Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 July 2020 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	-6.1	4.8	-34.1	-29.0	-2.2	27.4
Net asset value	-3.9	5.2	-30.0	-23.6	6.1	39.4
Benchmark (NR)**	-4.0	4.2	-24.2	-6.4	22.1	37.9
MSCI Frontiers Index (NR)	-6.5	2.6	-19.7	-7.4	20.8	37.4
MSCI Emerging Markets Index (NR)	2.6	13.2	-0.6	9.3	60.2	46.0
US Dollars:
Share price	-0.3	9.1	-29.3	-29.2	-17.6	7.7
Net asset value	2.0	9.5	-25.0	-23.9	-10.7	17.7
Benchmark (NR)**	2.0	8.4	-18.7	-6.8	2.7	17.0
MSCI Frontiers Index (NR)	-0.7	6.8	-13.9	-7.8	1.6	15.6
MSCI Emerging Markets Index (NR)	8.9	17.8	6.5	8.8	34.8	22.9

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:	125.78c
Net asset value - cum income:	127.34c
Sterling:
Net asset value - capital only:	95.83p
Net asset value - cum income:	97.02p
Share price:	90.40p
Total assets (including income):	£234.6m
Discount to cum-income NAV:	6.8%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	6.4%
Ordinary shares in issue:	241,822,801
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 6.4% and includes the 2019 final dividend of 4.75 cents per share declared on 06 December 2019 with a pay date of 07 February 2020. Also included is the 2020 interim dividend of 2.75 cents per share announced on 28 May 2020 and paid to shareholders on 26 June 2020.

**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	28.4		Indonesia	14.8
Consumer Discretionary	15.6		Saudi Arabia	11.0
Industrials	13.7		Philippines	9.0
Consumer Staples	11.8		Vietnam	8.7
Materials	9.8		Thailand	8.5
Energy	8.9		Egypt	7.5
Communication Services	6.0		Chile	6.5
Real Estate	5.7		Kazakhstan	6.0
Utilities	5.7		Malaysia	4.4
Health Care	2.7		Greece	4.3
Information Technology	2.0		Pakistan	4.2
	-----		Poland	3.8
	110.3		Qatar	3.8
	-----		Romania	3.6
Short positions	-1.1		United Arab Emirates	2.5
	=====		Czech Republic	2.0
			Peru	1.7
			PAN-Africa	1.7
			Pan-Emerging Europe	1.7
			Ukraine	1.6
			Hungary	1.4
			Kenya	1.2
			Nigeria	0.4
				-----
			Total	110.3
				-----
			Short positions	-1.1
				=====

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

Market Exposure
 

	31.08  2019   %	30.09  2019   %	31.10  2019   %	30.11  2019   %	31.12  2019   %	31.01  2020   %	29.02  2020   %	31.03  2020   %	30.04  2020   %	31.05  2020   %	30.06  2020   %	31.07  2020   %
Long	111.5	110.1	108.0	107.8	108.0	113.0	107.1	106.4	105.9	109.6	109.8	110.3
Short	4.2	4.1	2.2	1.7	1.0	1.1	3.8	2.5	2.6	2.5	1.5	1.1
Gross	115.7	114.2	110.2	109.5	109.0	114.1	110.9	108.9	108.5	112.1	111.3	111.4
Net	107.3	106.0	105.8	106.1	107.0	111.9	103.3	103.9	103.3	107.1	108.3	109.2

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
PTT Exploration & Production Public	Thailand	3.8
Bank Mandiri	Indonesia	3.7
Astra International	Indonesia	3.1
United International Transport	Saudi Arabia	3.0
MCB Bank	Pakistan	2.9
Indocement Tunggal Prakarsa	Indonesia	2.6
Eastern Tobacco	Egypt	2.6
Halyk Savings Bank	Kazakhstan	2.5
Vincom Retail	Vietnam	2.5
Hellenic Telecom Organisation	Greece	2.4

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

The Company’s NAV returned +2.0%¹ versus the Company’s benchmark (the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”)), which also returned +2.0% in July². For reference, the MSCI Emerging Markets Index ended the month +8.9% and the MSCI Frontier Markets Index -0.7%² over the same period (all performance figures are on a US Dollar basis with net income reinvested).

Our universe of smaller emerging and frontier markets continued their steady climb in July, posting more modest returns over the month than we saw in the second quarter. Despite concerns of a resurgence in COVID-19 cases and the dim global economic outlook in 2020, equities continued to post gains with investor appetite underpinned by a falling US Dollar, an accommodative Federal Reserve, an economic recovery led by China and a further fall in US Treasury yields. Although frontier currencies featured amongst the best performing globally, with the Chilean Peso, Hungarian Forint and Czech Koruna leading the charge, equities markets are still lagging this recovery which we believe bodes well for future performance.

The biggest contributors to performance in July were our positions in Poland as the region benefited from sentiment surrounding the European Recovery Fund and increased fiscal support. Our holdings in debt collection company Kruk (+26.5%) and clothing retailer LPP (+21.7%) were strong contributors as earnings began to turnaround. Our underweight exposure in Thailand was an additional contributor; in particular the absence of any exposure to the industrials or financials sector  benefitted performance as the region suffered from renewed COVID-19 risks. The performance of our holdings in Pakistan was driven by financial MCB bank (+10.1%) which rose after one of its peers reported very strong results, around 40% ahead of expectations, benefiting from the substantial fall in interest rates. Not holding any exposure in Turkey was an additional contributor as the country continued to try and defend the Lira and the raised risk of capital flight.

The largest detractor in July was not owning the Malaysia glove names which continued their strong price momentum on the back of COVID-19 demand pick-up (which we believe will be temporary). Our holdings in the Philippines were driven by our position in Bloomberry resorts (-14,1%) which gave back some of their prior gains over the month as a spike in new COVID-19 cases led to renewed lockdown measures. Our holding in Egyptian tobacco company Eastern Company (-6.6%) was an additional detractor as COVID-19 cases in the country increased.

In terms of recent portfolio changes, we have been rotating some exposure in Indonesia, initiating a position in cement company Indocement and trimming existing holdings in the industrial stock Astra and financial bank Mandiri. In Thailand we swapped out our telecom exposure to add to consumer company CPALL where we are looking for a rebound in same store sales growth to drive performance through the second half of the year. In Saudi we are rotating at the margin away from domestic exposure (where we are taking profits) and towards oil exposure, while we remain underweight in financials. We continue to take profits in names which have done well and we picked up at the height of the market dislocation in the first quarter of 2020 such as the European airline Wizz Air.

While smaller emerging and frontier markets are vulnerable to health and economic fall-out from COVID-19, data thus far on infection rate and fatalities gives some hope that the damage to life and economy will not be as pervasive as originally feared. We remain positive on prospects of select economies, where policy makers have taken upfront, prudent measures to contain COVID-19, where the foreign exchange debt situation is relatively manageable, that will benefit from lower oil prices and whose currencies are not over-valued. More broadly, many of our markets continue to look very compelling at current valuations, trading at sub nine times trailing price-to-earnings and in some cases close to global financial crisis levels. Despite the bounce, the portfolio is still around the lowest valuation levels that we have seen in the last ten years.

Sources:

¹BlackRock as at 31 July 2020

²MSCI as at 31 July 2020

28 August 2020

ENDS

Latest information is available by typing www.blackrock.com/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.