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Fund Profile

BlackRock Throgmorton Trust 03 April 2019

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BlackRock Throgmorton Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

Now the sole manager, Dan Whitestone offers a growth-oriented portfolio of UK small and mid caps through BlackRock Throgmorton Trust.

The trust is referred to as an ‘extension fund’ by BlackRock, using both long and short positions to deliver consistent capital growth and attractive total returns. More specifically, this means the trust can increase its overall gross exposure to the market, varying its net exposure over time. Dan aims to manage the portfolio so that the net exposure amounts to between 70% of NAV and 115% of NAV. The shorts are typically a smaller size than long positions, between 0.5% and 1% of NAV.

Fundamental analysis is at the heart of the strategy - Dan looks for high quality, differentiated companies which sit in structurally sound industries. Making full use of the investment trust structure, THRG is typically geared through the use of CFDs. As opposed to bank borrowing which incurs arrangement fees etc, CFDs allow the manager ultimate flexibility to react opportunistically to share price movements. Currently, Throgmorton’s gross gearing stands at 23%, although the net exposure (deducting shorts) is 90%.

The trust has an exceptional long-term track record of outperformance relative to the benchmark and peer group alike. Over the past five years (to the end of March), the trust has delivered NAV returns of 67.6%, seven times greater than the benchmark Numis Smaller Companies plus AIM ex inv com, (9.8%) and close to double the FTSE All Share (34.9%). The trust has also significantly outperformed the previous benchmark, the Numis SC Ex Invt Com, outperforming by c.38% over the past five years.

Given the company invests in one of the most out of favour sectors across the globe, the trust had a relatively strong year in 2018. The fact the smaller companies portfolio outperformed the benchmark by over 6%, and only marginally underperformed the FTSE All share (-9.5%) over this period, is surely a testament to the manager and his quality driven investment style, and ability to add alpha through shorts.

The trust’s discount has narrowed significantly since the referendum in 2016 – when it reached a 22% discount at one point - and we have continued to see it narrowing over 2018 and 2019 ytd. Currently the discount sits at close to 5.5%.

Kepler View

BlackRock Throgmorton has long been one of the most reliable smaller companies vehicles in the UK in terms of performance. The trust has consistently been in the top three trusts in the sector for NAV returns, and over five years has delivered the greatest NAV returns of the 10-strong sector.

While there is still uncertainty surrounding the UK, THRG is a trust that is able to benefit from volatility through its ability to flex its overall market exposure, something a traditional long only fund cannot. Dan and the team have demonstrated that they are able to generate alpha in both falling and rising markets. Although the trust is trading at a historically narrow discount (5.5%), given its unique approach and strong performance, we would not be entirely surprised if we saw the trust eventually trade on a premium.

Bull
Bear
Exceptional track record of outperforming peers and the benchmark
Uncertainty continues to cloud the UK, which could impact small caps in particular
Can benefit from both falling or rising markets through short and long book
The use of gearing could lead to more volatility in returns
Relatively cheap OCF

