AGM update

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About this investment trust

The Company’s investment objective is to achieve long term capital  growth by investing in companies domiciled or listed in, or exercising  the predominant part of their economic activity in, less developed  countries. These countries (the “Frontiers Universe”) are any country  which is neither part of the MSCI World Index of developed markets nor  one of the eight largest countries by market capitalisation in the MSCI  Emerging Markets Index as at 1 April 2018: being Brazil, China, India,  Korea, Mexico, Russia, South Africa, and Taiwan.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Why choose it?

Frontier markets are smaller countries at an early stage of economic and political development. These economies don’t simply follow global markets but are subject to their own internal dynamics. Their growth potential often depends largely on their domestic outlook, which means they can thrive independently of the wider global economy. This Trust targets smaller, under-researched markets such as Vietnam, Egypt, Romania, and Chile. For investors, this can be a source of diversifying long-term income and growth.

Capital growth values may fluctuate, and the level of income may vary from time and is not guaranteed.

Suited to…

Investors looking to target the world’s youngest economies, which present exciting opportunities but may be volatile. This Trust suits those with a high appetite for risk, able to invest for the medium to long term.

award logos

Kepler Rating: As at 30 January 2020.
Money Observer Award: As at 7 February 2020
Awards/Ratings have not been superseded to date.

Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

What are the risks?

  • Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
  • Overseas investment will be affected by movements in currency exchange rates.
  • Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation.
  • Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
  • Frontier markets are generally more sensitive to economic and political conditions than developed and emerging markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund. There may be larger fluctuations to the value of your investment and increased risk of losing your capital.

Useful information

Fees & Charges

Annual Expenses as at Date: 30/09/2020

Ongoing Charge (including any Performance Fee): 1.36% as at 30/09/2020

Management Fee Summary: Management fee is 1.10% p.a. of the Gross Assets. Performance fee 10% of any NAV outperformance of the MSCI Emerging Markets Index ex Selected Countries + MSCI Frontier Markets Index + MSCI Saudi Arabia Index (net total return, USD).

  • ISIN: GB00B3SXM832

    Sedol: B3SXM83

    Bloomberg: BRFI LN

    Reuters: BRFI.L

    LSE code: BRFI

  • Name of Company: BlackRock Fund Managers Limited

    Telephone: 020 7743 3000



    Correspondence Address:

    Investment Trusts, BlackRock Investment Management (UK) Limited, 12 Throgmorton Avenue, London EC2N 2DL

    Name of Registrar: Computershare PLC

    Registered Office: 12 Throgmorton Avenue, London EC2N 2DL

    Registrar Telephone: +44 (0)370 707 4027

    Place of Registration: England

    Registered Number: 5612963

  • Year End: 30 September

    Results Announced: May (half yearly), November/December (final)

    AGM: February

    Dividends Paid: February (final), June/July (interim)

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Fund manager commentary

30 April 2021

Please note that the commentary below includes historic information in respect of the performance of portfolio investments, index performance data and the Company’s NAV and share performance.

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results.

The Company’s NAV returned +3.2% versus the Company’s benchmark (the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”)), which returned +2.5% in April1. For reference, the MSCI Emerging Markets Index ended the month +2.5% and the MSCI Frontier Markets Index +6.8%1 over the same period (all performance figures are on a US Dollar basis with net income reinvested).

Frontier and emerging markets did well in April, helped in part by some US Dollar weakness as US yields retraced some of their earlier moves higher. In addition, commodity prices had a strong month with prices of several materials across oil, metals and agriculture up high single to low double digits. While markets in aggregate continue to look through the worsening Covid-19 situation in many emerging markets, headlines were dominated by rapidly rising cases in many of our markets across South East Asia and Latin America. The vaccine availability and rollout in most of these markets remains slow. We continue to believe the coming months will remain challenged by Covid-19 related news flow while our base case for broad based economic normalization in H2 2021 remains unchanged. We believe frontier assets remain very attractively valued in this context.

Many Central and Eastern European countries performed best in April, with the MSCI Poland up 9.4%, the MSCI Greece up 7.2% and the MSCI Kazakhstan up 14.8%. Most of our Latin American markets were the laggards in April amid political uncertainty and renewed Covid-19 cases and lockdowns (MSCI Peru -6.4%, MSCI Colombia -7.0% and MSCI Chile -9.3%).

Our positions in Greece and Kazakhstan contributed the most in April. All of our financial holdings in Greece, particularly National Bank of Greece (+6.4%) and Eurobank (+11%) contributed strongly. Our conviction in these positions remains strong given our belief that post Piraeus’s capital raise, in which we participated, these three banks now have enough capital to reduce the non-performing loan exposure that built up during the Global Financial Crisis. For the sector to perform further we need to see the return of loan growth and continued cost reductions and we have confidence in management to execute. Furthermore, on a per capita basis, Greece is set to be the biggest beneficiary of the European Union’s recovery fund which is much needed having seen no investment for the past decade.

In Kazakhstan both our holdings in fintech company Kaspi (+19.7%) and Energy company Kazatomprom (+10.4%) did well.

Our holdings in Chile and Pakistan were the biggest detractors over the month. Chilean Pulp and paper company Empresas CMPC fell by 14.1% as its earnings release came in below market expectations, despite a significant rise in the pulp price. Our holding in Pakistan financial MCB (-6.4%) was an additional detractor.

