BLACKROCK FRONTIERS INVESTMENT TRUST PLC
BLACKROCK FRONTIERS INVESTMENT TRUST PLC
All information is at 31 December 2015 and unaudited.
Performance at month end with net income reinvested
One Three Six One Three Since
month months months year years Launch*
% % % % % %
Sterling:
Share price -0.7 -0.2 -5.0 -3.4 38.3 18.2
Net asset value -0.4 2.0 -4.3 -2.9 35.8 25.7
MSCI Frontier Markets Index (NR) 1.8 1.5 -5.8 -9.5 26.9 9.5
MSCI Emerging Markets Index (NR) -0.1 3.4 -11.8 -10.0 -10.6 -14.3
US Dollars:
Share price -2.8 -2.9 -11.0 -8.6 25.6 12.0
Net asset value -2.5 -0.8 -10.3 -8.1 23.3 19.1
MSCI Frontier Markets Index (NR) -0.3 -1.2 -11.7 -14.5 15.1 3.5
MSCI Emerging Markets Index (NR) -2.2 0.7 -17.4 -14.9 -18.9 -19.0
Sources: BlackRock and Standard & Poor's Micropal
* 17 December 2010.
At month end
US Dollar
Net asset value - capital only: 155.24c
Net asset value - cum income: 159.72c
Sterling:
Net asset value - capital only: 105.33p
Net asset value - cum income: 108.37p
Share price: 103.50p
Total assets (including income): £163.2m
Discount to cum-income NAV: 4.5%
Gearing: Nil
Gearing range (as a % of gross assets): 0-20%
Net yield*: 4.2%
Ordinary shares in issue: 150,621,621
Ongoing charges**: 1.5%
Ongoing charges plus taxation and performance fee: 1.6%
*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 2015
final dividend of 4.15 cents per share declared on 18 December 2015, payable to
shareholders on 19 February 2016 and the 2015 interim dividend of 2.40 cents
per share announced on 18 May 2015 and paid to shareholders on 3 July 2015.
**Calculated as a percentage of average net assets and using expenses,
excluding performance fees and interest costs for the year ended 30 September
2015.
Benchmark
Sector Analysis Gross assets(%)* Country Analysis Gross assets(%)*
Financials 34.8 Bangladesh 10.4
Consumer Staples 20.1 Argentina 10.2
Telecommunications 9.9 Pakistan 9.6
Energy 9.1 Romania 8.1
Utilities 6.0 Kuwait 7.8
Health Care 5.5 Sri Lanka 7.7
Industrials 5.1 Kazakhstan 7.3
Consumer Discretionary 3.6 Ukraine 6.0
Technology 2.1 Morocco 4.9
Materials 1.7 Kenya 4.9
Information Technology 1.4 Vietnam 4.3
----- Nigeria 4.0
Total 99.3 Eurasia 3.1
----- Caribbean 2.6
Short positions -1.7 Slovenia 2.2
=== Estonia 1.9
Other 4.3
-----
Total 99.3
-----
Short positions -1.7
===
*reflects gross market exposure from contracts for difference (CFDs).
Market Exposure
31.01 28.02 31.03 30.04 31.05 30.06 31.07 31.08 30.09 31.10 30.11 31.12
2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015
% % % % % % % % % % % %
Long 101.1 102.0 106.4 105.9 105.8 101.5 102.9 103.1 101.8 99.6 100.3 99.3
Short 1.6 1.6 1.7 1.7 1.1 1.0 1.5 1.5 1.0 1.2 1.7 1.7
Gross 102.7 103.6 108.1 107.6 106.9 102.5 104.4 104.6 102.8 100.8 102.0 101.0
Net 99.5 100.4 104.7 104.2 104.7 100.5 101.4 101.6 100.8 98.4 98.6 97.6
Company Country of Risk % of gross assets
MHP Ukraine 3.9
Kuwait Foods (Americana) Kuwait 3.6
Grupo Financiero Galicia Argentina 3.6
Hub Power Pakistan 3.5
MCB Bank Pakistan 3.3
Square Pharmaceuticals Bangladesh 3.3
KazMunaiGas Exploration Production Kazakhstan 3.2
Coca Cola Icecek Eurasia 3.1
BRD Groupe Societe Generale Romania 3.1
Equity Group Kenya 2.9
Commenting on the markets, Sam Vecht and Emily Fletcher, representing the
Investment Manager noted:
Portfolio Performance
In December, the Company's NAV fell by 2.5%, underperforming the benchmark by
2.2%. Since its launch in December 2010, the Company's NAV has returned 19.1%,
outperforming the MSCI Frontier Markets Index by 15.6%. (All calculations are
on a US dollar basis with net income reinvested.)
December was a challenging month for Emerging and Developed Markets which fell
by 2.2% and 1.8% respectively over the month. Increasing concerns over the
health of the Chinese economy, and the potential negative effects on the US
economy dragged down markets. Frontier Markets once again proved resilient
falling by only 0.3% during the month, although disappointingly, the Company's
performance was somewhat weaker.
Positive contributions to performance came from Argentina, where we saw
substantial benefits from stock selection. The new government have shown
impressive speed in implementing a number of measures which represent a return
to orthodox economic policies. These include reforming the exchange rate system
and reducing energy producer subsidies. While these measures are likely to be
positive for Argentina's medium term prospects, some individual stocks such as
state-controlled energy producer, YPF, were negatively impacted.
In December the weakness in oil prices, which fell by 16% (brent crude) over
the month, continued to impact our holdings in Kazakhstan and Iraq given the
reliance on oil of the economies in these two countries. However, despite the
oil price weakness, our underweight positioning in Nigeria also detracted from
relative performance during December. For the second year running, this was
driven by substantial positive moves in large benchmark weighted stocks in the
final days of the month, which have subsequently reversed. The Central Bank
policy of maintaining the current Naira peg to the US dollar is creating
increasing stress in the domestic economy with a number of companies reporting
shortages of vital goods and parts. While valuations of some stocks are
compelling, our macroeconomic concerns mean that we are 10.0% underweight
relative to the MSCI Frontier Market Index.
Portfolio Activity
We increased our position in Coca-Cola bottling franchise, Icecek. Listed in
Turkey, the company is seeing substantial volume growth from its operations
across Pakistan and the former Soviet Republics which we expect to result in
returns on invested capital increasing over time. The company is the
highest-growth bottler across the Coca Cola franchise universe with some of the
lowest market penetration figures, meaning it has good long-term potential. For
example, if consumption rose to UK levels, a moderate level globally, Iraq
volumes could grow 4 fold, and Pakistan volumes could grow 7 fold. Falls in
raw material prices including sugar will likely have a positive impact on
margins in 2016, which, combined with growth profile, makes the stock an
attractive proposition.
We also increased our position in Equity Group in Kenya. The bank has a very
strong domestic franchise with a market share of deposit accounts of around 34%
which we believe gives them a sustainable funding advantage in a country which
is persistently reliant on external funding sources.
8 January 2016
ENDS
Blackrock Frontiers Inv Tst : INVESTMENT TRUST PLC - Portfolio Update
January 08, 2016 at 11:01 am
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