BlackRock Throgmorton Trust September NAV outperformed Numis Smaller Companies

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BlackRock Throgmorton Trust plc (LON:THRG) has provided the following portfolio update.

All information is at 30 September 2020 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	-0.3	9.3	4.8	20.5	74.7
Share price	-5.3	5.1	4.4	40.1	96.4
Benchmark*	-1.1	7.7	-2.8	-8.6	19.4

Sources: BlackRock and Datastream

*With effect from 22 March 2018 the Numis Smaller Companies plus AIM (excluding Investment Companies) Index replaced the Numis Smaller Companies excluding AIM (excluding Investment Companies) Index as the Company’s benchmark. The performance of the indices have been blended to reflect this.

At month end
Net asset value capital only:	603.03p
Net asset value incl. income:	607.11p
Share price	586.00p
Discount to cum income NAV	3.5%
Net yield¹:	1.7%
Total Gross assets²:	£509.3m
Net market exposure as a % of net asset value³:	117.4%
Ordinary shares in issue⁴:	83,883,462
2019 ongoing charges (excluding performance fees)^5,6:	0.6%
2019 ongoing charges ratio (including performance fees)^5,6,7:	1.8%

1. Calculated using the 2020 interim dividend declared on 23 July 2020 and paid on 26 August 2020, together with the 2019 final dividend declared on 06 February 2020 and paid on 27 March 2020.

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 0 shares held in treasury.

5. Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 30 November 2019.

6. With effect from 1 August 2017 the base management fee was reduced from 0.70% to 0.35% of gross assets per annum.

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	30.5
Financials	18.9
Consumer Services	18.8
Technology	10.9
Consumer Goods	8.3
Health Care	6.6
Telecommunications	2.8
Basic Materials	2.5
Oil & Gas	0.2
Net current assets	0.5
	—–
Total	100.0
	=====

Country Weightings	% of Total Assets

United Kingdom	86.1
United States	8.0
France	2.5
Australia	1.0
Netherlands	0.9
Switzerland	0.7
Denmark	0.5
Ireland	0.3
	—–
Total	100.0
	=====

Market Exposure (Quarterly)

	30.11.19 %	29.02.20 %	31.05.20 %	31.08.20 %
Long	103.2	119.3	118.6	121.0
Short	7.4	8.9	2.1	2.4
Gross exposure	110.6	128.2	120.7	123.4
Net exposure	95.8	110.4	116.6	118.6

Ten Largest Investments

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Company	% of Total Gross Assets

Gamma Communications	2.8
YouGov	2.6
Games Workshop	2.6
Avon Rubber	2.5
Watches of Switzerland	2.5
Dechra Pharmaceuticals	2.5
IntegraFin	2.5
Pets at Home	2.4
Breedon	2.4
Impax Asset Management	2.1

Commenting on the markets, Dan Whitestone, representing the Investment Manager noted:
During the month the Company returned -0.3%¹ (net of fees), outperforming our benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which fell -1.1%¹. Both the long and short book contributed positively to outperformance during the month.
Global equity markets fell during September as signs of a second wave of COVID-19 infections in several countries, most notably in Europe, once again resulted in an increase in market volatility. As seen in many other countries, tighter restrictions were once again imposed in the UK to curb the spread of the virus including the ‘rule of six’ and fewer operating hours for the already fragile hospitality sector. Brexit made headlines with the Government’s controversial Internal Markets Bill which provoked an intense row with the EU. As a result, concerns of a “no-deal Brexit” once again came to the fore and this coupled with softer domestic data led to sterling weakness.
The single biggest contributor to relative performance was Pets At Home, a company with a leading position in the growth of the UK pet market, and a company that has successfully adapted its business model by strengthening its digital capabilities. This latter factor has been a major benefit during the COVID-19 crisis and the company’s trading update revealed second quarter like-for-like sales up double digit, well ahead of expectations, prompting large increases to profit forecasts. Shares in video game developer, Sumo Group, rallied after the company delivered positive interim results as well as announcing the acquisition of Pipeworks, which gives Sumo a strategic foothold in the US market. Games Workshop continued to rise after reporting strong trading ahead of expectations, driven by online sales, whilst also confirming the payment of its dividend.
The largest single detractor during the month was YouGov, which fell despite no negative stock specific newsflow. The shares have performed extremely well since their last trading update and we would simply attribute the weakness during the month to some share price consolidation after a strong run. Breedon was weak during the month along with many domestically focused industrial businesses given the uncertainty in the UK outlook. We think the company has unique assets and maintain the view they are well placed to benefit from infrastructure stimulus when it arrives. Insurance business, Beazley, fell sharply after reporting higher than expected losses due to COVID-19 related insurance claims.
Overall, we think the positive return for the month is good in light of the wider sell off in equity markets. Months like this are an important reminder to us to demonstrate our long held belief that stock and industry specifics triumph macro trends, and to showcase that there are large contributions from companies that can buck the market trend and have delivered great financial outcomes for shareholders through this period and over many years; Pets At Home, Sumo Group and Games Workshop are just a few examples, but there are many more of these advantaged companies we own that remain the spinal cord of this Company and continue to be a significant driver of the Company’s returns.
We remain very excited about the opportunities ahead. What is most striking when looking at industrial trends is that the COVID-19 crisis seems mainly to have accelerated existing patterns rather than changing them. And so we are excited by the level of opportunity that this brings. We think that the dispersion we have already seen is likely to be enduring because it is causing actual changes at the industry level; changes in market share and changes to profits and cashflows. We do not think this has just been about temporary moves in share prices that will revert back to where they were pre-COVID-19. As ever, there remains much uncertainty, but hopefully months like September remind us that if we continue to prioritise our efforts on stock and industry analysis and back the advantaged and the differentiated, these shares will prevail. We thank shareholders for their ongoing support.