BLACKROCK FRONTIERS INVESTMENT TRUST PLC: Correction : Portfolio Update
BLACKROCK FRONTIERS INVESTMENT TRUST PLC: Correction : Portfolio Update This announcement has been corrected to reflect the reclassification of country holdings representing 2.2% of the portfolio from Russia to Kuwait. It has also been amended to reflect adjusted performance data for the MSCI Emerging Markets Index and MSCI Frontiers Index since launch. All other information remains the same.
BLACKROCK FRONTIERS INVESTMENT TRUST PLC
All information is at 31 July 2013 and unaudited.
Performance of ordinary share class at month end with net income reinvested
One Three Six One Since
month months months year launch* Sterling: Share price 6.8% 7.7% 21.1% 49.4% 20.3% Net asset value 6.5% 11.7% 18.3% 45.0% 21.1% MSCI Frontiers Index (NR) 5.2% 7.1% 13.7% 32.3% 8.2% MSCI EM Markets (NR) 1.1% -5.4% -5.7% 5.4% -6.1% US Dollars: Net asset value 6.4% 8.8% 13.2% 40.3% 17.8% MSCI Frontiers Index (NR) 5.2% 4.3% 8.8% 28.0% 5.3% MSCI EM Markets (NR) 1.0% -7.8% -9.9% 2.0% -8.7%
Sources: BlackRock and Standard & Poor's Micropal * 17 December 2010.
At month end Ordinary Shares US Dollar: Net asset value - capital only: 165.62c Net asset value - cum income: 165.63c Sterling: Net asset value - capital only: 109.24p Net asset value - cum income: 109.25p Share price: 110.50p Total assets (including income): £103.5m Premium to cum-income NAV: 1.14% Gearing: nil Gearing range (as a % of gross assets): 0-20% Net yield*: 4.6% Ordinary shares in issue: 94,766,267
*Yield calculations are based on dividends announced in the last 12 months as at the date of the release of this announcement, including the 2012 final dividend per share of 2.60 cents per share (1.64557 pence per share) announced on 30 November 2012, the 2013 interim dividend of 2.00 cents per share and the special interim dividend of 3.40 cents per share announced on 30 May 2013, payable to shareholders on 5 July 2013. The interim and special dividends announced on 30 May 2013 that total 5.40 cents per share (3.45003 pence per share) are the total dividends for the financial year ending 30 September 2013. The special dividend represents the final dividend which is normally paid in March each year. Therefore, a more accurate indication of the projected yield for the financial year to 30 September 2013 would be 3.1% (based on the latest available share price as at the date of this announcement of 110.50 pence per share). The Board does not currently anticipate any further distributions for the current financial year.
C Shares** US Dollar: Net asset value - capital only: 148.95c Net asset value - cum income: 148.95c Sterling: Net asset value - capital only: 98.25p Net asset value - cum income: 98.25p Share price: 102.75p Total assets (including income): £62.5m Premium to cum-income NAV: 4.6% Gearing: nil Gearing range (as a % of gross assets): 0% Net yield: Nil C shares in issue: 63,566,000
** admitted to trading on 31 July 2013.
The following relates specifically to the ordinary share portfolio.
Benchmark Sector Analysis Gross assets(%)* Country Analysis Gross assets(%)*
Financials 33.1 Qatar 11.6 Consumer Staples 16.8 United Arab Emirates 11.3 Telecommunication 15.7 Saudi Arabia 11.2 Energy 13.6 Nigeria 10.9 Industrials 9.6 Bangladesh 7.3 Healthcare 6.9 Kazakhstan 7.2 Consumer Discretionary 4.0 Iraq 6.0 Utilities 1.5 Vietnam 4.6 Materials 1.4 Kuwait 4.2 Technology 0.6 Ukraine 4.0
----- Sri Lanka 3.3 Total 103.2 Pan Africa 2.7
----- Pakistan 2.4 Short positions -3.0 Turkmenistan 2.2
===== Algeria 2.2 Oman 2.1 Panama 2.1 Croatia 2.1 Cambodia 1.9 Other 3.9 ----- 103.2 ===== Short positions -3.0 ===== *reflects gross market exposure from contracts for difference (CFDs) Market Exposure
31.08 30.09 31.10 30.11 31.12 31.01 28.02 31.03 30.04 31.05 30.06 31.07
2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013
% % % % % % % % % % % % Long 96.5 99.1 101.0 102.0 103.4 105.1 104.1 99.5 99.2 99.8 95.9 103.2 Short 2.5 2.6 4.2 4.9 5.2 3.5 1.2 1.2 1.2 1.1 2.5 3.0 Gross 99.0 101.7 105.2 106.9 108.6 108.6 105.3 100.7 100.4 100.9 98.4 106.2 Net 94.0 96.5 96.8 97.1 98.2 101.6 102.9 98.3 98.0 98.7 93.4 100.2
Ten Largest Equity Investments
Company Country of Risk % of gross assets
Zenith Bank Nigeria 4.6% Halyk Savings Bank Kazakhstan 4.3% Doha Bank Qatar 3.8% Qatar National Bank Qatar 3.8% Etihad Etisalat Saudi Arabia 3.6% Emaar Properties United Arab Emirates 3.5% Kazmunaigas Exploration Kazakhstan 2.9% BAT Bangladesh Bangladesh 2.8% First Gulf Bank United Arab Emirates 2.8% United International Transport Saudi Arabia 2.7%
Commenting on the markets, Sam Vecht, representing the Investment Manager noted:
In July, the MSCI Frontiers Markets index returned 5.2% (in US dollar terms with net income reinvested), once again outperforming mainstream MSCI Emerging Markets Index, which rose 1.0% (in US dollar terms with net income reinvested). Year to date, the MSCI Frontier Markets Index has returned 16.9% against the MSCI Emerging Market Index returns of -8.6%. (All percentages calculated on a US dollar basis with net income reinvested.)
