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Fund Profile

BlackRock Throgmorton Trust 04 November 2022

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
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Overview

BlackRock Throgmorton Trust (THRG) has historically generated some of the best returns in the AIC UK Smaller Companies sector. Manager Dan Whitestone seeks to identify the highest-quality growth companies in the UK small-cap market, meaning companies which have a long runway of fundamental growth ahead of them as sector leaders or industry disruptors, or which have innovative ways to capitalise on secular growth opportunities. Dan can take long or short positions in contracts for difference (CFDs) to supplement the shares he owns. He will take short positions when he feels that a company is likely to underperform, though this typically forms a small part of the portfolio (see Gearing).

Over the long term, THRG has demonstrated significant outperformance against both its peers and benchmark. However, the market environment over 2022 has been difficult for many growth managers, as we discuss under Performance. Yet Dan tells us the underlying fundamentals of his holdings have shown little to no sign of deteriorating, with the investment cases for almost all of his portfolio having remained unchanged, despite the sell-off. Dan has reduced his net market exposure, though, recognising the current economic challenges and the increased levels of market volatility that this can bring, in order to protect shareholder capital. This puts Dan in a stronger position to be able to deploy capital swiftly when he believes the time is right. THRG trades on a 1.7% Discount at the time of writing.

Analyst's View

THRG has a highly impressive long-term track record built on identifying companies which demonstrate disruptive business models or capitalise on structural growth themes. We think this is an attractive long-term strategy to take in the small and mid-cap market, which is bound to throw up such companies. In the short term, investing for growth has suffered due to macroeconomic conditions, specifically rising interest rates and growing risk aversion due to fears of a recession. We think the indiscriminate sell-off could represent an opportunity for Dan, and also for potential long-term investors in THRG who can bear short-term volatility and uncertainty.

We note that THRG’s performance fee serves to align the interests of shareholders and manager and incentivises Dan and the team to continue to push to outperform, which should benefit long-term shareholders. A cap and a clawback mechanism serve to address some of the most common criticisms of performance fees.

Bull

  • Has demonstrated strong outperformance versus peers and benchmark over the long run
  • Discount may offer attractive entry point
  • Is the only strategy in its peer group to benefit from short positions

Bear

Growth investing can underperform during periods of rising interest rates

Gearing can amplify losses on the downside

Offers lower diversification benefits relative to peers

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 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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