Fund Profile

Disclaimer

This is a non-independent marketing communication commissioned by BlackRock. 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
Overview

BlackRock Throgmorton Trust (THRG) invests in small and mid-sized UK companies that are either driving innovation or benefitting from structural change, with the primary aim of achieving capital growth. The portfolio manager, Dan Whitestone, firmly believes financially sound, well-managed companies with differentiated products that have a tailwind of secular trends are most likely to undergo exponential growth, and as discussed in Performance to date, this has translated into exceptionally strong and consistent returns for shareholders, both over the long and short term.

Uniquely in the AIC UK Smaller Companies peer group, THRG takes both long and short positions in stocks, betting against firms Dan believes are in a weak position. The short book provides a separate avenue for the manager to add value through stock selection skills. Additionally, the short book allows net exposure to the market to be reduced to smooth volatility in stressed market conditions. As discussed in Gearing, THRG can have a net exposure between 70% and 130% of NAV but typically operates in a range between 100 and 115% of NAV. The current gearing of 120.9% (as at 30/09/2021) indicates the bullish outlook Dan has for his Portfolio, believing the pandemic has accelerated the pre-existing trends his companies were benefitting from.

THRG’s exceptional performance has created strong investor demand such that the trust has been trading at a premium for a large part of 2020 and 2021, and as discussed in Discount the board has been active in issuing shares to address this issue. This has contributed to the growth in assets leading THRG to join the FTSE 250 Index in September 2021.

Kepler View

As discussed in Performance, THRG’s track record is outstanding. It is the best performing trust in the AIC UK Smaller Companies sector over five and ten years and second-best over three years on a NAV basis. The ability to go both long and short and gain effective leverage via CFDs has provided Dan and his team additional flexibility to add value via both stock picking and managing overall net exposure to the market. This has resulted in THRG’s excess returns not being overly driven by stylistic factors, despite high conviction in the quality-growth approach and the eschewal of highly cyclical sectors such as energy and mining. If an investor believes that trends in disruption, innovation and digitalisation will continue to drive stock performance and wants a focussed, undiluted Portfolio reflecting this view, then THRG may appeal.

We would note that the trust fee structure is heavily skewed towards performance fees rather than the fixed management fee. As discussed in Charges, although this remuneration structure has fallen out of favour with some boards, we believe it aligns the interests of shareholders and the manager and incentivises Dan and the team to continue to push to outperform. This means we expect Dan to continue to use high levels of gross market exposure, shorting and to maintain conviction in his particular approach, and this will mean THRG will not suit investors uncomfortable with any of these features.

bull bear
Very strong and consistent track record of relative and absolute performance
Trading at a premium
Focus on structural growth and industry change provides high return opportunities
High effective gearing can amplify losses as well as gains
Ability to short companies provides additional opportunities for manager to add value
Avoidance of cyclical sectors could cause future underperformance if they rally
Continue to Portfolio

Fund History

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…
09 Jun 2021 Cool Britannia?
Join the team at Kepler Trust Intelligence and six leading UK fund managers as we examine the prospects for UK equities with COVID in retreat and Brexit uncertainty finally behind us…
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...
06 Dec 2017 Fund Analysis
A top-performing emerging European trust that has delivered significant alpha generation...
29 Nov 2017 Fund Analysis
A portfolio of UK equities with a focus on companies that can generate attractive income and capital growth.
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...
24 Oct 2017 Fund Analysis
A very high octane but relatively unknown UK small-cap trust that has delivered significant outperformance and undergone a recent make-over...
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...
26 Apr 2017 Fund Analysis
26 Apr 2017 Fund Analysis
20 Apr 2017 Fund Analysis
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