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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?

The degree to which different less developed markets move in relation to one another can be extremely low and the growth potential within each country will depend on their domestic, political and economic situations. Over a medium to long-term horizon, this can create attractive opportunities for investors. Capital growth values may fluctuate and the level of income may vary from time and is not guaranteed.

Frontier markets are equity markets in smaller countries that are at an earlier stage of economic and political development and less established than emerging markets. Countries include Argentina, Kuwait and Nigeria among others.

Suited to…

Investors targeting capital growth and looking to diversify their portfolio, who have a high appetite for risk and are able to commit to medium to long-term investments.

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Awards/Ratings have not been superseded to date.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: 30/09/2019

Ongoing Charge (including any Performance Fee): 1.39%

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)

Fund manager commentary

31 May 2020

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 and should not be the sole factor of consideration when selecting a product or strategy.

The Company’s NAV returned +2.6%1 versus its benchmark the MSCI Emerging ex Selected Countries + Frontier Markets + Saudi Arabia Index (“Benchmark Index”), which returned +3.0% in May2. For reference, the MSCI Emerging Markets Index ended the month +0.8% and the MSCI Frontier Markets Index +5.7%2 over the same period (all performance figures are on a US Dollar basis with net income reinvested).

Our universe of smaller emerging and frontier markets continued to rebound in May. These countries, which for the most part haven’t been the epicentre of rising COVID-19 cases, are supported by the rally in oil prices and are less impacted from the rise in US/China tensions (in some cases even beneficiaries). Meanwhile, May was a lacklustre month for Emerging Market (EM) equities in aggregate (+0.8%), driven by underperformance of China and reversing the trend of the last few months.

The biggest contributors to performance in May were our positions in Indonesia and Vietnam for the second month running. Our Indonesian positions continued their strong rebound having previously lagged the recovery as the equity market moved to catch up with the rally seen in the foreign exchange market (FX) and fixed income markets. Attribution was driven by our cyclical holdings in consumer discretionary, particularly auto parts conglomerate Astra International (+26.1%) and retailer Mitra Adiperkasa (+12.7%). In Vietnam, the biggest contributors were mall operator Vincom Retail (+19.8%), followed by information technology services company FPT (+11.2%). Vietnam benefitted from a strong COVID-19 record which has allowed the economy to start to reopen as well as trade flows continuing to benefit from renewed US/China tensions as Vietnam continues to take share in the global supply chain. We have been trimming our exposure at the margin to lock in profits. Our position in Kazakhstan financial Halyk Bank (+18.5%) was an additional contributor.

The largest detractor in May was our position in Malaysia, specifically our holding in British American Tobacco Malaysia (-13.6%) after Q1 earnings disappointed on weaker than expected volumes and market share. Our holdings in Egypt in construction contractor Orascom construction (-4.3%) and real estate developer Medinet Nasr (-16.2%) both detracted as concerns over the spread of COVID-19 in Egypt and its impact on the country’s financial standing weighed on the market. We have been trimming our weight in Egypt driven by the need for the Egyptian currency to devalue in the short term and the need for external financial support for the economy which will likely come with fiscal strings attached. Our position in Pakistan financial MCB Bank (-9.2%) was an additional detractor.

In terms of recent portfolio changes we have been trimming Egypt, Vietnam and Pakistan. In Pakistan, we have been trimming back the position after good performance and mindful of risks around the country’s debt load and fiscal balance. We have been redeploying capital into Eastern Europe which looks interesting as a beneficiary of a large European fiscal stimulus directed primarily towards infrastructure spending. This is feeding into significant stimulus into Eastern Europe which is something we haven’t seen for a long time and is supportive of a number of positions in those markets. We have also reduced our underweight exposure in Saudi Arabia in part due to our favourable view on oil prices. We believe oil prices will normalise driven by a faster than expected demand recovery given evidence that personal car usage is higher post COVID-19 given the preference for driving over public transport. On the contrary, supply remains constrained by the Organization of the Petroleum Exporting Countries (OPEC) as well as oil well shut-ins in North America which are unlikely to come back online until we see a much higher incentive price.

While smaller emerging and frontier markets are vulnerable to health and economic fall-out from COVID-19, data thus far on infection rate and fatalities gives some hope that the damage to life and economy will not be as pervasive as originally feared. We remain positive on prospects of select economies, where policy makers have taken upfront, prudent measures to contain COVID-19, where the FX debt situation is relatively manageable, that will benefit from lower oil price and whose currencies are not over-valued. More broadly, many of our markets look very compelling at current valuation, trading at sub 8x trailing price-to-earnings and in some cases close to global financial crisis levels. Despite the bounce, the portfolio is still around the lowest valuation levels that we have seen in the last ten years.

1BlackRock as at 31 May 2020
2MSCI as at 31 May 2020

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

Any opinions or forecasts represent an assessment of the market environment at a specific time and are not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research, investment advice or a recommendation.

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

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.

Nick Pitts-Tucker (date of appointment 23 November 2010) is currently acting in a number of non-executive roles, including container shipping company Seaspan Corporation, Health Impact Partners and University of Northampton. He is also a member for the Royal Society for Asian Affairs and a Fellow of the Royal Asiatic Society. These follow a 36-year career in Emerging Markets with Japanese, British and American banks, arranging corporate and project finance loans for borrowers in those markets.

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 and Polar Capital Technology Trust 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.



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Telephone: 020 7743 3000