BlackRock Frontiers Investment Trust is one of the relatively few options across the open- and closed-ended space for investors seeking a play on the high development potential in frontier markets.
Managers Sam Vecht and Emily Fletcher’s investment universe is those countries which are not listed in the MSCI index of developed countries and not one of the largest eight countries on the MSCI Emerging Markets index - and are therefore not bound to the constituents of the MSCI Frontiers Index.
From launch in 2010 to the end of January 2018, NAV returns were 105% compared to total returns of just 63% from the index. Shareholder gains were actually slightly higher thanks to the discount tightening: 109%. Over five years BlackRock Frontiers stands out as one of the best alpha generators in emerging markets.
The fund offers exposure to markets that tend to have lower correlations to the more developed regions, thereby giving the potential to improve risk-adjusted returns on a portfolio. Over the past five years the correlation of the MSCI Frontier Markets Index to the MSCI Emerging Markets benchmark has been just 0.56, and to the FTSE 100 just 0.52.
Furthermore, the trust also has a strong track record for income, and currently yields 3.2%. This has been achieved despite capital growth being the principal aim of the trust.
BlackRock Frontiers has frequently traded on a premium since launch, and the premium reached significant levels during the bull run for emerging markets in 2017. Since then, the premium rating has subsided somewhat, although the trust currently trades on a premium of c 4%.
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Fund History: BlackRock Frontiers Investment Trust
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