energy prices and commodities at large should help temper
the outlook for global inflation. We observe a growing consensus around peak US 
interest rates. A gradual reversal from here should bode positively for emerging
markets, with the caveat of an unexpectedly severe recession in the US.

In our universe, Eastern European markets were the top performers, notably Poland(
+13%), supported by strong earnings from the banking sector and optimism surrounding
the consumer recovery. Elsewhere, Indonesia (+7%) did well from the gradual structural
shift underway in its balance of payments from downstream nickel exports. On the
other hand, equity markets in Turkey (-5%) and Thailand (-3%) were challenged given
increased political uncertainty from general elections in both countries in May.

Several stock picks did well in April. It is encouraging to see earnings delivery
and capital return by our holdings starting to reflect in market valuations. Polish
Bank PKO (+17%) was the top performer following strong earnings results. Indonesian
auto conglomerate Astra International (+15%) performed well given good results, 
and importantly, improved capital returns via larger than anticipated dividend payment.
Kazakh bank Halyk (+16%) also contributed positively during the month on back of
strong results and capital return. On the other side, Colombian bank Bancolombia
was the weakest link (-12%) from the unexpected dismissal of the country’s finance
minister. Mitra Adiperkasa (-7%) was the second worst performer; we believe this
is from short-term profit taking as the Indonesian consumer confidence remains robust.

We made few changes to the portfolio in April. We trimmed our exposure to Colombia
following news of the change in finance minister. We took some profits across a 
few names such as Saudi grocery operator Al Othaim which had an outsized move on
heels of a bonus stock dividend and also in Argentinian energy company Vista on 
strong performance.

We believe global markets are still adjusting to a significantly higher cost of 
capital and remain vulnerable to unexpected hiccups such as the liquidity crisis
in the regional banking space in the US. However, through the last few years, we
have observed a marked contrast in the monetary and fiscal policy decisions taken
in small emerging/frontier markets versus developed markets and this keeps us optimistic
on our opportunity set. Our investment universe, in absolute and relative terms,
remains under-researched and this should enable compelling alpha opportunities.

Sources:

^(1)BlackRock as at 30 April 2023

^(2)MSCI as at 30 April 2023

**You can discover more about the BlackRock Frontiers Investment Trust at [blackrock.com/uk/brfi](https://www.blackrock.com/uk/individual/products/investment-trusts/our-range/blackrock-frontiers-investment-trust/trust-information?siteEntryPassthrough=true&cid=aff:investmenttrusts2020:brfi:directorstalk:link)**

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