Last checked at 18 Oct 2018 13:38
BlackRock Frontiers Investment Trust Plc - Portfolio UpdateBlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, October 18
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 30 September 2018 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 | -2.3 | -3.6 | -3.1 | 50.9 | 49.3 | 78.7 |
| Net asset value | -2.6 | -5.0 | -4.0 | 43.9 | 53.0 | 77.5 |
| Benchmark (NR)** | -0.3 | 2.8 | 5.3 | 50.5 | 58.6 | 61.2 |
| MSCI Frontiers Index (NR) | -0.4 | -0.8 | -5.1 | 35.7 | 43.0 | 46.4 |
| MSCI Emerging Markets Index (NR) | -0.9 | 0.1 | 2.0 | 64.8 | 48.3 | 36.5 |
| US Dollars: | ||||||
| Share price | -1.9 | -4.8 | -5.7 | 30.1 | 20.5 | 50.1 |
| Net asset value | -2.3 | -6.1 | -6.6 | 24.0 | 23.4 | 48.8 |
| Benchmark (NR)** | 0.0 | 1.6 | 2.3 | 29.5 | 27.7 | 35.9 |
| MSCI Frontiers Index (NR) | -0.1 | -2.0 | -7.7 | 16.8 | 15.2 | 22.5 |
| MSCI Emerging Markets Index (NR) | -0.5 | -1.1 | -0.8 | 41.9 | 19.4 | 14.1 |
Sources: BlackRock and Datastream* 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 Ordinary Shares | |
| US Dollar | |
| Net asset value - capital only: | 171.02c |
| Net asset value - cum income: | 177.71c |
| Sterling: | |
| Net asset value - capital only: | 131.14p |
| Net asset value - cum income: | 136.27p |
| Share price: | 139.75p |
| Total assets (including income): | £273.4m |
| Premium to cum-income NAV: | 2.6% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 3.7% |
| Ordinary shares in issue: | 200,616,108 |
| Ongoing charges**: | 1.4% |
| Ongoing charges plus taxation and performance fee: | 1.6% |
\* The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.7% and includes the 2017 final dividend of 4.20 cents per share declared on 4 December 2017 and paid to shareholders on 9 February 2018 and the 2018 interim dividend of 3.00 cents per share announced on 17 May 2018 and paid to shareholders on 29 June 2018.**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2017.
| Sector Analysis | Gross market value as a % of net assets | Country Analysis | Gross market value as a % of net assets | |
| Financials | 29.6 | Thailand | 10.2 | |
| Real Estate | 15.7 | Indonesia | 9.2 | |
| Consumer Discretionary | 14.3 | Vietnam | 9.0 | |
| Consumer Staples | 10.8 | Argentina | 8.8 | |
| Materials | 10.3 | Egypt | 7.7 | |
| Health Care | 7.7 | Romania | 6.2 | |
| Energy | 7.6 | Nigeria | 5.9 | |
| Telecommunication Services | 5.8 | United Arab Emirates | 5.6 | |
| Industrials | 4.5 | Kuwait | 5.6 | |
| Information Technology | 1.4 | Ukraine | 5.5 | |
| ----- | Saudi Arabia | 5.1 | ||
| Total | 107.7 | Kazakhstan | 3.4 | |
| ----- | Greece | 3.3 | ||
| Short positions | -7.7 | Qatar | 3.3 | |
| ===== | Hungary | 3.2 | ||
| Malaysia | 2.7 | |||
| PAN-Africa | 2.4 | |||
| Poland | 2.4 | |||
| Kenya | 2.0 | |||
| Philippines | 1.8 | |||
| Tanzania | 1.3 | |||
| PAN-Asian | 1.2 | |||
| Morocco | 0.8 | |||
| Sri Lanka | 0.5 | |||
| Other Africa | 0.3 | |||
| Bangladesh | 0.3 | |||
| ----- | ||||
| Total | 107.7 | |||
| ----- | ||||
| Short positions | -7.7 | |||
| ===== |
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 31.10 2017 % | 30.11 2017 % | 31.12 2017 % | 31.01 2018 % | 28.02 2018 % | 31.03 2018 % | 30.04 2018 % | 31.05 2018 % | 30.06 2018 % | 31.07 2018 % | 31.08 2018 % | 30.09 2018 % | |
| Long | 113.4 | 111.0 | 113.3 | 110.2 | 102.1 | 97.0 | 113.2 | 119.5 | 116.2 | 113.9 | 107.7 | 107.7 |
| Short | 2.5 | 3.8 | 3.8 | 3.0 | 3.0 | 2.9 | 3.8 | 4.2 | 4.7 | 5.1 | 6.4 | 7.7 |
| Gross | 115.9 | 114.8 | 117.1 | 113.2 | 105.1 | 99.9 | 117.0 | 123.7 | 120.9 | 119.0 | 114.1 | 115.4 |
| Net | 110.9 | 107.2 | 109.5 | 107.2 | 99.1 | 94.1 | 109.4 | 115.3 | 111.5 | 108.8 | 101.3 | 100.0 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Astra International | Indonesia | 4.6 |
| MHP | Ukraine | 3.5 |
| Halyk Savings Bank | Kazakhstan | 3.3 |
| Ooredoo | Qatar | 3.3 |
| Chemical Works of Gedeon Richter | Hungary | 3.2 |
| Land & Houses Public Company Limited | Thailand | 3.2 |
| YPF | Argentina | 3.1 |
