The geopolitical landscape continues to shift, with supply chains being redrawn and political alliances changing. This environment will, in our view, continue to support a re-organisation of globalisation that will benefit many parts of emerging markets. We continue to find a range of opportunities in different sectors across smaller emerging and frontier markets, as companies relocate.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
We see a world splitting into three groups: those aligned with China, those aligned with the US and the rest. The latter group - for which the Economist has coined the term "Transactional 25" – these are 25 countries that are uniquely positioned to benefit from their ability to trade with both China and the US. Global companies want stable supply chains that are not vulnerable to a new tariff regime, or geopolitical volatility. This puts these countries in a strong position to attract investment, in our view.
Geopolitical tensions to foster new growth opportunities
Frontier markets and other smaller emerging markets are well-represented among the transactional economies set to benefit. For example some of the largest American companies have historically done much of its manufacturing in China, but geopolitical tensions are making this more complex and they have sought to diversify their supply chains across alternative locations. Vietnam, for example, has been a beneficiary.. For these countries, it often has a knock-on effect on economic growth and consumption. We expect this phenomenon to continue in 2025.
Malaysia is another example of a market benefitting from increased geopolitical fragmentation, as well as the spill-over for power demand from Singapore. We see evidence of re-shoring across various sectors, particularly in parts of the semi-conductor supply chain as both Chinese and US companies take advantage of the existing ecosystem in Malaysia and the availability of affordable land, power capacity and skilled labour.
Where BRFI is finding growth opportunities
We have sought to take advantage of the opportunities to invest for growth that this type of development brings. For example, we have exposure to a semiconductor-related name in Malaysia and we also have exposure to countries such as the Philippines and Bangladesh. This is subject to change. Frontier markets remain plugged into other important emerging growth sectors, including technology, emerging market consumption and vital natural resources.
We continue to see improving economic activity in frontier and smaller emerging markets. With inflation falling across many countries within our universe, rate cuts are possible for many emerging economies. This is a good set up for a revival in economic growth because it helps lower borrowing cost and revive investment.
Within the BlackRock Frontiers Investment Trust, we remain positive on the outlook for smaller emerging markets, and we find significant value in currencies and equity markets across our investment opportunity set. Our investment universe, in absolute and relative terms, remains under-researched and we believe this should enable us to find opportunities.
For more information on this Trust and how to access the potential opportunities please visit: www.blackrock.com/uk/brfi
Risk Warnings
Investors should refer to the prospectus or offering documentation for the funds full list of risks.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time and depend on personal individual circumstances.
Fund-specific risks
BlackRock Frontiers Investment Trust plc
Counterparty Risk, Currency Risk, Emerging Markets, Frontier Markets, Gearing Risk.
Description of Fund Risks
Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.
Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.
Emerging Markets: Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.
Frontier Markets: Frontier markets are generally more sensitive to economic and political conditions than developed and emerging markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund. There may be larger fluctuations to the value of your investment and increased risk of losing your capital.
Gearing Risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
Important Information
In the UK and Non-European Economic Area (EEA) countries: this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.
UK Investment Trust Funds: The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.
Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
The investment trusts in this document currently conduct their affairs so that their securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to non-mainstream investment products and intend to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are securities issued by investment trusts. Investors should understand all characteristics of the funds objective before investing, if applicable this includes sustainable disclosures and sustainable related characteristics of the fund as found in the prospectus, which can be found www.blackrock.com on the relevant product pages for where the fund is registered for sale. For information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in local language in registered jurisdictions.
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