Continue to Portfolio

Fund History

21 Feb 2024 Pitch doctoring
Our analyst argues the upcoming budget should see radical action to boost the UK market…
13 Feb 2024 Results analysis: BlackRock Throgmorton
Easing macroeconomic conditions may provide a catalyst for THRG’s operationally resilient companies to re-rate…
10 Jan 2024 Definitely maybe
Fund flows and discounts may shed some light on a once-in-a-generation opportunity…
07 Aug 2023 Fund Analysis
THRG: falling portfolio valuations mask strong and resilient operational growth trends…
13 Feb 2023 Results analysis: BlackRock Throgmorton
Performance improved for THRG in the second half of the 2022 financial year…
18 Jan 2023 Fortune favours the brave
Our research suggests a recession has already been priced into small cap trusts, but risks abound...
11 Jan 2023 Solving the Rubik’s Cube
We reveal the winners of our investment trust ratings for 2023…
04 Nov 2022 Fund Analysis
THRG’s manager argues macro is driving short-term volatility, but fundamentals should prevail in the long term…
10 Aug 2022 Get ‘em while they’re hot
Wide discounts in the UK Smaller Companies sector may present long term investors with good entry opportunities…
16 Feb 2022 Perfectly formed
Our research suggests that investment trusts really are a better way to gain exposure to smaller companies…
09 Feb 2022 Results analysis: BlackRock Throgmorton
THRG continues to build on its impressive track record by investing in disruptive and innovative UK smaller companies…
30 Dec 2021 Great expectations
As the last of the mince pies wilts in the fridge, topped with a generous helping of stilton, the Kepler Trust Intelligence team stick a finger in the air and point toward their top picks for the year ahead…
08 Dec 2021 Fund Analysis
A dynamic and growth orientated approach to UK smaller companies…
11 Aug 2021 In at the deep end
Does seeking out wider-than-usual discounts help investors systematically outperform in the UK trust space?
28 Jul 2021 Fund Analysis
THRG’s high net exposure reflects the manager’s bullishness about the opportunity set in UK small caps…
08 Jul 2021 London Calling
UK equities represent a ‘once in a generation’ opportunity according to the managers who joined us at our event last week…
07 Jul 2021 Slides and Audio: BlackRock Throgmorton
Download the presentation and listen to the audio from our 'Cool Britannia' Summer conference on 01 July...
07 Jul 2021 Slides and Audio: Roundtable - Small is beautiful
Download the presentation and listen to the audio from our second roundtable discussion with Dan Whitestone, Georgina Brittain and Judith MacKenzie...
23 Jun 2021 Time to back Britain?
After a challenging period for the United Kingdom, we wonder if it could be the most exciting market on a five-year view…
18 Feb 2021 Results analysis: BlackRock Throgmorton
After another set of strong results, we look at why, in our opinion, THRG continues to be one of the standout trusts in the UK…
10 Feb 2021 Eye of the Pfizer
Mining shares have rallied in recent months. With further potential, what impact could this have on the relative returns of active UK Small cap strategies...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
23 Dec 2020 Fund Analysis
BlackRock Throgmorton (THRG) seeks to use both long and short positions to generate alpha...
10 Dec 2020 Lots of uncertainty, but an abundance of investment opportunities
Dan Whitestone rationalises the financial performance of individual companies during the pandemic and how this has affected BlackRock Throgmorton Trust plc...
25 Nov 2020 Britannia Redux
UK equities have been despised for almost five years and could offer extreme rebound potential…
17 Jun 2020 Fund Analysis
One of the most reliable trusts in the UK smaller-companies sector, THRG uses both a long and a short book to generate alpha, regardless of the wider market conditions…
20 Nov 2019 Fund Analysis
One of the most reliable trusts in the UK, THRG has shown the ability to perform strongly in both rising and falling markets at low levels of volatility…
16 Oct 2019 Thinking big on small companies
10 Apr 2019 Because they're worth it
With the rise of the passives putting more pressure on fees than ever before, we argue that performance fees could be the key to encouraging truly active investment trust managers...
03 Apr 2019 Fund Analysis
Dan Whitestone offers a growth-orientated portfolio of UK small and mid caps, using both long and short positions...
16 Oct 2018 The Investment Trust Advantage
Our recent conference for discretionary fund managers saw some of the UK's leading fund managers discussing the outlook for the world's major regions and asset classes...
25 Oct 2017 Fund Analysis
A UK small-cap trust that can profit in both rising and falling markets...
25 Oct 2017 Patience is a virtue…
We analyse the outperformance of UK small-caps and why it is so important to take a long-term view...
26 Apr 2017 Fund Analysis
26 Apr 2017 Size matters
Our analysis proves that investment trusts really are the best way to access smaller companies, and exposes liquidity concerns for their open ended counterparts...
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