BlackRock Throgmorton Trust plc (LON:THRG) has announced its portfolio update.
All information is at 31 March 2024 and unaudited.
To learn more about the BlackRock Throgmorton Trust plc please follow this link: blackrock.com/uk/thrg
Performance at month end is calculated on a cum income basis
| One Month % | Three months % | One year % | Three years % | Five years % | |
| Net asset value | 3.4 | 2.7 | 10.2 | -12.6 | 32.1 |
| Share price | 1.7 | -3.2 | 3.4 | -22.5 | 26.2 |
| Benchmark* | 3.0 | -0.8 | 3.0 | -12.7 | 14.9 |
Sources: BlackRock and Deutsche Numis
*With effect from 15 January 2024 the Numis Smaller Companies plus AIM (excluding Investment Companies) Index changed to the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies).
| At month end | |
| Net asset value capital only: | 650.37p |
| Net asset value incl. income: | 653.68p |
| Share price | 587.00p |
| Discount to cum income NAV | 10.2% |
| Net yield1: | 2.5% |
| Total Gross assets2: | £609.7m |
| Net market exposure as a % of net asset value3: | 118.4% |
| Ordinary shares in issue4: | 93,278,514 |
| 2023 ongoing charges (excluding performance fees)5,6: | 0.54% |
| 2023 ongoing charges ratio (including performance fees)5,6,7: | 0.87% |
1. Calculated using the interim dividend declared on 07 July 2023 paid on 29 August 2023, together with the final dividend declared on 05 February 2024 paid on 28 March 2024
2. Includes current year revenue and excludes gross exposure through contracts for difference.
3. Long exposure less short exposure as a percentage of net asset value.
4. Excluding 9,931,350 shares held in treasury.
5. The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, excluding performance fees, finance costs, direct transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 30 November 2023.
6. With effect from 1 August 2017 the base management fee was reduced from 0.70% to 0.35% of gross assets per annum. The Company’s ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses, including performance fees, but excluding finance costs, direct transaction charges, VAT recovered, taxation and certain other non-recurring items for the year ended 30 November 2023.
7. Effective 1st December 2017 the annual performance fee is calculated using performance data on an annualised rolling two-year basis (previously, one year) and the maximum annual performance fee payable is effectively reduced to 0.90% of two year rolling average month end gross assets (from 1% of average annual gross assets over one year). Additionally, the Company now accrues this fee at a rate of 15% of outperformance (previously 10%). The maximum annual total management fees (comprising the base management fee of 0.35% and a potential performance fee of 0.90%) are therefore 1.25% of average month end gross assets on a two-year rolling basis (from 1.70% of average annual gross assets).
| Sector Weightings | % of Total Assets |
| Industrials | 36.0 |
| Consumer Discretionary | 22.8 |
| Financials | 15.7 |
| Basic Materials | 6.8 |
| Technology | 6.5 |
| Telecommunications | 3.8 |
| Health Care | 2.2 |
| Consumer Staples | 1.9 |
| Energy | 1.2 |
| Communication Services | 1.1 |
| Real Estate | 0.9 |
| Other | 0.1 |
| Net Current Assets | 1.0 |
| —– | |
| Total | 100.0 |
| ===== | |
| Country Weightings | % of Total Assets |
| United Kingdom | 91.6 |
| United States | 4.8 |
| Ireland | 1.4 |
| Australia | 0.8 |
| France | 0.8 |
| Switzerland | 0.5 |
| Canada | 0.4 |
| Sweden | -0.3 |
| —– | |
| Total | 100.0 |
| ===== |
| Market Exposure (Quarterly) | ||||
| 31.05.23 % | 31.08.23 % | 30.11.23 % | 29.02.24 % | |
| Long | 111.7 | 112.7 | 111.3 | 117.9 |
| Short | 3.6 | 4.5 | 3.8 | 3.2 |
| Gross exposure | 115.3 | 117.2 | 115.1 | 121.1 |
| Net exposure | 108.1 | 108.2 | 107.5 | 114.7 |
| Ten Largest Investments | |
| Company | % of Total Gross Assets |
| FTSE 250 Index Future | 3.6 |
| Breedon | 3.2 |
| Gamma Communications | 3.1 |
| 4imprint Group | 3.0 |
| Oxford Instruments | 2.9 |
| WH Smith | 2.9 |
| Grafton Group | 2.9 |
| Rotork | 2.5 |
| Hill & Smith Holdings | 2.5 |
| YouGov | 2.3 |
Commenting on the markets, Dan Whitestone, representing the Investment Manager noted:
The Company returned 3.4% in March, outperforming its benchmark the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index which returned 3.0%.