| Emaar Properties | United Arab Emirates | 3.1 |
| Indorama Ventures | Thailand | 3.1 |
| Al Rajhi Bank (P-Note) | Saudi Arabia | 3.0 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:In September the Company’s NAV fell by 2.3%1 (on a US Dollar basis with net income reinvested) versus its benchmark, the MSCI New Frontier benchmark, which remained flat (0.0%2). For reference, MSCI Emerging Markets Index ended the month down by 0.5%2 and MSCI Frontier Markets Index down by -0.1%2 (all performance figures are on a US Dollar basis with net income reinvested).
Emerging and Frontier Market equities stabilised in September as the selloffs in Turkey and Argentina eased. Dispersion remains elevated as the combination of the gradual withdrawal of dollar liquidity, higher oil prices and political risk is leading to market movements more justified than others in our view, given their underlying economic fundamentals, fiscal and external account balances and policy choices. Oil hitting $85 should generally be positive for our portfolio - opportunities exist in those parts of the market which have not responded as strongly to a rising oil price as we would expect – such as Nigeria and UAE (United Arab Emirates).
Our holding in Ukrainian Steel company, Ferrexpo, was the biggest contributor to returns this month, rallying +30% on the month from low levels as the market recognized the strong cash flows that the company is generating at current iron ore pellet prices. Also contributing to returns were positions in Vietnam, driven by our holding in electronics and grocery retailer, Mobile World Group. The Argentine market rebounded through the month, as the currency stabilized following the expanded IMF (International Monetary Fund) deal and move by the central bank to monetary aggregate targeting. Our short positions in the Philippines added to returns as the market underperformed.
Our positioning in Greece driven by our holdings in the financials Alpha Bank and National Bank of Greece were the largest detractors with both stocks down more than 20% on the month amid concerns around bank capital levels. Returns were also hurt by positions in Egypt where the market fell post the announcement of higher than expected inflation numbers for August and concerns that inflation could trend even higher in September, which together with the rise in interest rates seen globally meant that investors thought it would be increasingly unlikely that interest rates would be cut this year.
In terms of positioning we made few changes to the portfolio in September. We initiated a position in drinks company ThaiBev. We believe the stock should benefit from a pickup in activity in Thailand, it trades at an attractive valuation relative to the Thai market and the market has heavily discounted the valuation of its acquisition of Sabeco, Vietnam’s leading beer company. We believe the business will be able to pay down its debt faster than the market expects due to stronger free cash flow generation. Elsewhere we added to positions we like that have sold off such as IDH in Egypt and energy company Vivo. We completed the exit of Yanbu National Petrochemical Company, a Saudi chemicals company, taking profits on a position which was up nearly 25% since entry in the last quarter of 2017.
2018 has seen Emerging and Frontier Markets de-rate considerably and whilst weaker exchange rates and tighter financial conditions will affect growth, we do not expect a sharp slow-down and many countries have significantly improved external balances than in previous crises, creating significant pockets of value in our view. In aggregate the wide subset of countries that make up our investible universe continue to exhibit strong GDP (Gross Domestic Product) growth, have low government debt levels, and represent an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world.
Sources:1BlackRock as at 30 September 20182MSCI as at 30 September 2018
18 October 2018
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.