We made a few changes to the portfolio in April. Alongside the comments on Greek banks we note that we are seeing positive trends at financials across emerging markets. We have been adding to the sector in aggregate, including in Saudi where the banks are beneficiaries of strong domestic loan growth and rising US yields. Elsewhere in the Middle East we are starting to see the property market bottoming in the UAE. While property prices are still down year over year, we see signs of improvement in mortgage activity and believe we are seeing inventory clean out with very little new supply coming online. In Latin America we initiated a position in Chilean retailer Falabella in April where our earnings estimates are ahead of consensus, driven by conviction in our widening profit margins as they stave off competition. This enables the company to maintain its high market share and use its cash flow to pay down debt. We took profits on our holding in Chilean bank Santander Chile preferring Falabella for domestic Chile exposure. We added to our position in Credicorp as the bank sold off aggressively after polls showed left wing candidate, Pedro Castillo, ahead of Keiko Fujimori in the Presidential race.

Globally the economy is recovering quickly and supported by a very accommodative policy mix in the developed world with extraordinary levels of both fiscal and monetary support. We believe this backdrop is likely to be inflationary given the broad spending plans across private and public spending, which are being reflected in rising commodity prices. While we see the potential for higher rates globally which could put global equity multiples under pressure we note that frontier markets are at a very different starting point given a number of markets still trading significantly below their average 10-year price to book valuations. We believe that frontier markets continue to look very attractive against this backdrop both on a relative and absolute basis.

1MSCI as at 30 April 2021.

Unless otherwise stated all data is sourced from BlackRock as at 30 April 2021.

Risk: Reference to the names of each company in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.

BlackRock Frontiers Investment Trust plc will not invest more than 10% of its gross assets in other closed-ended listed investment funds.

Portfolio manager biographies

Sam Vecht is co-manager of BlackRock Frontiers Investment Trust plc. He is Head of the Emerging Europe & Frontiers team within the Fundamental Active Equity division of BlackRock's Active Equities Group and is responsible for managing long-only and long/short portfolios in both Emerging and Frontier markets. He is also co-manager of the BlackRock Greater Europe Investment Trust plc and the BlackRock Latin American Investment Trust plc. Sam joined BlackRock in 2000 in the Global Emerging Markets Team. He has a degree in international relations and history.

Emily Fletcher is co-manager of the BlackRock Frontiers Investment Trust plc, and is a member of BlackRock's Emerging Markets Specialist Team, within the Fundamental Equity division of the Alpha Strategies Group, specialising in African and Frontier markets. Emily has degrees in experimental and theoretical physics.

Sam Vecht profile photo
Sam Vecht
Portfolio Manager
Emily Fletcher profile photo
Emily Fletcher
Portfolio Manager

Board of directors

All the Directors are independent of the Investment Manager and are members of the Audit & Management Engagement Committee.

Audley Twiston-Davies (Chairman) (date of appointment 23 November 2010) is currently non-executive chairman of TR European Growth Trust plc. He was formerly chairman of Taylor Young Investment Management Ltd and also the chief executive officer of Foreign & Colonial Emerging Markets Ltd.

Mr. Sarmad Zok (date of appointment 8 February 2011) is the Chairman and Chief Executive Officer of Kingdom Hotel Investments (KHI) headquartered in Dubai, UAE and a non-executive director on the boards of Four Seasons Hotels and Resorts, AccorHotels, Mövenpick Hotels & Resorts Management, BlackRock Frontiers Investment Trust plc and Kingdom Holding Company. Mr. Zok is an active member of the boards of the hotel management companies he sits on, being directly engaged on strategy, product, operations/guest experience, growth and value creation.

In 2006, Mr. Zok led KHI on its Initial Public Offering on the Dubai International Financial Exchange (the predecessor to NASDAQ Dubai) and the London Stock Exchange. Since a successful take-private in 2010 he has headed KHI's accomplished hotel investment management team in Dubai in managing an integrated luxury hospitality investment portfolio across the US, Europe and growth/developing markets in the Middle East, Africa and Asia. In 2016, he successfully led the KHI team on the sale and merger of Fairmont Raffles with AccorHotels, one of the largest recent transactions in the luxury hospitality sector.

In his early career, Mr. Zok worked at HVS International and Hilton International. He holds a Bachelor of Science in Hotel Management from the University of Surrey and a Masters of Arts in Property Valuation and Law from City University Business School in London.

Stephen White (Chairman of the Audit and Management Engagement Committee) (appointed 13 July 2016) qualified as a Chartered Accountant at PwC before starting a career in investment management. He has more than thirty five years' experience of managing investment portfolios, most notably twenty as Head of European Equities at F&C Asset Management and ten as Head of European and US equities at British Steel Pension Fund.

Stephen is a Non-Executive Director and Chairman of the audit committee of Aberdeen New India Investment Trust plc and a Non-Executive Director of JP Morgan European Smaller Companies Trust plc, Polar Capital Technology Trust plc and Jupiter US Smaller Companies PLC.

Katrina Hart (date of appointment 1 October 2019) spent her executive career in investment banking, advising, analysing and commentating on a broad range of businesses. Initially working in corporate finance at ING Barings and Hawkpoint Partners, she then moved into equities research at HSBC, covering the General Financials sector. Latterly, Katrina headed up the Financials research teams at Bridgewell Group plc and Canaccord Genuity, specialising in wealth and asset managers. Mrs Hart has been a Non-Executive Director of Miton Group plc, an AIM-listed fund manager, since 2011. She is also a Non-Executive Director of Polar Capital Global Financials Trust plc, Keystone Investment Trust plc and of AEW UK REIT plc.

Investment strategies targeting growth and income
Investment strategies targeting growth and income
Over 25 years of proven experience running investment trusts
Over 27 years of proven experience running investment trusts. (December 2019)
Unparalleled research capabilities
Unparalleled research capabilities and experienced stock pickers
To get in touch contact us on:
Telephone: 020 7743 3000