Last checked at 30 Nov 2018 17:16
BlackRock Frontiers Investment Trust Plc - Portfolio UpdateBlackRock Frontiers Investment Trust Plc - Portfolio Update
PR Newswire
London, November 30
BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at 31 October 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 | -2.0 | -10.7 | -9.4 | 48.5 | 41.2 | 75.2 |
| Net asset value | -2.0 | -9.9 | -7.8 | 36.7 | 46.1 | 73.9 |
| Benchmark (NR)** | -2.0 | -3.8 | 0.9 | 45.0 | 50.5 | 58.0 |
| MSCI Frontiers Index (NR) | -1.5 | -6.4 | -8.6 | 31.4 | 36.4 | 44.1 |
| MSCI Emerging Markets Index (NR) | -6.8 | -9.3 | -9.1 | 46.1 | 30.7 | 27.2 |
| US Dollars: | ||||||
| Share price | -3.9 | -13.1 | -12.8 | 23.0 | 12.5 | 44.2 |
| Net asset value | -4.0 | -12.3 | -11.2 | 13.2 | 16.3 | 42.8 |
| Benchmark (NR)** | -4.0 | -6.3 | -2.9 | 20.0 | 19.7 | 30.5 |
| MSCI Frontiers Index (NR) | -3.5 | -8.8 | -12.1 | 8.7 | 8.4 | 18.1 |
| MSCI Emerging Markets Index (NR) | -8.7 | -11.6 | -12.5 | 20.9 | 4.0 | 4.2 |
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 Ordinary Shares | |
| US Dollar | |
| Net asset value - capital only: | 163.40c |
| Net asset value - cum income: | 170.59c |
| Sterling: | |
| Net asset value - capital only: | 127.88p |
| Net asset value - cum income: | 133.50p |
| Share price: | 137.00p |
| Total assets (including income): | £271.7m |
| Premium to cum-income NAV: | 2.6% |
| Gearing: | nil |
| Gearing range (as a % of gross assets): | 0-20% |
| Net yield*: | 3.8% |
| Ordinary shares in issue: | 203,491,108 |
| 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 3.8% 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 | 32.3 | Thailand | 9.6 | |
| Real Estate | 13.9 | Indonesia | 9.5 | |
| Consumer Discretionary | 13.8 | Argentina | 9.0 | |
| Consumer Staples | 10.9 | Vietnam | 8.7 | |
| Materials | 9.6 | Egypt | 7.4 | |
| Health Care | 6.9 | United Arab Emirates | 7.0 | |
| Energy | 6.6 | Nigeria | 6.5 | |
| Telecommunication Services | 6.5 | Romania | 6.1 | |
| Industrials | 5.5 | Ukraine | 4.9 | |
| Information Technology | 1.3 | Malaysia | 4.9 | |
| Utilities | 0.5 | Saudi Arabia | 3.8 | |
| Kazakhstan | 3.7 | |||
| Total | ----- | Qatar | 3.3 | |
| 107.8 | Kuwait | 3.3 | ||
| Short positions | ----- | Hungary | 3.3 | |
| -6.8 | Greece | 3.2 | ||
| ===== | Poland | 2.7 | ||
| PAN-Africa | 2.2 | |||
| Kenya | 2.0 | |||
| Philippines | 1.9 | |||
| Colombia | 1.8 | |||
| Tanzania | 1.3 | |||
| PAN-Asian | 1.0 | |||
| Morocco | 0.7 | |||
| ----- | ||||
| Total | 107.8 | |||
| ----- | ||||
| Short positions | -6.8 | |||
| ===== | ||||
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
| 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 % | 31.10 2018 % | |
| Long | 111.0 | 113.3 | 110.2 | 102.1 | 97.0 | 113.2 | 119.5 | 116.2 | 113.9 | 107.7 | 107.7 | 107.8 |
| Short | 3.8 | 3.8 | 3.0 | 3.0 | 2.9 | 3.8 | 4.2 | 4.7 | 5.1 | 6.4 | 7.7 | 6.8 |
| Gross | 114.8 | 117.1 | 113.2 | 105.1 | 99.9 | 117.0 | 123.7 | 120.9 | 119.0 | 114.1 | 115.4 | 114.6 |
| Net | 107.2 | 109.5 | 107.2 | 99.1 | 94.1 | 109.4 | 115.3 | 111.5 | 108.8 | 101.3 | 100.0 | 101.0 |
Ten Largest Investments
| Company | Country of Risk | Gross market value as a % of net assets |
| Astra International | Indonesia | 5.0 |
| Banco Macro | Argentina | 4.4 |
| Halyk Savings Bank | Kazakhstan | 3.6 |
| MHP | Ukraine | 3.4 |
| Ooredoo | Qatar | 3.3 |
| Chemical Works of Gedeon Richter | Hungary | 3.3 |
| Emaar Properties | United Arab Emirates | 3.1 |
| Zenith Bank | Nigeria | 2.9 |
| Indorama Ventures | Thailand | 2.8 |
| Emaar Development | United Arab Emirates | 2.7 |
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the Investment Manager noted:In October the Company’s NAV fell by 4.0%1 (on a US Dollar basis with net income reinvested) versus its benchmark, the MSCI New Frontier benchmark, which also fell by 4.0%2. For reference, the Company’s previous benchmark, the MSCI Frontiers Index, fell by 3.5%2, and the MSCI Emerging Markets Index fell by 8.7%2 (all performance figures are on a US Dollar basis with net income reinvested).
October was a tough month for global equities as risk appetite was hard hit on concerns of the impact of a continuing trade war on growth and earnings expectations. The smaller Emerging and Frontier Markets were less affected than some of the larger markets which proved to be more sensitive to the global risk-off move. We take comfort that markets like Turkey and Argentina, which had suffered sharp falls earlier in the year, look to have stabilised. In Argentina we have seen the currency moderate and rates start to come down from the peak and in Turkey immediate funding needs were met. We expect weakness in other parts of our universe, such as Pakistan, where at the margin things have gotten worse given rising inflation and a widening trade deficit, making the currency vulnerable. For that reason we currently have no exposure to the market.
Our positioning in Kazakhstan through financial Halyk Bank was the largest contributor to returns in October, up by 7%. Argentine financial, Banco Macro, also added to returns, up by over 8% as the funding situation in Argentina stabilised. Our short position in an apparel manufacturer was an additional contributor.
Our positioning in Vietnam, Egypt and Thailand negatively impacted the portfolio during the month. Our overweight to Vietnam detracted, as the market – fell by 6%, hit by sentiment spill over from the rest of Asia. Our Egyptian holdings in engineering and construction contractor, Orascom construction (-11%) and medical diagnostics company, IDH (-18%) also detracted from the portfolio, as did Thai real estate developer, Land and Houses (-13%).
In terms of positioning we made few changes to the portfolio in October taking advantage of areas of market weakness. We initiated a position in Colombian financial, Bancolombia, given we expect earnings to improve from declining provisioning needs and where, from a macro perspective, Colombia benefits fiscally from higher oil prices. We also bought Malaysia Telecom, taking advantage of poor relative performance. We added Air Arabia to our holdings, as it is our belief that the risk reward is now favourable given operating trends compared to current valuations. We also sold down some positioning in Al Rajhi Bank in Saudi Arabia given limited upside from here in our view.
2018 has seen Emerging and Frontier Markets de-rate considerably and whilst weaker exchange rates tighten financial conditions which will effect growth, we do not expect a sharp slow-down. Many countries are in better shape than feared, 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:
*BlackRock as at 31 October 2018
**MSCI as at 31 October 2018
30 November 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 Kazakhstan