The strong positive sentiment surrounding the United Arab Emirates continued into July. Already buoyed by MSCI's decision to upgrade the country to Emerging Market status, the market has continued to benefit from corporates reporting better than expected results, reflecting the on-going economic recovery.
Pakistan also continued a strong run in July, rising nearly 10%. Investors were cheered by proposals for economic reform outlined by the new government and the increasing likelihood of Pakistan agreeing a loan with the IMF.
Bangladesh was the weakest performer in July. Although the medium term outlook for the country is positive, renewed political tensions have weighed on short term sentiment and a number of corporates, especially those in the banking sector have reported disappointing results.
The Company's NAV increased by 6.4% in July, outperforming the MSCI Frontier Market index by 1.2%. Over the past 12 months, the Company's NAV has returned 40.3%, outperforming the benchmark by 12.3%. (All percentages calculated on a US dollar basis with net income reinvested.)
The largest individual contributor to performance in July was UAE airline, Air Arabia. The stock outperformed in the run up to results, which were reported in early August. The airline carried 3 million passengers in the first half of 2013, an increase of 16% from the same period in 2012 and achieved a load factor of 82% which resulted in profits rising 17% and beating analyst expectations.
Saudi car rental firm, United International Transport (also known as Budget) was also a strong performer over the month. Investors were cheered by the release of strong second quarter results with earnings up 28% year-on-year.
The largest individual detractor form performance over the month Sri Lankan financial, Hatton Bank, which fell around 4% over the month. Investors became increasingly concerned over the bank's pawning portfolio which offers loans securitized against gold given the fall in the gold price during 2013. However, it is trading on price/earnings ratio of 7 and we continue to believe that the stock is an interesting investment.
The Company is invested in 55 stocks in across 24 markets, including three short positions.
We initiated a new position in Pakistani financial, MCB Bank. MCB is the leading private sector bank in Pakistan with a strong deposit franchise, generating an ROE greater than 25%.
We realized profits in Kenyan telecom, Safaricom. The stock has risen more than 160% since we initially acquired a position and now looks fully valued.
The C share issue was closed during July and the proceeds are currently being invested across the various markets.
Despite their continued outperformance, Frontier Market valuations remain attractive both in absolute terms and relative to the mainstream Emerging Markets. Companies operating very profitably in Sub-Saharan Africa, Asia and the Middle East offer exposure to some of the fastest growing economies globally yet are often trading on a price/earnings ratio of 9 and supported by high dividend yields in excess of 7%. In aggregate, the holdings of the BlackRock Frontier Markets Investment Trust are trading on a forward price to earnings ratio of under 10 and a dividend yield in excess of 4%.
The virtues of Frontier Markets include the world's fastest growing markets, with stock markets that trade on attractive valuations and high dividend yields. The combination of the countries with the best demographic profile the lowest government debt and a substantial commodity endowment provides an unrivalled investment opportunity. The low correlation between Frontier Markets and all developed and emerging markets mean that the inclusion of a Frontier Markets fund within a portfolio can bring significant diversification benefits. As we wrote in January, it is looking increasingly likely that 2013 will be the breakout year for Frontier Markets.
16 August 2013
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 the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.
-0- Sep/04/2013 10:34 GMT