REG-BlackRock Throg Tst: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

31/10/2022 11:00

The information contained in this release was correct as at 30 September
2022.  Information on the Company’s up to date net asset values can be
found on the London Stock Exchange Website at:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. 

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59)
 

All information is at 30 September2022 and unaudited.
Performance at month end is calculated on a cum income basis

                      One     Three     One    Three     Five  
                    Month    months    year    years    years  
                         %         %       %        %        % 
 Net asset value     -10.1      -7.5   -41.7     -3.2     11.3 
 Share price          -9.4      -5.8   -45.0     -6.4     25.7 
 Benchmark*           -7.7      -7.1   -26.9      3.5     -2.7 

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:                                          537.13p 
 Net asset value incl. income:                                          545.83p 
 Share price                                                            512.00p 
 Discount to cum income NAV                                                6.2% 
 Net yield (1):                                                            2.1% 
 Total Gross assets (2):                                                £552.4m 
 Net market exposure as a % of net asset value (3):                       99.7% 
 Ordinary shares in issue (4):                                      101,194,864 
 2021 ongoing charges (excluding performance fees) (5,6):                 0.57% 
 2021 ongoing charges ratio (including performance fees) (5,6,7):         1.38% 

1. Calculated using the 2022 interim dividend declared on 20 July 2022 and
paid on 26 August 2022, together with the 2021 final dividend declared on 07
February 2022 and paid on 31 March 2022.

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 2,015,000 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 2021.

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
2021.

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                           29.4 
 Consumer Discretionary                20.5 
 Financials                            13.0 
 Technology                             6.5 
 Health Care                            6.1 
 Consumer Staples                       3.8 
 Telecommunications                     3.2 
 Energy                                 2.0 
 Basic Materials                        0.5 
 Communication Services                 0.4 
 Net Current Assets                    14.6 
                                      ----- 
 Total                                100.0 
                                      ===== 
                                            
 Country Weightings       % of Total Assets 
                                            
 United Kingdom                        92.0 
 United States                          4.6 
 France                                 2.3 
 Australia                              0.8 
 Netherlands                            0.4 
 Germany                               -0.1 
                                            
                                      ----- 
 Total                                100.0 
                                      ===== 

   

 Market Exposure (Quarterly)                                 
                                                             
                  30.11.21   28.02.22   31.05.22   31.08.22  
                          %          %          %          % 
 Long                 121.3      121.8      104.8      102.0 
 Short                  2.7        2.3        3.3        4.1 
 Gross exposure       123.9      124.1      108.1      106.1 
 Net exposure         118.6      119.5      101.5       97.9 

   

 Ten Largest Investments                            
                                                    
 Company                    % of Total Gross Assets 
                                                    
 RS Group                                       3.6 
 CVS Group                                      3.3 
 Gamma Communications                           3.2 
 Watches of Switzerland                         3.0 
 Oxford Instruments                             2.9 
 Ergomed                                        2.8 
 Diploma                                        2.5 
 Auction Technology Group                       2.5 
 4imprint Group                                 2.5 
 WH Smith                                       2.3 

Commenting on the markets, Dan Whitestone, representing the Investment Manager
noted:

The Company returned -10.1% during September, while the Numis Smaller
Companies plus AIM (excluding Investment Trusts) benchmark fell by -7.7%.(1)
Negative returns during the month were driven by the long book while our
shorts made a positive contribution to relative performance.

September saw falls in global stock markets on a combination of global
factors. The high core inflation statistics (over 6%) in the US combined with
continued hawkish statements from the Federal Reserve (Fed) served to increase
rate expectations at all durations. This both fuels fear of an economic
slowdown, but also simply increases discount rates on all shares. In the UK
this situation was further exacerbated by the ‘mini-budget’ at end
September which spooked investors with its implied spending deficits and led
to a jump in Gilt yields and intervention by the Bank of England to buy long
term Gilts. Overall, this was clearly a difficult backdrop for equities and
this can be seen in the monthly returns for various indices, notably the UK
mid-cap which was down around -10% in September. Continuing a recent trend,
the mega cap FTSE 100 Index was ‘only’ down -5% thereby significantly
outperforming small and mid-caps, even as it was itself meaningfully negative.

Given the moves in the month the overriding effect on all names was simply a
selloff in markets rather than stock specific news. This impacted several
holdings in the portfolio, for example Watches of Switzerland, WH Smith,
Sigmaroc and Dechra Pharmaceuticals despite all four reporting strong updates
or results either in September or at the very end of August. Shares in
Computacenter fell after the company reported a fall in first half profits,
with notable weakness in the UK, with management citing tough comps from the
Covid period.

The largest contributor was Ergomed, which reported another half of strong
sales growth, particularly in North America. Recent acquisitions appear to be
integrating well and the management team remain confident in their long-term
strategic progress, which includes further expansion into new geographies.
Shares in digital payments provider Boku rose after the company announced a
deal to supply digital wallet and payment services to Amazon. The company also
announced solid interim results, with trading running ahead of expectations
and connections with new, high volume, fast-growing customers which Boku can
continue to monetise over the coming months and years. Shares in US listed
retailer of swimming pool supplies, Leslie’s, were in demand on the back of
news that the stock was being added to the S&P SmallCap 600 Index.

Overall it is clearly a difficult time for investors across a variety of asset
classes and the macro data can lead to large swings in sentiment on release.
Given the current focus on inflation and the battle to curb it, alongside the
politics of the war in Ukraine there is plenty of macro focus right now. The
monthly release of core inflation data can be expected to have outsize effects
(positive and negative) for the foreseeable future because of its outsize
effect on rate expectations, and alongside this all utterances connected to
the Federal Reserve are now both regular and given especial attention by
investors in all asset classes. This does imply that markets will remain
volatile, but doesn’t have to mean that they will always be negative. It is
on this basis that the gross of the Company remains lower than recent history
at c.101% and the net is around 98%. We continue to feel comfortable running
the gross and net at these levels recognising the heightened volatility that
extreme market positioning can bring. We can quickly deploy more capital when
we believe the time comes, particularly within the long book which we believe
presents substantial value on any easing of the macro fears. We thank
shareholders for their ongoing support.

(1)Source: BlackRock as at 30 September 2022

31 October 2022

ENDS

Latest information is available by typing www.blackrock.com/uk/thrg on the
internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3
(ICV terminal).  Neither the contents of the Manager’s website nor the
contents of any website accessible from hyperlinks on the Manager’s website
(or any other website) is incorporated into, or forms part of, this
announcement.



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