Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 March 2023 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	7.0	9.2	84.3	2.9	111.4
Net asset value	-0.8	3.3	4.8	92.0	14.3	130.0
Benchmark (NR)**	-0.8	-2.8	-6.8	44.5	8.8	76.9
MSCI Frontiers Index (NR)	-1.0	0.3	-12.2	26.0	-1.8	60.7
MSCI Emerging Markets Index (NR)	0.9	1.1	-4.9	25.7	8.4	51.1
US Dollars:
Share price	0.3	10.1	2.7	83.9	-9.2	68.5
Net asset value	1.3	6.2	-1.5	91.6	0.9	83.0
Benchmark (NR)**	1.3	-0.1	-12.5	44.1	-4.1	41.4
MSCI Frontiers Index (NR)	1.2	3.1	-17.5	25.6	-13.5	27.5
MSCI Emerging Markets Index (NR)	3.0	4.0	-10.7	25.4	-4.5	19.8

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:	175.86c
Net asset value - cum income:	178.60c
Sterling:
Net asset value - capital only:	142.23p
Net asset value - cum income:	144.46p
Share price:	134.50p
Total assets (including income):	£273.5m
Discount to cum-income NAV:	6.9%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	4.2%
Ordinary shares in issue**:	189,325,748
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 4.2% and includes the 2022 interim dividend of 2.75 cents per share, declared on 26 May 2022, and paid to shareholders on 24 June 2022 and the 2022 final dividend of 4.25 cents per share, declared on 8 December 2022, and payable to shareholders on 19 January 2023.

** Excluding 52,497,053 ordinary shares held in treasury.

***The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding performance fees, finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for year ended 30 September 2022.

**** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses and including performance fees but excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for Year ended 30 September 2022.

Sector Analysis	Gross market value as a % of net assets		Country Analysis	Gross market value as a % of net assets
Financials	36.6		Indonesia	17.2
Energy	14.0		Saudi Arabia	15.0
Materials	13.8		Vietnam	8.6
Industrials	11.0		United Arab Emirates	8.1
Consumer Staples	10.7		Kazakhstan	7.8
Consumer Discretionary	6.4		Thailand	7.6
Information Technology	5.7		Hungary	7.3
Communication Services	3.8		Chile	6.0
Real Estate	2.6		Greece	4.2
Health Care	1.7		Poland	3.2
	-----		Argentina	2.7
	106.3		Egypt	2.4
	-----		Qatar	2.4
Short positions	-3.9		Philippines	2.0
	=====		Panama	2.0
			Peru	1.7
			Malaysia	1.6
			Georgia	1.6
			Colombia	1.5
			Kuwait	1.3
			Romania	1.0
			Kenya	0.7
			Ukraine	0.4
				-----
			Total	106.3
				-----
			Short positions	-3.9
				=====

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

Market Exposure
 

	30.04  2022   %	31.05  2022   %	30.06  2022   %	31.07  2022   %	31.08  2022   %	30.09  2022    %	31.10  2022   %	30.11  2022   %	31.12  2022   %	31.01  2023   %	28.02  2023   %	31.03  2023   %
Long	110.6	107.9	106.1	107.3	107.3	106.2	107.4	106.2	110.7	112.4	111.9	106.3
Short	1.8	4.7	4.6	6.2	5.3	5.2	5.3	4.8	4.9	5.1	3.9	3.9
Gross	112.4	112.6	110.7	113.5	112.6	111.4	112.7	111.0	115.6	117.5	115.8	110.2
Net	108.8	103.2	101.5	101.1	102.0	101.0	102.1	101.4	105.8	107.3	108.0	102.4

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
Bank Central Asia	Indonesia	5.0
Abdullah Al Othaim Markets	Saudi Arabia	3.6
Astra International	Indonesia	3.5
Saudi Basic Industries Corp	Saudi Arabia	3.3
PKO Bank Polski	Poland	3.2
Bank Mandiri	Indonesia	3.0
JSC Kaspi	Kazakhstan	2.9
Wizz Air Holdings	Hungary	2.9
OTP Bank	Hungary	2.9
FPT	Vietnam	2.9

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

The Company’s NAV was up 1.3% in March, performing in line with its benchmark, the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”). For reference, the MSCI Emerging Markets Index ended the month up 3.0% and the MSCI Frontier Markets Index was up 1.2% over the same period. The Company’s NAV was up 6.2% for the quarter while the benchmark is down 0.1% over the same period. All performance figures are on a US Dollar basis with net income reinvested.

Markets sold off during the first half of March 2023 on concerns of financial contagion from deposit flight at regional US banks and the ongoing troubles at Credit Suisse and then rallied in the second half of the month as some of the fears eased from central bank and policy makers’ interventions. Whilst few Frontier banks have comparable asset-liability mismatches to the troubled US banks, and the banks we own are majority national champions and hence benefit from deposit flight to safety, we are well aware of the risks in the sector and have lightened positions somewhat. A sticky consumer price index(CPI) has likely pushed out rate cut expectations in the US and financial conditions will likely remain tight for the remainder of 2023. Whilst this will have an impact across Emerging and Frontier markets, we believe that rates have peaked already in the majority of markets where we are invested given the extent of hikes over the last 2 years vs history. 

Vietnam (+6.5%) was the top performing country in March, buoyed by an interest rate cut and some policy support for the ailing real estate sector. Saudi Arabia (+5.7%) also did well, bouncing off recent lows as the oil price rallied. Kenya (-16%) was the worst performing market (impacted by a fall in the Kenyan shilling). Among our stock holdings, Hungarian low-cost airline Wizz Air (+18%) was the top performer. The company benefitted from a rebound in travel demand in a post-Covid environment while managing to maintain cost discipline. Saudi IT company, ELM (+16%), and grocery store operator Abdullah Al Othaim (+13%) were the other major contributors; both rallying with a lag to strong recent earnings results. On the other side, financials across the board corrected (driven by aforementioned contagion concerns across the banking sector): National Bank of Greece (-13%), Commercial International Bank of Egypt (-12%), OTP (-6%) and PKO (-5%). All of these holdings have rebounded strongly in April. 

We made relatively few changes to the portfolio in March. We initiated a position in Borouge, an Abu Dhabi based polyolefin manufacturer. We believe polyolefin spreads are near cyclical lows and the company’s valuation is well supported from underlying free cash flow generation even in today’s difficult environment. We exited resort operator Genting Malaysia as the company has disappointed on cost discipline on reopening.

We still believe global markets are in the process of adjusting to a world of higher inflation and higher interest rates and the banking sector fragility we saw this month is one indicator that this level of interest rates is starting to bite.  We see a marked contrast in the monetary and fiscal policy decisions taken in small emerging/frontier versus developed markets in the post pandemic years and find significant value in currencies and equity markets across our investment opportunity set. We are optimistic over the long-term in our under-researched investment universe which should enable compelling alpha opportunities.

Sources:

¹BlackRock as at 31 March 2023

²MSCI as at 31 March 2023

24 April 2023

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.