BlackRock Frontiers Investment Trust plc

About this investment trust

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.

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.

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.

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.

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ESG Integration

The fund noted above does not commit to sustainable criteria nor does it have a sustainable investment objective.

BlackRock considers many investment risks in our processes. In order to seek the best risk-adjusted returns for our clients, we manage material risks and opportunities that could impact portfolios, including financially material Environmental, Social and/or Governance (ESG) data or information, where available. See our Firm Wide ESG Integration Statement for more information on this approach and fund documentation for how these material risks are considered within this product, where applicable.

Fund manager commentary

28 February 2025

Comments from the Portfolio Managers

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 rose by 0.7% in February, outperforming its benchmark, the MSCI Frontier + Emerging Markets ex Selected Countries Index (“Benchmark Index”) which returned -1.2%.¹

For reference, the MSCI Emerging Markets Index returned +0.5% while the MSCI Frontier Markets Index returned +1.9% over the same period. All performance figures are on a US Dollar basis with net income reinvested.

Emerging Markets (+0.5%) significantly outperformed Developed Markets, which dropped by 0.7% in February 2025. EMEA (+0.7%) outperformed as the region experienced a significant uplift from a potential Russia-Ukraine ceasefire. Notably, Poland ended the month up by 7.7%. While EM Asia (+1.1%) outperformed, performance within the region was mixed. Thailand (-10%) was amongst the bottom performers, as signs of economic slowdown, reflected in earnings disappointment. Latam underperformed, declining by 1.8% over the month.

Stock selection across markets had a positive impact on portfolio returns in February 2025. The largest contributor to returns was our off-benchmark position in Lucky Cement (+20.3%), a Pakistani conglomerate with businesses in local cement production, chemicals, passenger vehicle assembly, power generation as well as international cement operations in the Middle-East and Africa. The stock rose on the expectations of improved activity as interest rates have come quite significantly in Pakistan. A collection of names exposed to a potential resolution in the war between Ukraine and Russia also did well including Wizz Air, the Hungarian low-cost carrier up by 31.6% and polish clothing retailer LPP up by 12.6%. Our position in Philippines based gaming conglomerate DigiPlus Interactive Corporation (+30.0%) also contributed to returns driven by strong activity indicators and plans to expand into other gaming verticals and new markets.

On the flipside, IT services company EPAM (-18.7%) was the largest detractor over the month. In addition to a softer outlook for the broader Information Technology sector, the stock also sold off following a soft set of results which missed expectations. However, we maintain conviction in the name and note stronger revenue guidance for next year. Vietnamese IT services company FPT (-10.5%) also detracted from performance. Software Development company Endava (-26%) was another detractor. While the company announced a decent set of earnings results, they revised down their FY25 revenue forecast. Ciputra Development (-21.1%), the Indonesian property developer, also detracted alongside the Indonesian market as newsflow on fiscal and monetary policy remains uncertain.

We made a few changes to the portfolio in February. In Indonesia, we rotated our bank exposure from Bank Central Asia to Bank Mandiri due to the latter’s attractive valuation. We also added to property developer Ciputra. The stock looked oversold despite as company remains well positioned within the broader real sector in Indonesia. Elsewhere, we took advantage of recent weakness to top up our holding in Thai Real Estate name Amata. We trimmed our holding in Raiffeisen Bank and Philippines based gaming conglomerate DigiPlus to lock in profits. We also added to IT services company Endava, taking advantage of recent weakness. The stock is trading at attractive valuations and should be further supported by a $100m buyback expected through the year.

We continue to see improving activity levels in some frontier and smaller emerging markets. With inflation falling across many countries within our universe, rate cuts should resume once US bond yields settle down. This is a good set up for domestically oriented economies to see a cyclical pick up. We remain positive on the outlook for small emerging and frontier markets, and we find significant value in currencies and equity markets across our investment opportunity set. Our investment universe, in absolute and relative terms, remains under-researched and we believe this should enable compelling alpha opportunities.

¹ MSCI as at 28 February 2025.

Unless otherwise stated all data is sourced from BlackRock as at 28 February 2025.

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

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.

Sam Vecht, CFA, Managing Director, is Head of Emerging Europe, Frontiers and Alternative Strategies and a portfolio manager within BlackRock’s Fundamental Equity Group. Mr. Vecht is lead portfolio manager for the Emerging Markets Equity Strategies Fund and also co-manages the Latin America, Emerging Europe, Emerging Frontiers Hedge Fund, Frontiers, and Asia Pacific Absolute Return strategies. He is also a research pod leader of the EMEA & Frontiers pod.

