Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)
All information is at31 December 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	-1.8	8.4	28.8	63.5	134.0	99.9
Net asset value	2.8	4.8	19.9	49.8	109.4	93.9
MSCI Frontiers Index (NR)	3.2	4.7	20.4	33.5	87.2	61.5
MSCI Emerging Markets Index (NR)	3.7	6.6	25.4	49.7	48.7	42.5
US Dollars:
Share price	-1.9	9.3	41.0	42.0	95.1	74.0
Net asset value	2.8	5.7	31.2	30.0	74.4	68.4
MSCI Frontiers Index (NR)	3.1	5.6	31.9	15.8	55.8	40.2
MSCI Emerging Markets Index (NR)	3.6	7.4	37.3	29.9	23.7	23.6

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.
 

At month end Ordinary Shares
US Dollar
Net asset value - capital only:	203.27c
Net asset value - cum income:	208.21c
Sterling:
Net asset value - capital only:	150.26p
Net asset value - cum income:	153.91p
Share price:	161.50p
Total assets (including income):	£279.6m
Premium to cum-income NAV:	4.9%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	3.2%
Ordinary shares in issue:	181,691,108
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 3.2% and includes the 2017 final dividend of 4.20 cents per share declared on 4 December 2017 and payable to shareholders on 9 February 2018 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 2017.
 

Sector Analysis	Gross assets(%)*		Country Analysis	Gross assets(%)*
Financials	41.6		Argentina	21.9
Consumer Staples	11.7		Kuwait	13.0
Energy	10.4		Vietnam	10.5
Telecommunication Services	9.1		Egypt	8.7
Health Care	9.0		Kazakhstan	8.2
Materials	8.5		Romania	7.7
Real Estate	6.5		Nigeria	6.1
Industrials	6.5		Morocco	5.6
Utilities	4.0		Sri Lanka	4.4
Consumer Discretionary	3.8		Ukraine	4.0
Information Technology	2.2		Bangladesh	4.0
	-----		Columbia	3.7
Total	113.3		Kenya	3.3
	-----		PAN-Middle East	2.6
Short positions	-3.8		Philippines	2.6
	=====		Slovenia	2.0
			Estonia	1.9
			PAN-Asian	1.6
			Tanzania	1.4
			Eurasia	0.1
				-----
			Total	113.3
				-----
			Short positions	-3.8
				=====

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

Market Exposure
 

	31.01  2017     %	28.02  2017     %	31.03  2017     %	30.04  2017     %	31.05  2017     %	30.06  2017     %	31.07  2017     %	31.08 2017     %	30.09  2017     %	31.10  2017     %	30.11  2017     %	31.12  2017     %
Long	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9	107.7	113.4	111.0	113.3
Short	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	2.5	3.8	3.8
Gross	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9	107.7	115.9	114.8	117.1
Net	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9	107.7	110.9	107.2	109.5

Ten Largest Equity Investments

Company	Country of Risk	% of gross assets
Grupo Financiero Galicia	Argentina	4.0
The National Bank of Kuwait	Kuwait	3.6
Halyk Savings Bank	Kazakhstan	3.0
Pampa Energia	Argentina	2.8
Zenith Bank	Nigeria	2.7
Equity Group	Kenya	2.6
MHP	Ukraine	2.6
Irsa Inversiones	Argentina	2.6
KazMunaiGas Exploration Production	Kazakhstan	2.5
Mobile Telecommunications	Kuwait	2.4

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

In December, the Company’s NAV rose by 2.8%* on a US Dollar basis with net income reinvested. For reference, the MSCI Frontiers Index benchmark gained 3.1%*, while the MSCI Emerging Markets Index added 3.6%* on a US Dollar basis, over the same period.

With a strong final month, Frontier Markets closed the year gaining +32%. As a result, with almost all markets ending up in positive territory, 2017 marked the asset class’s best performing annual period since 2007.   The best performing markets were Argentina, Kazakhstan and Vietnam which rose 76%, 70% and 65% respectively, whilst only Oman -11% and Lebanon -4% fell during the year.

December followed a common theme with Kazakhstan and Argentina continuing their strong recent runs.  In Kazakhstan, fund performance was led by Kazmunaigas which rose 12% following the announcement of a tender offer for the outstanding shares.  In Argentina, the banking stocks rose as activity continued to accelerate in the country.  In the last days of the month, the government passed a bill which will see corporate tax rates fall from 35% to 25% over the next 3 years, supporting earnings. 

In an unusual turn of events, we saw a second stock rise substantially on bid rumours.  Estonian ferry operator, Tallink, rose 10% on the back of speculation in the local press that a number of companies were considering making a bid.  Other notable stock contributors included Colombia’s largest state-owned integrated oil company, Ecopetrol, which gained +26%, rallying in line with stronger oil prices.   Given its substantial leverage to the oil price, the substantial increase in cash flows that the company is seeing at these oil prices are ameliorating investors concerns over the company’s level of debt.  

Egypt, in aggregate, also performed very well for us in December. Gold miner, Centamin, was among the portfolio’s best performing positions (+15%), supported by normalized production and a late rebound in gold prices. Tobacco name, Eastern Tobacco, also contributed positively, ending the month up +18%, as investors speculated that the company could be added to the MSCI and FTSE indices in 2018. 

Detractors from performance included Moroccan real estate company, Addoha, which fell 10% on increased concerns of a slowdown in the real estate sector.  Our underweight to Vietnam continues to weigh on relative returns as market momentum continued into year end. Specifically, our lack of positioning in Vinamilk (+13%), acted as the primary drag after the stock moved higher on investor speculation of a bidding war as Fraser & Neave topped up their holding following Jardine Cycle and Carriage winning the government auction of shares in November.

From a positioning standpoint, we marginally increased leverage over the month to initiate our position in Eastern Tobacco. We added to positions in Nigeria, increasing our holding in Zenith Bank and adding a position in Nigerian Breweries based on both stock specifics and improvements in the country’s macroeconomic outlook. We took profits in Argentine natural gas company, TGS, as the stock had risen 85% from the point we bought it in February 2017 and reached our target price.  Broadly, our view on Frontier Markets remains intact; their continued exhibition of strong GDP (Gross Domestic Product) growth and low government debt levels represent an opportunity to invest in companies with strong cash flow and high dividend yields, on some of the lowest valuations in the world.

19 January 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