REG-BlackRock Throgmorton Trust Plc: Portfolio Update

Blackrock Throgmorton TrustAnnouncement

Mon 16:30

The information contained in this release was correct as at 31 March 2025. 
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 31 March 2025 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  -4.2      -8.8       -6.7     -15.3     43.5      
 Share price      -5.0      -8.9       -7.4     -24.8     26.1      
 Benchmark*       -3.3      -5.9       -0.4     -11.1     49.0      

  

Sources: BlackRock and Deutsche Numis

*With effect from 15 January 2024 the Numis Smaller Companies plus AIM
(excluding Investment Companies) Index to Deutsche Numis Smaller Companies
plus AIM (excluding Investment Companies).

 

 At month end                                                         
 Net asset value capital only:                            589.81p     
 Net asset value incl. income:                            592.83p     
 Share price                                              527.00p     
 Discount to cum income NAV                               11.1%       
 Net yield 1 :                                            3.4%        
 Total Gross assets 2 :                                   £465.8m     
 Net market exposure as a % of net asset value 3 :        109.0%      
 Ordinary shares in issue 4 :                             78,571,864  
 2024 ongoing charges (excluding performance fees) 5,6 :  0.56%       
 2024 ongoing charges ratio (including performance        0.82%       
  fees) 5,6,7 :                                                       

1. Calculated using the Final Dividend declared on 20 February 2025 payable on
11 April 2025, together with the Interim Dividend declared on 24 July 2024
paid on 21 August 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 24,638,000 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 2024.

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
2024.

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             32.9               
 Financials              23.6               
 Consumer Discretionary  10.8               
 Basic Materials         8.2                
 Technology              6.6                
 Real Estate             3.8                
 Consumer Staples        3.3                
 Health Care             2.2                
 Communication Services  1.8                
 Telecommunications      0.9                
 Energy                  0.7                
                                            
 Net Current Assets      5.2                
                         -----              
 Total                   100.0              
                         =====              
                                            
 Country Weightings      % of Total Assets  
                                            
 United Kingdom          94.6               
 United States           4.0                
 Australia               0.9                
 Canada                  0.5                
                                            
                         -----              
 Total                   100.0              
                         =====              
                                            
                                            
                                            

 

 Market Exposure (Quarterly)                                 
                                                             
                 31.05.24   31.08.24   30.11.24   28.02.25   
                  %          %          %          %         
 Long            114.9      111.7      111.9      117.8      
 Short           2.3        2.7        3.4        4.9        
 Gross exposure  117.2      114.4      115.3      122.7      
 Net exposure    112.6      109.0      108.5      112.9      

 

 Ten Largest Investments                           
                                                   
 Company                  % of Total Gross Assets  
                                                   
 Breedon                  3.2                      
 GPE                      3.2                      
 Rotork                   3.1                      
 Tatton Asset Management  3.1                      
 Hill & Smith Holdings    3.1                      
 Bellway                  2.9                      
 IntegraFin               2.8                      
 XPS Pensions Group       2.8                      
 Grafton Group            2.4                      
 Oxford Instruments       2.4                      

 

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

 

The Company returned -4.2% in March, underperforming its benchmark the
Deutsche Numis Smaller Companies +AIM ex Inv Trusts which returned -3.3%.1

 

March picked up where February left off, with many of the prevailing issues
(tariffs, tariffs, tariffs) dominating headlines as investors scrambled to
divine rhetoric from policy, and from policy to consequences for
macro-economics (growth/inflation), company profitability (volumes, pricing,
costs) and country responses (retaliatory moves). Expectations for inflation
have increased. The latest PCE (Personal Consumption Expenditure) inflation
data (the Federal Reserve’s preferred measure) saw the annualised rate of
core PCE +3.6% in February 2025, the highest in 12 months. Probability of a US
recession has increased, industrial/manufacturing activity is slowing (part
DOGE (Department of Government Efficiency), part tariff) and consumer
confidence has fallen.

