Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 30 November 2019 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	1.0	-3.2	-3.7	9.6	29.5	72.4
Net asset value	-0.6	-4.4	-1.4	12.0	33.8	76.5
Benchmark (NR)**	-1.1	-7.1	-0.5	25.4	29.0	60.8
MSCI Frontiers Index (NR)	1.4	-5.7	8.3	23.7	27.2	59.7
MSCI Emerging Markets Index (NR)	-0.1	-0.1	5.8	25.1	41.2	40.3
US Dollars:
Share price	0.9	2.8	-2.3	13.6	7.2	43.7
Net asset value	-0.7	1.5	0.0	16.1	10.7	46.9
Benchmark (NR)**	-1.1	-1.3	0.9	29.8	6.5	34.5
MSCI Frontiers Index (NR)	1.4	0.2	9.8	28.0	5.1	32.5
MSCI Emerging Markets Index (NR)	-0.1	6.1	7.3	29.5	16.6	16.4

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
US Dollar
Net asset value - capital only:	161.52c
Net asset value - cum income:	166.91c
Sterling:
Net asset value - capital only:	124.87p
Net asset value - cum income:	129.04p
Share price:	128.50p
Total assets (including income):	£310.6m
Discount to cum-income NAV:	0.4%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	5.1%
Ordinary shares in issue:	240,672,801
Ongoing charges**:	1.4%
Ongoing charges plus taxation and performance fee:	1.4%

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 5.1% and includes the 2018 final dividend of 4.40 cents per share and special dividend of 1.0 cents per share, both of which were declared on 11 December 2018 and were paid to shareholders on 7 February 2019. Also included is the 2019 interim dividend of 3.00 cents per share announced on 30 May 2019 and paid to shareholders on 28 June 2019.

**Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 September 2019.

Sector Analysis	Gross market value as a % of net assets		Country Analysis	Gross market value as a % of net assets
Financials	25.1		Indonesia	12.8
Consumer Staples	15.7		Thailand	12.3
Consumer Discretionary	13.9		Vietnam	9.6
Real Estate	12.0		Egypt	9.4
Industrials	10.0		United Arab Emirates	8.7
Materials	9.5		Saudi Arabia	7.2
Energy	9.2		Philippines	6.2
Health Care	5.5		Turkey	4.5
Communication Services	3.8		Pakistan	4.4
Information Technology	1.6		Kazakhstan	4.3
Utilities	1.5		Malaysia	4.0
	-----		Nigeria	3.5
	107.8		Ukraine	3.0
Short positions	-----		Colombia	2.5
	-1.7		Romania	2.2
	=====		PAN-Africa	2.2
			Qatar	2.1
			Pan-Emerging Europe	2.1
			Poland	2.0
			Greece	1.7
			Kenya	1.5
			Chile	1.4
			Morocco	0.2
				-----
			Total	107.8
				-----
			Short positions	-1.7
				=====

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

Market Exposure
 

	31.12  2018     %	31.01  2019     %	28.02  2019     %	31.03  2019     %	30.04  2019     %	31.05  2019     %	30.06  2019     %	31.07  2019     %	31.08  2019     %	30.09  2019     %	31.10  2019     %	30.11  2019     %
Long	109.3	115.1	112.9	113.1	116.0	111.0	114.1	117.0	111.5	110.1	108.0	107.8
Short	8.6	7.3	6.7	6.6	6.6	8.8	8.1	5.1	4.2	4.1	2.2	1.7
Gross	117.9	122.4	119.6	119.7	122.6	119.8	122.2	122.1	115.7	114.2	110.2	109.5
Net	100.7	107.8	106.2	106.5	109.4	102.2	106.0	111.9	107.3	106.0	105.8	106.1

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
Astra International	Indonesia	3.4
Charoen Pokphand Food	Thailand	3.4
Vincom Retail	Vietnam	3.2
PTT Global Chemical	Thailand	3.1
United International Transport	Saudi Arabia	3.1
Bank Mandiri	Indonesia	2.7
Eastern Tobacco	Egypt	2.7
Orascom Construction	Egypt	2.5
Thai Beverage	Thailand	2.5
NMC Health	United Arab Emirates	2.5

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

The Company’s NAV returned -0.6%¹ versus its benchmark the MSCI  Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which returned -1.1% in October². For reference, the MSCI Emerging Markets Index ended the month at -0.1% and the MSCI Frontier Markets Index was up 1.4%² over the same period (all performance figures are on a US Dollar basis with net income reinvested).

Our allocation to Pakistan was the top contributor to returns in November, driven by our holdings in financials, MCB (+16%), and energy, Hub Power (+26%). The market rallied as the country turned its current account to a surplus and released better than expected fiscal deficit numbers. Having only one small position in Chile also helped our relative returns, as the market sold off on the back of protests in the country. Our holdings in Nigerian financials Zenith Bank (+9%) and United Bank for Africa(+21%) were additional contributors.

The largest detractor from returns this month was our stock selection in Indonesia as holdings in Energy, Materials, Real Estate and Autos all sold off. Economic activity has disappointed this year, with little recovery having been seen to date post the elections. We are hopeful that this can improve now that the cabinet has been appointed. Philippines stock selection fared little better driven by Tobacco company LT Group (-17%) and Bank of the Philippine Islands (-11%). Not holding any Saudi financials in the portfolio was an additional relative detractor.

We made a few recent changes to the portfolio. We exited our last positions in Argentina on our belief that the fiscal adjustment needed in 2020 will be much harder to achieve than the market is expecting combined with our disappointment with Alberto Fernandez in his speeches and political appointments since the election. 

We have been adding to Pakistan where the macro signs look more positive.  External balances have shown clear signs of improvement with the country reporting a current account surprise in October for the first time in four years. We have added to our positions in the banking sector as we think there should be a substantial earnings upside as the economic picture improves. We also added to Chile post the market correction and elsewhere topped up a few high conviction stock positions which had underperformed such as Philippine tobacco company LT Group and UAE healthcare company NMC.

The highest conviction country positions in the Company are Egypt, UAE and Pakistan while we remain under-weight Saudi, Malaysia and Qatar.

We see significant value in the smaller emerging and frontier markets and believe a number of these countries are set up for a strong year in 2020. We see the markets well supported by the lower rate environment and improved local and global liquidity. We note that a lot of stocks in our universe are trading at extreme low valuations, which we view as an opportunity to invest in a wide subset of countries which exhibit good growth and have low government debt levels. We look for companies there with strong cash flow and high dividend yields, trading on some of the lowest valuations in the world.

Sources:

¹BlackRock as at 30 November 2019

²MSCI as at 30 November 2019

16 December 2019

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.