BlackRock Frontiers (BRFI)

BlackRock Frontiers (BRFI) is a truly unique proposition, investing actively in some of the fastest-growing yet almost completely overlooked markets in the world. Managers Sam Vecht and Emily Fletcher focus on frontier markets and the smaller emerging markets, the latter having been ever more marginalised in the mainstream indices by the increasingly developed Asian tech sector. They also invest in those countries yet to even win a place on the Frontiers index, which have at times contributed meaningfully to strong returns over the past five years (see Performance).

BRFI’s portfolio includes stocks being driven by domestic growth themes, with Kazakhstan, Kenya and Hungary amongst the diverse stories represented. Rapid economic development in the individual country is often behind the positioning, with the managers looking to buy into markets as they enter cyclical upswings. However, an important general theme of digitalisation is represented across the portfolio, through fintech holdings, ecommerce and leading banks. Notably, most growth drivers are unrelated to the AI trade which currently dominates emerging market as well as developed market indices.

BRFI’s board has committed to a five-yearly liquidity opportunity, and offered a 100% tender offer this spring. Only 13% of the shares were tendered, and the trust trades on a slight premium at the time of writing.