Investment trusts

About this investment trust

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The Company aims to provide shareholders with long-term capital growth and an attractive total return by investing primarily in UK smaller companies and mid-capitalisation companies traded on the London Stock Exchange.

Why choose it?

The BlackRock Throgmorton Trust looks to back the UK’s emerging companies. An unusual feature of the Trust is its ability to ‘short’ companies that we find unattractive, enabling us to profit if the share price falls. This gives the Trust’s manager the opportunity to back investment ideas with real conviction, within a strong risk framework.

Suited to…

Investors who want a dynamically managed portfolio of growing companies but are comfortable with a limited degree of ‘short’ exposure.

AJ Bell Online Personal Wealth Awards 2021: As at 8 March 2021.
AJ Bell Award: As at 3 September 2021.

Awards/Ratings have not been superseded to date.
Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

What are the risks?

• Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
• Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
• The Trust’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Trust may not be able to realise the investment at the latest market price or at a price considered fair.
• Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
• The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.
• Derivatives may be used substantially for complex investment strategies. These include the creation of short positions where the Investment Manager artificially sells an investment it does not physically own.
• Derivatives can also be used to generate exposure to investments greater than the net asset value of the fund/investment trust. Investment Managers refer to this practice as obtaining market leverage or gearing. As a result, a small positive or negative movement in stockmarkets will have a larger impact on the value of these derivatives than owning the physical investments. The use of derivatives in this manner may have the effect of increasing the overall risk profile of the Funds.

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Fund manager commentary

30 April 2024

Comments from the Portfolio Manager

Please note that the commentary below includes historic information on the Company’s NAV performance and index performance. 

The figures shown relate to past performance. Past performance is not a reliable indicator of future results.

The Company returned 0.1% in April, underperforming its benchmark, the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies Index, which returned 1.9%.¹

Markets were mixed over April with most global equity markets recording losses while the FTSE 100 Index was up nearly 2.5%. As for UK small & mid-caps, they also managed to deliver a small positive return. April provided markets quite a lot to grapple with, from rising tensions in the Middle East to various puts and takes in inflation and economic data. The sharp recalibration of rate cut expectations in April generally provided a headwind to “growth” and reignited the reflation trade which provided a stylistic headwind to performance. We think the underlying portfolio navigated this style shift reasonably well, but frustratingly, the underperformance in the month is more reflective a few individual stock disappointments, something we hope is an aberration and not the start of a trend.

Starting with the positive contributors to performance, the single biggest success in April was our short in a UK listed semiconductor company which issued a large profit warning due to an accelerated transition away from China (their biggest region) as well as a change in revenue recognition for long term contracts. Our concerns regarding accounting, capital intensity and weak free cashflow generation remain and so we have maintained our short. M&A (mergers and acquisitions) activity levels in the UK market remain elevated and the second biggest contributor to performance was from our long position in Lok’nStore which received a bid from Belgian self-storage business Shurgard. The third biggest contributor was Luceco, a UK small cap industrial company which rallied on a resilient trading update. Management have managed the downturn in RMI (renovation, maintenance and improvement) markets well in the past couple of years and the company is now well positioned for any recovery which we think is not reflected in either consensus forecasts or the share price with the shares trading on a high single digit FCF (free cash flow) yield.

Turning to the detractors, the biggest detractor was our long position in WH Smith, the global travel retailer, which fell on results which were in line with expectations but showed a slight slowdown in revenue growth in the key US market. While the slowdown is slightly worse than anticipated, it was at least partly caused by lost sales from store refurbishments which are transitory issues and should reverse shortly. Meanwhile, the company continues to win a large number of tenders for new space and win significant market share. The shares have now de-rated to under 12x price to earnings, a discount to industry peers who have performed worse, and a discount to larger retailers who are focused exclusively on the UK and in much more challenged categories. Shares in YouGov continued to drift lower in April, following the release of results in March which showed a slowdown in the core data products business. Shares in Dunelm fell after the company reported a slightly softer demand environment in March, albeit this was somewhat offset by a better-than-expected gross margin helped by lower freight costs. The well documented wet weather will certainly have had a negative impact so trying to get a grip on the true underlying demand environment is tricky. However, this is a business which an outstanding track record of winning market share and we think is well placed to benefit from any improvement in the consumer or indeed the weather!

April was a challenging month for markets and the portfolio, and while it is frustrating to report a month of underperformance, we do not believe that the stock specific setbacks during the month will result in a permanent loss of capital or are signs of any flawed investment thesis. We maintain the view that the portfolio is well set, with a large exposure to some very undervalued shares, and a compelling opportunity set. The net of the portfolio is around 110% while the gross is around 115%.

We thank shareholders for your ongoing support.

