Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 May 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	-4.7	-3.3	-11.3	32.1	32.6	74.6
Net asset value	0.4	2.2	-5.5	37.7	34.6	83.0
Benchmark (NR)**	-0.2	3.2	4.9	49.0	34.4	69.2
MSCI Frontiers Index (NR)	5.7	9.3	4.4	38.6	25.0	58.5
MSCI Emerging Markets Index (NR)	-4.1	0.8	-3.6	53.2	45.4	36.0
US Dollars:
Share price	-7.8	-8.4	-16.0	14.6	-0.1	41.8
Net asset value	-2.9	-3.2	-10.5	19.3	1.4	48.4
Benchmark (NR)**	-3.6	-2.2	-0.7	29.0	1.0	37.9
MSCI Frontiers Index (NR)	2.2	3.6	-1.1	20.0	-6.1	28.1
MSCI Emerging Markets Index (NR)	-7.3	-4.5	-8.7	32.6	9.3	9.9

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:	164.78c
Net asset value - cum income:	171.58c
Sterling:
Net asset value - capital only:	130.73p
Net asset value - cum income:	136.13p
Share price:	132.50p
Total assets (including income):	£327.6m
Discount to cum-income NAV:	2.7%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	4.9%
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 4.9% 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 due to be 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 2018.

Sector Analysis	Gross market value as a % of net assets		Country Analysis	Gross market value as a % of net assets
Financials	28.6		Indonesia	14.5
Real Estate	14.7		United Arab Emirates	9.2
Consumer Staples	13.6		Vietnam	8.8
Consumer Discretionary	12.4		Egypt	8.8
Industrials	8.7		Thailand	8.6
Health Care	8.3		Argentina	7.7
Energy	8.0		Malaysia	6.6
Materials	7.6		Kazakhstan	5.6
Communication Services	6.0		Saudi Arabia	4.7
Utilities	1.9		Kuwait	4.1
Information Technology	1.2		Nigeria	3.9
	-----		Romania	3.9
	111.0		Philippines	3.2
Short positions	-----		Greece	2.9
	-8.8		Pakistan	2.8
	=====		Ukraine	2.5
			Poland	2.4
			Qatar	2.3
			PAN-Africa	2.3
			Kenya	1.8
			Turkey	1.8
			Hungary	1.4
			PAN-Asian	0.7
			Morocco	0.5
				-----
			Total	111.0
				-----
			Short positions	-8.8
				=====

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

Market Exposure

	30.06  2018     %	31.07  2018     %	31.08  2018     %	30.09  2018     %	31.10  2018     %	30.11  2018     %	31.12  2018     %	31.01  2019     %	28.02  2019     %	31.03  2019     %	30.04  2019     %	31.05  2019     %
Long	116.2	113.9	107.7	107.7	107.8	108.1	109.3	115.1	112.9	113.1	116.0	111.0
Short	4.7	5.1	6.4	7.7	6.8	8.6	8.6	7.3	6.7	6.6	6.6	8.8
Gross	120.9	119.0	114.1	115.4	114.6	116.7	117.9	122.4	119.6	119.7	122.6	119.8
Net	111.5	108.8	101.3	100.0	101.0	99.5	100.7	107.8	106.2	106.5	109.4	102.2

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
Bank Mandiri	Indonesia	3.4
Banco Macro	Argentina	3.3
Astra International	Indonesia	3.2
National Medical Care	Saudi Arabia	3.2
Vincom Retail	Vietnam	3.1
LT Group	Philippines	3.0
Charoen Pokphand Food	Thailand	2.7
Emaar Development	United Arab Emirates	2.7
Eastern Tobacco	Egypt	2.6
MHP	Ukraine	2.5

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

The Company’s NAV returned -2.9%¹  versus its benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which was down by 3.6%² in May. For reference, the MSCI Frontiers Index was up by 2.2%² and the MSCI Emerging Markets Index was down by 7.3%² on a US Dollar basis, over the same period (all performance figures are on a US Dollar basis with net income reinvested).

Our allocation to Argentina was the largest contributor to returns in May as the market was up +14% buoyed by its re-entry into the MSCI Emerging Markets Index.  Our holdings in financial, Banco Macro (+29%), Energy company, YPF (+10%) and electric utility, Pampa Energia (+21%), all rallied strongly.  We have trimmed exposure on strong performance while remaining positively positioned. We hold little exposure to Saudi Arabia, which also helped returns during the month.  May saw the Saudi market entering the MSCI Emerging Markets index for the first time, which saw the market give back some of its strong year-to-date gains (-9%).   We continue to view the market as expensive on both absolute and relative measures, as well as structurally challenged.  We note the very different reactions to the upgrades which we believe were driven by the very different valuation levels across the two markets. Additionally, Greek banks continued their run of strong performance with National Bank of Greece (+21%) and Alpha Bank (+22%).

Positioning in South-East Asian countries of Malaysia, Philippines and Indonesia were the top detractors from returns in May, in addition to our holdings in Kazakhstan.  Our holding in British American Tobacco, Malaysia (-15%), hurt returns post the release of weak first quarter earnings which showed a greater than expected decline in volumes.  In the Philippines, conglomerate, LT Group, sold off (-7%) in spite of solid earnings results on the back of potential tobacco tax increases and investor concern around the funnelling of cash into a rights issue at bank subsidiary, Philippines National Bank. Indonesian cement company, Semen Indonesia, was an additional detractor declining (-14%) after a weaker than expected earnings result.  Our position in Kazakhstan copper miner, Kaz Minerals (-24%), also hurt returns as copper prices weakened. 

We initiated a small position in Pakistan in May as the country signed a US$6bn deal with the IMF (International Monetary Fund), buying a position in private bank, MCB.  We await to see what measures the country will put in place to tackle the challenges ahead including reducing fiscal spending as well as liberalizing their currency and interest rate regime but think that market valuations are already discounting significant headwinds.  We cut exposure in Malaysia by selling our position in Telekom Malaysia as it neared our target price, taking advantage of a very strong rally into month end (+25%) after the company reported much better than expected results.  Elsewhere, we took profits in Vietnam and trimmed positions in Argentina, Greece and Romania which have worked well.  We rotated the proceeds into our preferred names which have underperformed. 

We were in Argentina in May, visiting companies and policymakers. Our view remains that the economy should meet the conditions of its IMF package.  It is the political outlook which is more uncertain in our view given Cristina Kirchner’s decision to run as Vice President with little known Alberto Fernandez as the Presidential candidate. Whilst we continue to track the political developments closely, we believe that valuations are sufficiently attractive to account for the risks.

We continue to find value in the smaller emerging and frontier markets and see the markets well supported by the lower rate environment.  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:
¹BlackRock as at 31 May 2019
²MSCI as at 31 May 2019

19 June 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 Kazakhstan