Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 August 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	7.4	5.3	29.2	40.7	140.2	92.8
Net asset value	4.7	5.5	25.2	39.3	119.5	91.0
MSCI Frontiers Index (NR)	6.1	6.7	28.2	22.1	91.3	57.4
MSCI Emerging Markets Index (NR)	4.6	9.6	26.6	38.3	59.5	39.8
US Dollars:
Share price	5.0	5.1	27.1	9.3	95.2	59.8
Net asset value	2.3	5.3	23.1	8.2	78.3	58.1
MSCI Frontiers Index (NR)	3.7	6.5	26.1	-5.3	55.2	30.1
MSCI Emerging Markets Index (NR)	2.2	9.4	24.5	7.3	29.4	15.5

Sources: BlackRock and Standard & Poor’s Micropal

* 17 December 2010.
 

At month end Ordinary Shares
US Dollar
Net asset value - capital only:	190.69c
Net asset value - cum income:	195.42c
Sterling:
Net asset value - capital only:	147.99p
Net asset value - cum income:	151.66p
Share price:	155.75p
Total assets (including income):	£267.2m
Premium to cum-income NAV:	2.7%
Gearing:	Nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	3.3%
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 3.3% 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	32.8		Argentina	17.6
Consumer Staples	14.6		Vietnam	10.6
Energy	10.2		Kuwait	9.7
Health Care	9.9		Romania	9.3
Telecommunication Services	9.2		Kazakhstan	8.5
Materials	7.5		Egypt	7.5
Utilities	6.5		Morocco	6.8
Industrials	6.3		Ukraine	5.8
Real Estate	5.8		Bangladesh	4.8
Information Technology	3.5		Sri Lanka	4.8
Consumer Discretionary	1.6		Nigeria	4.1
	-----		Kenya	4.0
Total	107.9		Philippines	2.6
	-----		Eurasia	2.4
Short positions	0.0		Estonia	2.2
	=====		Colombia	2.0
			Tanzania	1.8
			PAN-LATAM	1.7
			Slovenia	1.7
				-----
			Total	107.9
				-----
			Short positions	0.0
				=====

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

Market Exposure
 

	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     %	31.08 2017     %
Long	104.0	106.4	102.3	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9
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	104.0	106.4	102.3	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9
Net	104.0	106.4	102.3	108.4	115.0	115.8	112.1	108.9	105.0	103.9	106.6	107.9

Ten Largest Equity Investments

Company	Country of Risk	% of gross assets
Banco Macro	Argentina	3.6
Halyk Savings Bank	Kazakhstan	3.5
Pampa Energia	Argentina	3.2
Equity Group	Kenya	3.2
Mobile Telecommunications	Kuwait	3.0
Irsa Inversiones GDR	Argentina	2.9
MHP	Ukraine	2.9
S.N.G.N Romgaz	Romania	2.4
Maroc Telecom	Morocco	2.3
Square Pharmaceuticals	Bangladesh	2.3

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

In August, the Company’s NAV rose by 2.3% on a US Dollar basis with net income reinvested. Its benchmark, the MSCI Frontiers Index, rose by 3.7%, whilst the MSCI Emerging Markets Index rose by 2.2% over the same period.

Our positions in Argentina, the largest country in MSCI Frontiers Index, helped absolute performance this month as the market rose 12%. The market welcomed the results from the mandatory primary elections where current pro-reform president Mauricio Macri performed much better than expected in prior polls, especially in the Province of Buenos Aires where Macri’s candidate Bullrich beat rival Fernandez.

At the stock level, Ukrainian poultry company, MHP, was one of the largest contributors to performance, rising 13.5%, as it reported good results and further demonstrated its ability to generate strong free cash flows. The market is starting to recognize these characteristics at a time when valuations remain very attractive. The company also benefited from its holding in Kuwaiti telecom, Zain, which rose 12.4% after the announcement that Oman Telecom had purchased a stake in the company at a significant premium to current market price. We believe the company remains undervalued.

On the other hand, Luxoft, a Ukrainian-based IT outsourcing company, detracted most, falling 19.5%, as it guided for weaker sales on the back of their two main financial clients implementing lower IT budgets. We think the stock has now priced in most of the negatives and we have maintained our position in this name as we see good growth opportunities in other Financials and Automotive segments. Our off-benchmark position in Egyptian gold miner, Centamin, has been under pressure despite positive gold trends, falling nearly 10% in August. We continue to like the company on strong cash flow generation and exploration outlook.

Our underweight position in Kuwait detracted most on a relative basis as the market rallied close to 8% on the back of continued talks on market reforms and potential MSCI index upgrade of the country to Emerging Market status. The banks in the country also benefitted from flows from other GCC (Gulf Cooperation Council) regional banks as investors feel visibility is reducing in the region and seek safer exposures. This was somewhat offset by a relative outperformance in Nigeria where the exchange rate used by MSCI for Nigeria was changed to the NAFEX rate at the start of August, implying a devaluation of 13%. The company moved to valuing our holdings in Nigeria at the NAFEX rate when it was introduced earlier this year.

Our overweight to Sri Lanka also detracted from returns as the beverage company Melstacorp reported poor numbers on the back of liquor division suffering from increased costs and lower volumes.

The Company remains most overweight to Egypt, an exposure that has been increasing throughout the year as we continue to like the fundamentals in this market. We also remain overweight to Kazakhstan and Ukraine.

We remain most cautious on GCC (Gulf Cooperation Council) countries as we feel currencies have not yet fully reflected the weakness in these economies.

Frontier Markets continue to exhibit strong GDP 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.

27 September 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