The six months to the end of March 2015 have been a difficult time for BlackRock Frontier Markets. the MSCI Frontier Markets Index has returned -7.4% over this time – well behind the 6.6% return generated by the MSCI Emerging Markets Index. The fund’s asset value outperformed its benchmark, returning -4.2% but the shares moved from trading on a premium of 4.1% to a discount of 4.1% and the return to shareholders was -11.5%. (NB all of these returns are in Sterling). The dividend for the period will be 2.4 US cents.
The collapse in the oil price had a big impact on many Frontier Markets. They have decreased exposure to oil exporting countries in favour of those countries benefitting from lower energy costs, including Sri Lanka, Pakistan and Bangladesh and this helped to cushion some of the fall. Individual holdings such as the Company’s holding in the software development company EPAM Systems, which has operations in Ukraine and Belarus, also contributed strongly to relative performance following good results. Pakistani industrial, Hub Power Company, outperformed substantially during the period, rising by 39%. The portfolio’s exposure to Iraqi oil stocks was the most significant negative contributor over the period.
BRFI : BlackRock Frontier outperforms in difficult market