BlackRock Frontiers Investment Trust

Sponsored by BlackRock

Emerging markets are a rich source of potential investment opportunities, but investors may be neglecting some of their most attractive sources of growth. Funds often focus principally on the largest markets – China, India or Taiwan. Looking into the world’s smallest markets – the frontier economies - brings something new and truly different to a portfolio, we believe.

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.

Between them, Asian giants China, India, South Korea and Taiwan make up around three-quarters of the index[1], leaving regions such as Latin America, Eastern Europe, Africa and the Middle East relatively unrepresented. While this approach is not without its merits, exploring the world’s smaller markets for unique and untapped growth opportunities may be rewarding.

Although larger emerging markets present considerable growth prospects, the range of opportunities found in the smaller emerging markets may be less correlated to the global cycle. In the MSCI Emerging Markets index, for example, the largest weightings are Taiwan Semiconductor, Samsung Electronics and Tencent1. These are large global businesses, dependent on global demand patterns. They may be great companies, with strong growth prospects, but their fortunes are determined as much by the outlook for the US economy as Taiwan or South Korea.

Idiosyncratic risks

The fortunes of companies in smaller emerging markets tend to have a more direct relationship with domestic economic growth. For instance, a bank in Indonesia or Georgia would primarily be an investment in the potential for economic expansion and increasing financial inclusivity within its own country, rather than being influenced by global factors. This is part of the appeal of investing in frontier markets.

These frontier market countries are, we believe, often only lightly correlated to each other[1] - Saudi Arabia may not be impacted by what's happening in Indonesia or Chile - which also helps risk management in a portfolio. The risks for each company and country may be idiosyncratic. This means an allocation to these smaller markets may add true diversification to a portfolio.

Because investor attention is elsewhere, there are a lot of under-researched opportunities in the rest of the world[2]. We believe these smaller countries provide a differentiated range of investment options and will often trade at lower valuations[3].

Also, these companies need to work harder to attract attention, so will often return capital to shareholders via dividends4. This may give investors a diversified source of income in their portfolios. While we don’t have an income target, the current yield of the portfolio is a result of the companies we invest in, which generate considerable amounts of cash.

How BlackRock manages risk in Frontier market investing

Investing in frontier markets may give investors exposure to attractive growth stories, but these are markets that need to be approached with care. Small capital flows can make a significant difference, and they are often illiquid. There may be political and economic volatility. We manage these risks through careful due diligence and holding a spread of assets. We travel frequently to the countries within our universe, to make sure we understand both the company and the environment in which it operates.
These smaller companies often sit outside the mainstream – apart from the broad sweep of global politics and economies. They may be able to side-step geopolitical tensions, trading with both China and the US, and can forge their own paths. Against this backdrop, they have the potential to be a source of diversification and growth for investors.

For more information on this Trust and how to access the potential opportunities presented by frontier markets, please visit: www.blackrock.com/uk/brfi

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[1]MSCI - MSCI Emerging market index - April 2024

[2]BlackRock Frontiers Investment Trust Report - Reasons to invest, p2 - March /2024

[3]BlackRock Frontiers Investment Trust Report - Investment manager’s report p10, 31/03/2024

[4]MSCI Frontier Markets- April 2024

Risk Warnings

Marketing Material.

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.

Investors should refer to the prospectus or offering documentation for the funds full list of risks.

Trust Specific 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 return of your investment may increase or decrease as a result of currency fluctuations.

Emerging Markets risk: Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore, the value of these investments may be unpredictable and subject to greater variation.

Frontier Markets risk: The Company invests in a number of developing emerging markets (“Frontier Markets”). Frontier Markets tend to be more volatile than more established markets and therefore present a higher degree of risk as they are less well regulated and may be affected by political and social instability and other factors.

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

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.

BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the fund specific risks in the Key Investor Document (KID) which gives more information about the risk profile of the investment. The KID and other documentation are available on the relevant product pages at https://www.blackrock.co.uk/its. We recommend you seek independent professional advice prior to investing.

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 BlackRock Frontiers Investment Trust plc currently conducts its affairs so that its 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 intends to continue to do so for the foreseeable

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