BRFI : Relatively poor year for BlackRock Frontiers
BlackRock Frontier Markets generated a total return on net assets of 21.1% over the year to the end of September 2014 which is good in absolute terms, a lot better than the MSCI Emerging markets Index which returned 4.2% but well behind its benchmark, the MSCI Frontier Markets Index, which returned 29.9%.
The report highlights a number of markets that did very well in the year, notably Bangladesh and Argentina but there’s not too much information about what the causes of its underperformance relative to its benchmark. The statement implies, we think, that being underweight Qatar and UAE ahead of their promotion to the MSCI Emerging Markets Index and hanging onto exposure there in the aftermath when profit-taking drove those market lower again, cost them money. They also mention holdings in Iraq specifically as detracting from performance.
On the plus side, Square Pharmaceuticals (a Bangladeshi pharma company rose by 73%, Chevron Lubricants (in Sri Lanka) rose by 35%, Americana (the Kuwaiti fast food company) rose by 32% on the back of takeover speculation, and, after the year end, Kinh Do (the Vietnamese food company) sold its confectionary and snacks business to US multi-national Mondelez International.