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
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Overview

BlackRock Frontiers Investment Trust (BRFI) provides exposure to the smaller and frontier emerging markets, a niche asset class that provides diversification to more mainstream emerging markets (such as China) that investors are likely to already hold. These markets arguably resemble the opportunity presented to emerging market investors a generation ago, with favourable demographics, rapid economic growth and cheap valuations reflecting low allocations by global investors.

As discussed in the Performance section, managers Sam Vecht and Emily Fletcher have added significant long-term excess returns since the inception of BRFI, likely reflecting the good opportunities that skilled active managers can find in a niche asset class with limited analyst coverage. Recent years have been tougher, with global investors’ focus on large US and Chinese technology stocks seeing smaller emerging and frontier markets being overlooked. However, the trust has seen a return to form in 2021 driven both by good stock-picking and the rally in value sectors such as banks, oil and mining, which are prominent in BRFI’s opportunity set.

Longer term, the Portfolio contains stocks that should benefit from secular trends such as the expansion of nuclear power capacity (played via uranium miners), increased demand for lithium due to the electrification of cars, and increasing consumption in the world’s least developed countries. Despite these long-term prospects, strong performance and an attractive yield, BRFI is currently trading at a wide discount relative to its history (9.5% as at 19/10/2021). As discussed under Dividend, BRFI’s historical yield of 3.9% is comparable to the sort of yields available in the UK equity income sector and could be a helpful diversifier for income investors with substantial exposure to the UK.

Analyst's View

There are several reasons to consider owning BRFI. As a small and generally overlooked niche asset class, smaller emerging and frontier markets offer active managers a broad range of opportunities to add value, and Sam and Emily have a track record of doing just that. The countries within BRFI’s investment universe are themselves potentially attractive, with their currently low economic base providing plenty of scope for growth as their economies converge with the rest of the world. This is backed by favourable demographics, a factor that will act as a headwind for many developed and emerging countries in the years to come. Additionally, from a portfolio construction perspective BRFI acts as a diversifier within an emerging markets (EM) allocation, especially with the growing dominance of China, Taiwan and Korea within EM portfolios. This gives both growth and income investors an interesting set of options. If the cheaper valuations and long-term outlook for smaller emerging and frontier markets are preferred, BRFI could be held as a core EM allocation. Alternatively, within a broader EM portfolio BRFI could be used as a diversifier to complement more benchmark-aware EM strategies or single-country funds (such as China or India funds).

As discussed under Discount, BRFI is trading at a particularly wide discount relative to its history. In our view, given the long-term drivers of smaller emerging and frontier markets’ growth and the themes being expressed in the Portfolio, this is potentially an attractive entry point.

Bull Bear
Diversification benefits from exposure to niche markets
Exposed to global monetary tightening or a pandemic resurgence
Smaller emerging and frontier markets are relatively cheap and have substantial growth potential
Has a high OCF relative to peers, although its offering is highly differentiated
Inefficient markets provide opportunity for managers to add value
Managers can go long and short on stocks using derivatives, meaning effective gearing can be high at times
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

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…
30 Aug 2023 Investing in frontier markets with investment trusts
Closed-ended funds can help investors access the growth opportunity in developing economies…
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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