Mr. Vecht's service with the firm dates back to 2000, including his years with Merrill Lynch Investment Managers (MLIM), which merged with BlackRock in 2006.

Mr. Vecht earned a BSc degree, with honours, in international relations and history from the London School of Economics.

Emily Fletcher, CFA, Managing Director, is a portfolio manager and a research analyst on the Global Emerging Markets Equities Team within BlackRock’s Fundamental Equity Group. She is responsible for co-managing the BlackRock Frontier Investment Trust, the Emerging Frontier hedge fund, Emerging Markets Sustainable Equity and the Emerging Market Equity Income strategies.

Mrs. Fletcher joined the Emerging Markets team in 2008 and since then has covered African, ASEAN, Frontier and Latam equities and is based in London.

Prior to moving to her current role in 2008, Ms. Fletcher was a member of the Multi-Asset Portfolio Strategies (MAPS) group and the UK Equity team. She joined BlackRock as an Analyst in 2006.

Mrs. Fletcher earned a BA degree and an MSc degree in experimental and theoretical physics, both from the University of Cambridge in 2005 and 2006, respectively.

Board of directors

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

Katrina Hart (Chair with effect from 6 February 2024) (date of appointment 1 October 2019) is currently a non-executive director of Keystone Positive Change Investment Trust plc (where she is also the Senior Independent Director), AEW UK REIT plc, Montanaro Asset Management Limited and Chair of JP Morgan UK Small Cap Growth and Income plc. She was formerly a non-executive director of Premier Miton Group plc and Polar Capital Global Financials Trust plc. Mrs Hart 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, Mrs Hart headed up the Financials research teams at Bridgewell Group plc and Canaccord Genuity, specialising in wealth and asset managers.

Stephen White (Chairman of the Audit and Management Engagement Committee) (appointed 13 July 2016) is currently a non-executive Director of Polar Capital Technology Trust plc and Chairman of Brown Advisory US Smaller Companies plc. He was formerly a non-executive director of Henderson Eurotrust plc, Aberdeen New India Investment Trust plc, JP Morgan European Discovery Trust plc, Global Special Opportunities Trust plc, Head of European and US Equities at British Steel Pension Fund, Head of European Equities at F&C Investment Management, Manager of F&C Eurotrust plc and Deputy Manager of the F&C Investment Trust plc. Prior to joining F&C in 1985, he held positions at Hill Samuel Asset Management, Phillips & Drew and PriceWaterhouse. He is a Chartered Accountant.

Hatem Dowidar (date of appointment 7 February 2024) is the Group CEO of e& and also holds roles as a non-executive Director of Vodafone Group, Etihad Etisalat Company (Mobily), Maroc Telecom & Etisalat Egypt. Previously, he worked for Vodafone, Procter and Gamble as well as Daimler Benz Group in various roles. He is a member of international forums such as the board of the GSM Association and the leadership panel of the United Nations Internet Governance Forum (IGF). His academic background includes a Bachelor’s in Communications and Electronics Engineering and an MBA.

Liz Airey (Senior Independent Director with effect from 6 February 2024) (date of appointment 10 December 2021) is currently Chairman of abrdn UK Smaller Companies Growth Trust plc, Chairman of Rolls-Royce UK Pension Fund Trustees Limited, a non-executive Director of Kirk Lovegrove & Company Limited, a member of the advisory board of Ownership Capital and a member of the Investments Committee of the Royal Horticultural Society. Previously she was non-executive Chairman of Jupiter Fund Management plc, a non-executive Director of Tate & Lyle plc, a non-executive Director of Dunedin Enterprise Investment Trust plc and a member of the Investment Committee of the Institute of Chartered Accountants in England and Wales. In her executive career she was Finance Director of Monument Oil and Gas plc, a post she held from 1990 until the sale of the company to Lasmo plc in 1999.

Lucy Taylor-Smith (date of appointment 10 December 2021) was previously Global Head of Strategy with Standard Chartered Bank based in Singapore. Prior to this, she was Chief Strategy Officer and a member of the Executive Committee at Manulife Asia, and Chairman of Manulife Singapore, as well as Chief Strategy Officer and Board Director for Prudential Corporation Asia. She also spent 13 years with UBS advising companies on a wide range of strategic initiatives and corporate transactions encompassing mergers and acquisitions, equity and debt capital markets deals, culminating in her position as Executive Director of Corporate Broking.