Portfolio Update

BLACKROCK FRONTIERS INVESTMENT TRUST PLC (LEI: 5493003K5E043LHLO706)

All information is at 31 July 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	7.4	10.0	21.9	83.2	18.9	133.4
Net asset value	4.3	7.2	17.0	81.3	30.9	152.7
Benchmark (NR)**	4.3	2.0	0.1	32.6	11.3	82.8
MSCI Frontiers Index (NR)	5.7	6.2	-2.4	22.9	9.6	68.8
MSCI Emerging Markets Index (NR)	5.0	5.9	2.5	6.6	11.0	55.6
US Dollars:
Share price	8.6	12.6	29.1	79.7	16.8	93.6
Net asset value	5.6	9.7	23.8	77.9	28.6	109.3
Benchmark (NR)**	5.5	4.5	5.8	29.9	9.1	52.0
MSCI Frontiers Index (NR)	7.0	8.7	3.2	20.4	7.5	39.3
MSCI Emerging Markets Index (NR)	6.2	8.4	8.3	4.5	8.9	28.4

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:	196.97c
Net asset value - cum income:	201.01c
Sterling:
Net asset value - capital only:	153.09p
Net asset value - cum income:	156.22p
Share price:	146.00p
Total assets (including income):	£295.8m
Discount to cum-income NAV:	6.5%
Gearing:	nil
Gearing range (as a % of gross assets):	0-20%
Net yield*:	4.0%
Ordinary shares in issue**:	189,325,748
Ongoing charges***:	1.36%
Ongoing charges plus taxation and performance fee****:	1.36%

*The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 4.0% and includes the 2022 final dividend of 4.25 cents per share, declared on 8 December 2022, and paid to shareholders on 19 January 2023, and the 2023 interim dividend of 3.10 cents per share, declared on 6 June 2023, and paid to shareholders on 7 July 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	38.3		Saudi Arabia	15.3
Energy	12.9		Indonesia	14.4
Consumer Staples	12.9		Thailand	11.6
Materials	12.8		United Arab Emirates	7.9
Industrials	11.9		Kazakhstan	7.8
Consumer Discretionary	6.7		Hungary	6.7
Information Technology	6.6		Vietnam	6.1
Communication Services	4.8		Chile	5.9
Real Estate	4.4		Philippines	4.9
Health Care	1.7		Qatar	4.0
	-----		Poland	3.7
	113.0		Colombia	3.5
	-----		Malaysia	3.3
Short positions	-3.0		Greece	2.2
	=====		Argentina	2.0
			Georgia	1.8
			Egypt	1.7
			Peru	1.5
			Multi-International	1.5
			Turkey	1.4
			Cambodia	1.3
			Czech Republic	1.2
			Romania	1.1
			Kuwait	1.1
			Kenya	0.6
			Ukraine	0.5
				-----
			Total	113.0
				-----
			Short positions	-3.0
				=====

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

Market Exposure
 

	31.08 2022    %	30.09 2022    %	31.10 2022    %	30.11 2022    %	31.12 2022    %	31.01 2023    %	28.02 2023    %	31.03 2023    %	30.04 2023    %	31.05 2023    %	30.06 2023    %	31.07 2023    %
Long	107.3	106.2	107.4	106.2	110.7	112.4	111.9	106.3	108.5	112.9	116.9	113.0
Short	5.3	5.2	5.3	4.8	4.9	5.1	3.9	3.9	3.8	3.6	4.0	3.0
Gross	112.6	111.4	112.7	111.0	115.6	117.5	115.8	110.2	112.3	116.5	120.9	116.0
Net	102.0	101.0	102.1	101.4	105.8	107.3	108.0	102.4	104.7	109.3	112.9	110.0

Ten Largest Investments

Company	Country of Risk	Gross market value as a % of net assets
Bank Central Asia	Indonesia	4.6
PKO Bank Polski	Poland	3.7
JSC Kaspi	Kazakhstan	3.2
FPT	Vietnam	3.1
Saudi National Bank	Saudi Arabia	3.1
Abdullah Al Othaim Markets	Saudi Arabia	3.1
Astra International	Indonesia	3.1
CP All	Thailand	3.0
Bangkok Bank	Thailand	3.0
Bank Mandiri	Indonesia	2.9

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

The Company’s NAV is up by 5.6% in July, marginally outperforming its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”) which rose by 5.5%. For reference, the MSCI Emerging Markets Index is up by 6.2% while the MSCI Frontier Markets Index was up by 7.0% over the same period. All performance figures are on a US Dollar basis with net income reinvested.

In our universe, a handful of markets performed well over the month. In Latin America, Colombia (+14%) was the best performer of the region in the context of rising Brent oil prices and expectations that the Central Bank will cut rates soon. Peru (+12%) was another strong performer, helped by a rise in copper prices. In Asia, the Vietnamese market rose by 10% on the back of improving liquidity conditions within the country. On the other hand, Egypt fell by 2% on concerns around the lack of momentum to move towards economic orthodoxy.

Stock picks in Saudi Arabia continued to perform well in July with last month's top contributor ELM, a Saudi IT company, up by 17%. The company's preliminary results were strong with margins up quarter of quarter. Vietnam exposure through our holding in IT services provider FPT Corp (+15%) also benefitted the Company as the stock reported numbers that are on track to hit expectations. It was further supported by a broader rise in the Vietnamese market. Kaspi (+15%), a Kazakh payments and e-commerce company, also performed well after yet another quarter of strong results. This is a long-term holding in the Company with a planned US listing in Q4 this year, which should hopefully lead to further value unlocking. As for detractors over the course of July, Wizz Air (-12%), the Hungarian low-cost carrier, fell after concerns around upcoming inspections of their P&W engines and its impact on their fleet. Eastern Co (-13%), an Egyptian tobacco products manufacturer, also detracted.

We made some changes to the portfolio in July. We initiated a position in Malaysia Airports, a Malaysian and Turkish airport operator, given its discounted relative valuation and improving traffic prospects at its main assets. We reduced our aggregate exposure to Thailand by exiting Airports of Thailand on the view that cost pressures and disappointment in volume recovery post-Covid will lead to weak earnings. Elsewhere, we took profits in the Energy sector by trimming our exposure to names like Petrovietnam Drilling, Qatar Gas Transport and Vista Energy. 

We believe global markets are still adjusting to a significantly higher cost of capital and remain vulnerable to unexpected hiccups such as the liquidity crisis in the regional banking space in the US. However, through the last few years, we have observed a marked contrast in the monetary and fiscal policy decisions taken in small emerging/frontier markets versus developed markets and this keeps us optimistic on our opportunity set. Our investment universe, in absolute and relative terms, remains under-researched and this should enable compelling alpha opportunities.
 

Sources:

¹BlackRock as at 31 July 2023

²MSCI as at 31 July 2023

22 August 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.

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Release

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