Fund Profile

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This is a non-independent marketing communication commissioned by BlackRock. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
BRFI has been on a multi-year run of outperformance of the mainstream EM indices…
Overview

BlackRock Frontiers (BRFI) invests across the emerging and frontier markets, excluding the largest eight countries which dominate the typical emerging markets portfolio. This has been a fruitful place to invest since early 2021, with BRFI delivering strong gains in both 2021 and 2022 (see Performance), while globally, markets have struggled. It has also performed well in 2023 so far. The unique investment universe is designed to offer exposure to countries with high GDP growth and whose markets often have low correlations to the mainstream indices. Additionally, investors are supporting economic development in some of the world’s poorer countries.

The portfolio is managed by Sam Vecht, Emily Fletcher, and Sudaif Niaz; Sudaif having joined the management team in February 2023. They argue their universe contains many countries benefitting from the de-globalisation trend which is seeing US and Chinese companies looking for third parties with whom to trade. Indonesia, the largest country exposure, is a case in point (see Portfolio). Additionally, they point out that fiscal and monetary discipline in many of their countries means rate cuts look likely to be seen in the near future.

Even after a strong two years of performance, BRFI’s portfolio still trades at a significant discount to global equity indices. Meanwhile, BRFI’s share price rating still offers potential value, with the shares on a 5.7% discount to NAV at the time of writing.

Strong operational performance by companies in the portfolio has seen a surge in revenue return per share in the 2023 financial year so far. This has allowed the board to announce a much higher interim Dividend. While BRFI does not have an income objective, it continues to offer an attractive yield, that being 4% on a historic basis at the time of writing.

Analyst's View

One of the key selling points of BRFI is the low correlation of its countries of investment to the mainstream indices and each other. We think this has really come through over the past two years, with BRFI producing attractive returns in two of the most difficult years for mainstream developed and emerging market indices in recent memory. BRFI’s unique investment universe means it offers a highly differentiated proposition which we think could reasonably be held alongside a typical emerging markets fund or a tracker, or could be held on its own. Why would an investor want to do that? Well, there are huge question marks around the wisdom of investing in China at the moment, with the threat of further US sanctions to consider alongside the quixotic behaviour of the domestic authorities. This might make taking emerging markets exposure without China attractive.

In any case, the MSCI EM index is heavily tilted towards technology and North Asian companies plugged into the global economy. Indeed, South Korea and Taiwan, two key exposures, have higher GDP per capita than Spain. This means the index increasingly offers something very different to what it used to. BRFI, by contrast, offers exposure to countries seeing rapid GDP growth and experiencing development from a rapid base, with the spread of basic industries and demographics providing endogenous drivers behind earnings growth. This looks like an attractive long-term investment to us, particularly when considering it can be accessed at a 5.7% discount.

Bull

  • Offers diversification benefits from exposure to niche markets
  • Smaller emerging and frontier markets are relatively cheap and have substantial growth potential
  • Trading at a substantial discount versus recent history

Bear

  • Potential for sharp sell-offs in systemic global crises
  • If global inflation pressures abate and growth style resumes market leadership, BRFI could underperform
  • Political risks are high in many of the universe’s key countries
Continue to Portfolio
2024 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