¹Source: BlackRock as at 30 April 2024

Unless otherwise stated all data is sourced from BlackRock as at 30 April 2024. 

Any opinions, forecasts represent an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research, investment advice or a recommendation.

Risk: Reference to the names of each company mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies.

Portfolio manager biography

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Daniel Whitestone, Managing Director, is Head of the Emerging Companies team, within the Fundamental Equity Division of BlackRock's Active Equity business. He is the lead Portfolio Manager for BlackRock Throgmorton Trust plc, BlackRock UK Emerging Companies Hedge Fund and BlackRock UK Emerging Companies Absolute Return Fund.

Dan's service with the firm dates back to 2013. Prior to joining BlackRock, Dan worked for UBS, where he was the head of the UK small and mid-cap sales desk and ranked the number one salesperson in the Extel Small/Mid-Cap sales ratings in 2011 and 2012. Prior to working at UBS, Dan joined Noble and Co in 2006 as a UK small and mid-cap salesman. He began his career at Accenture, in 2003 as a strategy consultant.

Dan earned a BA Hons degree in Combined Studies from the University of Newcastle-Upon-Tyne.

Board of directors

All the Directors are non-executive, independent of the Investment Manager and members of the Audit Committee, Management Engagement Committee and the Nomination Committee.

Christopher Samuel (Chairman) was appointed to the Board in June 2016. He was Chief Executive of Ignis Asset Management from 2009 until its sale to Standard Life Investments in 2014. He was previously Chief Operating Officer at Gartmore and Hill Samuel Asset Management and was a partner at Cambridge Place Investment Management. He is a Non-Executive Director of Quilter plc (including subsidiaries Quilter Financial Planning Limited, Quilter Investment Platform Limited and Quilter Life & Pensions Limited). Mr Samuel was formerly Chairman and a Non-Executive Director of JP Morgan Japanese Investment Trust plc and a non-Executive Director of the Alliance Trust plc, UIL Limited and its subsidiary UIL Finance Limited. He graduated from Oxford with an MA in Philosophy, Politics and Economics. He qualified as a Chartered Accountant with KPMG.

Angela Lane was appointed to the Board in June 2020. She had previously spent 18 years working in private equity at 3i, becoming a partner in 3i's Growth Capital business managing the UK portfolio. Since 2007, Angela has held several non-executive and advisory roles for small and medium capitalised companies across a range of industries including business services, healthcare, travel, media, consumer goods and infrastructure. She is currently the Audit Chair and Non-Executive Director of Pacific Horizon Investment Trust plc, Dunedin Enterprise Investment Trust plc and Seraphim Space Investment Trust plc.

Louise Nash was a UK Small and Mid-Cap Fund Manager, firstly at Cazenove Capital and latterly at M&G Investments which she left in 2015. She now works for family wine business Höpler. She also acts as a consultant to JLC Investor Relations. Louise holds an MA in German and Politics from the University of Edinburgh and the IMRO Investment Management Certificate.

Nigel Burton was appointed to the Board in December 2020. He has spent over 14 years as an investment banker at leading City institutions including UBS Warburg and Deutsche Bank, including as the Managing Director responsible for the energy and utilities industries. Nigel has also spent 15 years as Chief Financial Officer or Chief Executive Officer of a number of private and public companies. He is currently a Non-Executive Director of AIM listed companies DeepVerge plc, Microsaic Systems plc, eEnergy Group plc and Location Sciences Group plc. He was formerly a Non-Executive Director of Digitalbox plc, Corcel plc, Modern Water plc, Alexander Mining plc, Mobile Streams plc and Chairman of Remote Monitored Systems plc.

Merryn Somerset Webb was appointed to the Board in March 2021. She has significant experience of financial matters through her role as a senior columnist for Bloomberg Opinion and writes extensively on this subject across radio and television. She is also a former Editor-in-Chief of MoneyWeek, the UK personal finance magazine. Merryn brings valuable investment trust specific experience. She is a former Non-Executive Director of Murray Income Investment Trust plc, Baillie Gifford Shin Nippon Public Limited Company and Netwealth Investments Limited.

Glen Suarez was appointed to the Board on 9 January 2023. He is an experienced director, having held both executive and non-executive roles. He is currently a non-executive director of Impax Environmental Markets plc and chairman of the board of Knight Vinke Asset Management. He is a senior adviser to FMAP Limited, a consultancy founded by Lord Maude which advises governments on the implementation of public sector reform. Glen was chairman of The Edinburgh Investment Trust plc until July 2022 and was a committee member and co-chair of the Capital Markets Advisory Committee, an independent body advising the IASB on accounting issues and standards between 2014 and 2020. Before this, he was a Partner in Soditic Limited and prior to that he was head of European energy, infrastructure and utilities investment banking business at Morgan Stanley. He is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Royal Society of Arts.

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