Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 July 2017 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	-2.4	0.3	17.9	27.9	122.9	79.5
Net asset value	-0.1	5.3	21.0	35.6	118.5	82.5
MSCI Frontiers Index (NR)	0.6	5.1	21.1	15.9	81.4	48.3
MSCI Emerging Markets Index (NR)	4.4	8.1	25.7	37.4	50.0	33.7
US Dollars:
Share price	-0.9	2.2	17.0	0.0	87.9	52.2
Net asset value	1.4	7.3	20.1	6.0	84.0	54.5
MSCI Frontiers Index (NR)	2.1	7.1	20.2	-9.5	52.7	25.4
MSCI Emerging Markets Index (NR)	6.0	10.2	24.8	7.3	26.2	13.0

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.
 

At month end Ordinary Shares
US Dollar
Net asset value - capital only:	187.17c
Net asset value - cum income:	191.01c
Sterling:
Net asset value - capital only:	141.97p
Net asset value - cum income:	144.88p
Share price:	145.00p
Total assets (including income):	£255.3m
Premium to cum-income NAV:	0.1%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	3.5%
Ordinary shares in issue:	176,193,108
Ongoing charges**:	1.4%
Ongoing charges plus taxation and performance fee:	2.4%

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.5% and includes the 2016 final dividend of 4.00 cents per share declared on 22 November 2016 and paid to shareholders on 17 February 2017 and the 2017 interim dividend of 2.70 cents per share announced on 25 May 2017 and paid to shareholders on 30 June 2017.

**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2016.
 

Sector analysis	Gross assets(%)*		Country analysis	Gross assets(%)*
Financials	31.6		Argentina	15.6
Consumer Staples	14.9		Romania	9.8
Telecommunication Services	10.8		Kuwait	9.7
Health Care	10.0		Vietnam	8.7
Energy	9.9		Kazakhstan	8.3
Materials	7.7		Egypt	7.5
Industrials	6.0		Morocco	6.7
Utilities	5.7		Ukraine	6.0
Real Estate	4.5		Sri Lanka	5.2
Information Technology	4.0		Bangladesh	4.9
Consumer Discretionary	1.5		Nigeria	4.4
	-----		Kenya	4.0
Total	106.6		Eurasia	3.0
	-----		Philippines	2.6
Short positions	0.0		Estonia	2.2
	=====		Colombia	2.0
			Oman	1.9
			Slovenia	1.7
			Tanzania	1.6
			Pakistan	0.8
				-----
			Total	106.6
				-----
			Short positions	0.0
				=====

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

Market Exposure
 

	31.08  2016     %	30.09  2016     %	31.10  2016     %	30.11  2016     %	31.12  2016     %	31.01  2017     %	28.02  2017     %	31.03  2017     %	30.04  2017     %	31.05  2017     %	30.06  2017     %	31.07  2017     %
Long	105.7	104.0	106.4	102.3	108.4	115.0	115.8	112.1	108.9	105.0	103.90	106.6
Short	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Gross	105.7	104.0	106.4	102.3	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6
Net	105.7	104.0	106.4	102.3	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6

Ten Largest Equity Investments

Company	Country of Risk	% of gross assets
Halyk Savings Bank	Kazakhstan	3.4
Equity Group	Kenya	3.1
Banco Macro	Argentina	2.7
Mobile Telecommunications	Kuwait	2.7
MHP	Ukraine	2.6
Pampa Energia	Argentina	2.4
Coca Cola Icecek	Eurasia	2.3
Integrated Diagnostics	Egypt	2.3
Maroc Telecom	Morocco	2.3
Square Pharmaceuticals	Bangladesh	2.2

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

In July, the Company’s NAV rose by 1.5%, underperforming its MSCI Frontier benchmark which rose by 2.1% (on a US Dollar basis with net income reinvested). The MSCI Emerging Markets Index rose by 6.0% over the same period.

Off-benchmark positioning in LT Group, in the Philippines was a significant contributor to performance over the month, rising nearly 20%.  The company is a conglomerate with assets across banking, property and beverages, but the value is predominantly driven by its tobacco subsidiary, a JV with Philip Morris.  The stock has done well this year as the government has clamped down on the illicit cigarette trade, shutting factories, raiding warehouses and filing tax cases against its main competitor Mighty.  We believe that the stock remains undervalued and would see a substantial increase in profitability if this government initiative continues.     

In Estonia, our overweight in ferry operator, Tallink Group, contributed to returns as the stock hit 8 year highs as the company released a statement saying that it is looking to attract "new core investors", including a possibility of "voluntary or mandatory takeover".   Following month end, the company reported second quarter results that were above expectations, up 80% year-on-year on the back of strong passenger growth. 

Positions in Nigerian banks, Zenith Bank and UBA, contributed positively to returns rising 18% and 11% respectively during the month.  The two stocks benefited from the ongoing harmonization of exchange rates in Nigeria towards the NAFEX (Nigerian Autonomous Foreign Exchange Rate Fixing) rate, which continued post month end as MSCI moved the rate that they use for index calculation purposes to the NAFEX rate. 

However, performance over the month was hurt by our positioning in a gold mining business operating in Tanzania, Acacia Mining.  We bought this stock in June after it had fallen more than 30% after the Tanzanian government stopped the company from exporting gold concentrate and disputed the company’s calculation of the amount of gold within the concentrate exported.  However, post this initial acquisition, the stock declined a further 40% in July as the dispute with the Tanzanian government continued.  We took this opportunity to top up our position, expecting eventual resolution between the company and government.  Our holdings in Sri Lankan company Chevron lubricants also hurt performance as it fell 11% during the month on the back of weaker than expected results as the company lost market share. 

The Pakistan market continued to decline, falling 7% in July on the news of Prime Minister Nawaz Sharif's disqualification after an investigation into his family’s finances which arose following the Panama papers leaks. The decline in foreign exchange reserves shows the pressure on the Rupee from continued deterioration of the country’s current account balances.  We have significantly reduced our exposure to the Pakistani market during the year to under 3% as at end of July.

Broadly, Frontier Markets continue to exhibit strong GDP (Gross Domestic Product) growth and 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.

30 August 2017

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