06 Dec 2024 Results analysis: BlackRock Frontiers
BRFI has recorded another strong year…
20 Nov 2024 Big wheels keep on turnin’
The US election throws up several investment ideas from the mainstream to the more idiosyncratic...
08 Nov 2024 Monthly roundup: the budget’s impact, DGN's strategic review and our podcasts & results highlights
Jo and Ryan discuss the latest news, reviews and interviews in the investment trust world...
25 Oct 2024 Why frontier markets have such a big role to play in global trends
Global changes and supply chain tensions; could smaller markets see growth?
13 Oct 2024 Investing in frontier markets with investment trusts
How investment trusts provide exposure to the dynamic economies in frontier markets…
27 Sep 2024 Can investing in frontier markets enhance your portfolio?
Emerging markets are a rich source of potential investment opportunities, but investors may be neglecting some of their most attractive sources of growth. Funds often focus principally on the largest markets – China, India or Taiwan. Looking into the world’s smallest markets – the frontier economies - brings something new and truly different to a portfolio, we believe...
06 Aug 2024 Flash update: BlackRock Frontiers
BRFI’s unique investment universe has the wind in its sails…
29 Jul 2024 A bucketful of opportunity
How investors can harness the attractive secular growth drivers in emerging markets…
07 Jun 2024 BlackRock Frontiers Investment Trust: A Look Ahead for 2024
As developed markets see higher interest rates feeding through into the real economy, activity is likely to slow. But there are stronger prospects for investment growth in many emerging markets, particularly those outside China. Monetary tightening is already underway in Latin America and Eastern Europe, with inflationary pressures substantially controlled. This should support domestic economic growth and may suggest a better outlook for the next 12 months...
09 Apr 2024 Uncorrelated and ex-China
BRFI provides many of the features emerging market investors typically look for…
13 Mar 2024 What's next for BlackRock Frontiers – Podcast: Trust Issues #27
We talk to KTI Research Manager Thomas McMahon about BRFI's performance, diversification benefits, friendshoring, and more...
23 Feb 2024 An underrated edge
Company meetings give managers a level of access that is difficult for individual investors to obtain…
17 Jan 2024 Top of the Pops
We reveal the winners of our investment trust ratings for 2024…
27 Dec 2023 Man in the mirror
Our analysts take a deep dive into their own output and dig out their favourite pieces of the year…
04 Dec 2023 Results analysis: BlackRock Frontiers
BRFI’s portfolio is delivering strong growth at a time the global economy looks weak…
01 Dec 2023 A different take
BRFI’s unique investment universe has provided strong differentiated returns…
10 Nov 2023 LATAM rate cuts and central bank gold buying
We take a look at some of the highlights of our BlackRock event…
01 Nov 2023 BlackRock Frontiers
Emily Fletcher and Sudaif Niaz
Rewatch this webinar which was part of our October and November online event 'The Best of BlackRock'...
Watch Recording
20 Sep 2023 Five questions about emerging markets
We track key developments in the diverse emerging markets universe…
24 Aug 2023 Fund Analysis
BRFI has been on a multi-year run of outperformance of the mainstream EM indices…
05 Jul 2023 Silk Road Strife
The Asian narrative has been dominated by the India vs China debate, but on which side of the line have investment trust managers fallen?
28 Apr 2023 The outlook for the world’s smallest markets
Frontier markets have navigated some significant headwinds in 2022, but the outlook for the year ahead looks brighter, says Emily Fletcher, manager of the BlackRock Frontiers Investment Trust...
21 Dec 2022 Reasons to be cheerful
We find reasons to be cheery this Christmas in the long-term trends which are going to transform society and generate returns…
21 Dec 2022 Fund Analysis
BRFI’s unique investment proposition has outperformed mainstream emerging market funds for two years running…
15 Dec 2022 Beyond the Rubicon
Our first live event since March 2020 saw three fund managers describing their different perspectives on a vastly-changed investment landscape…
14 Dec 2022 Results analysis: BlackRock Frontiers
BRFI has significantly outperformed the key emerging market indices in 2021 and 2022…
07 Dec 2022 Live sessions today - Live from London
Forgot to register for our Live from London event? Here are the details of today’s line-up of investment companies. Join us with an easy-access link to the presentations...
14 Oct 2022 Frontier markets at a time of high inflation
Frontier markets might appear vulnerable at a time of global economic tension. The reality is that some are thriving in spite of the difficult environment, says Emily Fletcher, Co-Manager of the BlackRock Frontiers Investment Trust plc...
15 Sep 2022 Same same but different
We discuss the case for emerging markets at different stages of development…