 

The UK market saw continued divergence between large caps (driven by banks and
pharmaceuticals) and small & mid-caps, with the mid-caps down almost 4% versus
the FTSE 100 Index (which was down 2%) leaving an 11 percentage points
difference between the two respective indices in Q125. For context, the
drawdown of UK mid-cap versus large-cap is now >40% and a new 5-year low.

 

The shape of broader market moves was unhelpful to the portfolio’s
positioning in March, and despite a momentum reversal, many cheap shares we
own in the UK mid-cap complex only fell more. A frustrating reminder that
despite weak share prices, low valuations, and resilient updates, if there’s
a risk-off event somewhere in the world, whatever the catalyst, the chances
are high that UK small and mid-caps will fall more. Ironically, March was a
period where we have had one of the strongest periods of updates from our
companies, where we have seen real signs of trading improvements from
housebuilders, brick manufacturers and RMI (Repair, Maintenance and
Improvement) companies which for us delivered resilient statements and in many
cases saw positive revisions to forecasts.

 

The top contributor was the position in Great Portland Estates, a West End
office developer. During the month there was an upbeat investor event
highlighting their strong flexible office space product which is renting
faster and ahead of equivalent rental values. The shares trade at a 45%
discount to what we believe to be a trough book value. Shares in Victorian
Plumbing reversed some of its recent share price weakness, benefiting from the
positive updates from a number of RMI related businesses during the month and
the potential read across to other businesses in this space. The third biggest
contributor was a short position in a UK listed semiconductor business that
fell on concerns over AI capex and tariffs. We retain our short position.

 

Negative contributors during the month were heavily skewed towards shares that
we do not own that do not meet our investment philosophy, as well as one short
position. Not owning gold miners hurt the portfolio on a relative basis as the
gold price hit a record high in March, with the two biggest detractors being
Greatland Gold and Hochschild Mining. The third largest detractor was a short
in a IT software reseller which reported better than expected full year
trading update. We remain short as we think the outlook for spending in the
near term is more challenged as we think many companies will put capital
decisions on hold in the near term, and budgets could be under further
pressure if the economy slows from escalating tariffs.

 

In summary, Q1 2025 was a particularly frustrating and challenging quarter.
The compounding effect of risk-off sentiment driven by tariffs, rotation and
continued outflows has overwhelmed a period of lots of stock specific success
stories, and of course comes after a period where we had worked hard to manage
the volatility of the portfolio well through uncertain market conditions. The
gross exposure hasn’t been helpful to performance at a time like this, but
this is not a vehicle where the gross can be managed in a very dynamic way due
to the illiquidity of the asset class. As discussed last month, the
significant share buy-back programme undertaken in Q1 has made controlling the
gross and net exposures even more challenging.  This isn’t the start to the
year we wanted but like so many difficult periods before this too shall pass.
The opportunity set remains rich and compelling, and we continue to work
tirelessly for you to recapture lost performance. 

 

One can make a strong case that the UK looks a relative winner in the face of
tariff uncertainty and volatility, given the limited direct exposure,
potential beneficiary of imported deflation, resilient consumer and its
service-based economy.  However, as stated in many recent updates, the
valuation for many of the highest quality UK domestic assets are very
attractive on a medium-term view and have been for some time. Meanwhile
trading at many of these businesses remains resilient and is actually
improving! Alas this has been little consolation and provided little
protection from the ongoing selling pressure that UK small and mid-cap
equities continue to face. As such, any comments on an improving outlook for
the economy or indeed underlying businesses seems slightly redundant at this
time, with the real challenge facing the asset class being outflows, which
needs to moderate for the value in many of these businesses to be realised
aside from corporate activity.

 

As a result of the ongoing difficult outlook, the net is currently around 110%
and the gross around 116%.

 

We thank shareholders for your patience and ongoing support.

 

1Source: BlackRock as at 31 March 2025

 

28 April 2025

 

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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