March was another strong month for risk assets broadly, with equity markets globally delivering solid returns across the board on back of positive macro data points and falling rates of inflation. Specifically, within the UK, CPI data continued to come in below forecast and is heading towards the Bank of England’s (BOE) target. Indeed, if we annualise the last seven months of UK CPI then inflation is already below 2%. This leaves the path open for cuts to UK rates before the Federal Reserve, something unthinkable in June last year.
The largest positive contributor to performance during March was UK wealth manager Mattioli Woods, which received a cash bid from financial private equity specialist Pollen Street Capital. The sale of Mattioli Woods marks another name in a long (and growing) list of UK listed businesses, which have been targeted by Private Equity firms or Corporates taking advantage of the attractive valuations currently placed on the UK market, particularly when compared to comparable companies in other listed markets. The second largest contributor was Gamma Communications, the UK listed cloud communications company, which delivered robust results with organic revenues growing around 9%. Additionally, the company initiated its first buyback, utilising some of its £130m net cash pile while leaving enough capacity to continue to do bolt on acquisitions. The shares have re-rated to a mid-teens PE (price to earning ratio) this year, but this is still at a steep discount to other stable high single digit organic growth companies. 4imprint also contributed positively after reporting a 36% rise in pre-tax profit and a 16% increase in total revenue, once again demonstrating their market leading position and ongoing market share gains.
The largest detractor was veterinary services business, CVS Group. The shares fell in response to an announcement from the CMA (Competition and Markets Authority) that they would be progressing to a full Market Investigation into the veterinary market in the UK. The CMA had announced an initial review in September last year and we reduced the position to reflect uncertainty then. Our work at the time indicated that the market was functioning reasonably well for consumers and there was limited evidence of overcharging or anticompetitive practices so we were surprised and disappointed by the CMA’s decision. Alas, this is now a cloud that will hang over the shares for 18 months so reflecting that prolonged uncertainty we have reduced the position size further. YouGov was the second biggest detractor after a set of results which, although in line with expectations, demonstrated a larger than anticipated slowdown in the core Data Products business and a larger than expected weighting to H2 to meet their FY guidance. We have moderated the position but retain a holding as we still believe in the long term growth potential for YouGov’s proprietary data and sophisticated analytics platform. Shares in IT reseller Computacenter fell in response to providing a cautious outlook for 2024, despite delivering another year of record revenue and profits.
March was a positive month, rounding out a positive first quarter in 2024. We remain pleased with the breadth of returns in the portfolio, with positive contributions across a broad range of holdings both in the month and year-to-date. We are also reassured that the returns are primarily driven by stock specifics rather than any one factor or macro bet. Though it remains a source of frustration for us, the continued underperformance of UK small & mid-caps remains the biggest opportunity for the strategy. There were some tentative signs of increasing breadth within markets in March, but largely within large caps, if this were to spread to small & mid-caps, it would provide an even more positive environment for the strategy. The net of the fund is around 113% while the gross is around 119%.
We thank shareholders for your ongoing support.
1Source: BlackRock as at 31 March 2024
To learn more about the BlackRock Throgmorton Trust plc please follow this link: blackrock.com/uk/thrg