19 Jul 2022 Fund Analysis
As major economies stumble, the world’s smallest markets may offer overlooked opportunities…
29 Apr 2022 Stock picking in the forgotten 40
The world’s smallest markets are widely neglected by investors. Emily Fletcher, Co-Manager of the BlackRock Frontiers Investment Trust plc, asks whether a change of market environment might bring about a new era for these unloved gems...
22 Dec 2021 No humbug
Our analysts look back at a year of predictions, theories and ideas, and highlight those they think could matter most…
07 Dec 2021 Results analysis: BlackRock Frontiers
BRFI has delivered outstanding returns in the last financial year, combining strong capital returns and an attractive fully covered dividend…
10 Nov 2021 Fantastic growth funds (and where to find them)
We found them in India, Japan, frontier markets, healthcare and the global sector – and here they are…
10 Nov 2021 Fund Analysis
Opportunities in smaller emerging and frontier countries bring BRFI to the fore after China woes…
10 Nov 2021 Slides and Audio: BlackRock Frontiers
Download the presentation and listen to the audio from our 'Fantastic growth funds (and where to find them)' conference on 4 November...
01 Sep 2021 Winter is coming
Summer was a welcome opportunity for exhausted investors to turn their backs on the legion threats they face, but they haven't gone away and the days grow short - we examine four in detail...
25 Aug 2021 Is the UK’s debt a ticking time bomb?
Our analyst argues Rishi is right to worry about government debt and borrowing…
16 Jun 2021 Fund Analysis
BRFI still looks cheap despite good gains in the recovery…
16 Feb 2021 The Last Frontier: finding growth in smaller emerging markets
Smaller emerging markets have been left behind as investors have focused on a handful of high growth areas. As the crisis fades, investors are already starting to recognise that these areas may provide high growth at compelling valuations.
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
18 Dec 2020 Results analysis: BlackRock Frontiers
BlackRock Frontiers has seen a dramatic improvement in performance since its year end, and the managers are excited about the outlook…
09 Dec 2020 A bumper harvest?
Agricultural and industrial commodities have rallied strongly, but what are the implications for emerging market allocations...?
02 Dec 2020 Fund Analysis
BRFI’s portfolio is trading on a record low valuation, putting it in a potentially strong position for a COVID bounce…
11 Nov 2020 Now that's what I call a discount!
Presentations and audio from our conference focussed on discount opportunities in the investment trust sector…
11 Nov 2020 Slides and Audio: BlackRock Frontiers
View the presentation and listen to the audio from our 'Discounts in Focus' event on 05 November...
22 Oct 2020 Spotlight on discounts
As our event focussed on discounts approaches, we update our portfolio of discount opportunities and review discounts across the wider IT universe…
07 Oct 2020 Emerging markets: beyond China
Investors’ focus has been directed towards China as its weight in global indices grows, however, this may see them miss out on the growth, income, and diversification opportunities elsewhere...
21 Aug 2020 Fund Analysis
BRFI’s portfolio is trading on a record low valuation…
18 Jun 2020 Gimme shelter
As income investors brace for impact we ask which regions and trusts are less likely to cut their dividends in 2020…
16 Jan 2020 Drifting apart: how emerging markets have become less correlated
We examine how correlations between different emerging markets have evolved, and whether single country strategies could diversify returns going forward....
30 Dec 2019 Fund Analysis
BRFI offers a strikingly high yield from undervalued regions with strong growth potential…
21 Aug 2019 Exploring the next frontier
The world’s developing markets may look and feel like large emerging markets, but they bring something new for investors. The team at BlackRock explain why…
03 Jul 2019 Push-me pull-you
Two contrasting influences are dominating the outlook for Asian markets - we analyse them and how Asia trusts are positioning their portfolios in response...
10 Jun 2019 Fund Analysis
Sam Vecht's flagship emerging markets fund has kept pace with its new, more appropriate, benchmark so far in 2019 after a tricky start last year...
14 Nov 2018 Fund Analysis
BlackRock Frontiers is the leading fund for investors seeking exposure to the high development potential in frontier markets...
17 May 2018 Fund Analysis
Long-term capital growth from investment in companies operating in frontier markets...
19 Dec 2017 Fund Analysis
A high-quality trust managed by an experienced and well-resourced team that offers exposure to lowly correlated frontier markets
28 Jun 2017 Fund Analysis
A growth focused trust which invests in some of the world's most exotic markets, managed by a highly experienced team...
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