Fund Profile

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

BlackRock Throgmorton Trust (THRG) aims for long-term capital growth and an attractive total return through investment in UK small- and mid-cap companies. Uniquely in the sector, THRG has both a long and a short book, meaning manager Dan Whitestone can capitalise on opportunities, regardless of the wider market environment.

The ability to short has been beneficial over the past few years, when Dan has achieved significantly stronger returns than peers, as we discuss in the Performance section. In fact, in each of the past ten years the trust has outperformed the benchmark, and has achieved the fourth-highest returns in the sector.

In the long book, Dan owns two types of investment. The first are high-quality differentiated long-term-growth companies, and the second are companies which are leading industry change – ‘disruptors’. For Dan, high-quality businesses have strong management teams and a protected market position. They also possess a unique and compelling product offering with an attractive route to market which perhaps benefits from structural growth, and they are well financed. He aims to short those businesses with the opposite characteristics, i.e. the victims of industry change (‘the disrupted’), as well as companies with commoditised product offerings and weak financial structures, which are facing structural or cyclical industry pressures. The trust invests primarily in the UK small- and mid-cap market; however, Dan also has the flexibility to hold up to 15% outside the UK.

The trust’s discount has narrowed since the post-referendum lows, and the board has been able to issue a large number of shares to investors over the past year. Currently the trust is trading on a slight premium of 0.4%.

Analyst's View

Reliability of returns is a key pillar of THRG’s appeal. Over the past decade the trust has outperformed the benchmark in each calendar year, delivering one of the highest returns of any in the sector. This has been achieved at relatively low levels of volatility, and over the past five years THRG has the fourth-highest Sharpe ratio in the sector.

A vital contributor to this has been Dan’s ability to short stocks, which means he is able to generate alpha in ways other managers simply cannot. In the current volatile environment this is particularly useful, with the trust not necessarily relying on general macroeconomic conditions changing. Alongside this, the diversified approach to risk that Dan employs has helped to protect capital while not appearing to impact performance during bull markets. In the financial year ending November 2019, for example, the short book delivered 1% in absolute performance. This is a strong result considering the backdrop of a rising market during the period, and highlights the trust’s ability to generate stock-specific alpha on the short side.

Given the trust’s strong track record and defensive characteristics, it is unsurprising that it has spent a great deal of time trading at a premium. The trust moved to a discount in the midst of the market volatility during Q1 2020; however, this was short-lived and market participants soon took advantage of the opportunity, with the trust moving back to a premium in recent weeks.

BULL BEAR
Exceptional track record of outperforming peers and the benchmark Smaller companies are typically a difficult space during a downturn
Short book diversifies sources of alpha and gives downside-protection potential The UK continues to lack positive investor sentiment
Trading on a discount to recent history The bias to mid caps means it is not a purely small-cap exposure
Continue to Portfolio
2022 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

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 for investors according to the managers who joined us to discuss the outlook 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 Making the grade: Kepler's rated trusts report strong performance in 2019
Earlier this year, we launched our new ratings for income and growth. Since then, the 40 trusts to have been awarded the elite Kepler Trust Intelligence ratings have performed strongly…
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...
24 Oct 2017 Fund Analysis
A growth-orientated UK small-cap trust that is differentiated from its peers thanks to its ability to take both long and short positions...
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