Analysts at Winterflood Securities have tipped the £184.3m BlackRock Frontiers Investment Trust to bounce back after underperforming in the past year.
The trust had delivered a return of 15.5 per cent in the year to the end of August, according to the trust’s factsheet, compared with the 24.4 per cent rise in its benchmark MSCI Frontier Markets index.
The trust’s share price has suffered even more recently during the sharp market sell-off.
But Simon Elliott, research analyst at Winterflood, said the recent price weakness “has seen the fund’s premium eroded” and “offers a buying opportunity”. The trust has traded on a premium to its net asset value for much of the past 18 months, but it slipped to a discount in mid-October before moving back to trading on a very small premium.
Mr Elliott said the recent underperformance on the trust had been down to its underweight position in Qatar and the United Arab Emirates.
The BlackRock trust’s manager, Sam Vecht, had moved to an underweight position ahead of the promotion of the two countries into the MSCI Emerging Markets index.
However, the upcoming promotion caused mass buying of both countries’ stockmarket, causing a large, late rally in two of the main constituents of the index that the trust largely missed out on.
Mr Elliott said the recent underperformance “should not detract attention from the fund’s strong performance, both absolute and relative, since launch”.
From the trust’s launch in 2010, it has delivered a return of 37 per cent in both net asset value and share price terms, compared with a 28.9 per cent rise in the benchmark index.
Mr Vecht has ramped up his exposure to Ukraine in recent months due to the very low valuations in the country caused by its tensions with Russia.
