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.
Kepler: As at 1 January 2022.

Awards/Ratings have not been superseded to date.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.

Sign up for Regulatory News Service alerts

To receive email alert notifications once an update to the Trust occurs, please sign up and select the updates you would like to receive via The Association of Investment Companies website here.

Fund manager commentary

31 August 2023

Comments from the Portfolio Manager

Please note that the commentary below includes historic information in respect of the performance of portfolio investments, index performance data and the Company’s NAV and share performance.

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

The Company returned -2.5% in August, marginally behind the Numis Smaller Companies plus AIM (excluding Investment Companies) benchmark which returned -2.4%.¹

Markets weakened during August on the back of increased concerns for the growth outlook for China, as well as the usual interplay between macro data points and its projected impact on monetary policy. Indeed, for all the macro volatility, this was a month where there were lots of significant stock specific events for the Company.

The largest positive contributor to performance was 4imprint, which rallied after another strong beat and raise. This is a company that has consistently delivered better than expected results, winning share in its highly fragmented end market, whilst also growing the revenues from their existing customer base through high service levels and product innovation. SIG delivered in-line results and reiterated their full year guidance. The shares rallied strongly as many expected a warning. SIG’s new and highly credible management team delivered a positive longer-term message about their confidence in improving margins and the levers they have to pull to achieve this. This, combined, with a recovery in end markets, could in our view lead to substantial upside in earnings versus consensus forecasts, so we have continued to add to the position. Hill & Smith rose sharply in response to reporting better than expected trading during the first 6 months of the year with upgrades to full year guidance.

The biggest was Watches of Switzerland (WOSG), which fell sharply on the news that Rolex were acquiring Bucherer, a privately held luxury watch retailer and competitor of WOSG. For Rolex to break tradition and make its first foray into distribution, the stock market has rightly questioned whether this signals a complete change in strategic direction for Rolex (with implications for watch allocations to distributors, or capex and growth ambitions for Bucherer), or whether it really is as simple as Rolex themselves claim, that they are acquiring a 100 year old Swiss partner to secure ownership as opposed to it falling into the hands of a competitor or Private equity firm. This move changes the market structure of the luxury watch industry and as such there are many questions/fears but none of these are likely to be answered in the next 18 months. We’ve spoken with the Management of WOSG twice since the news broke, who themselves have had extensive dialogue with the highest levels within Rolex, and they reiterate their view (as directed by Rolex) that this doesn’t impact their strategy or growth ambitions, Rolex claim Bucherer’s operations will remain independent, and in fact WOSG now have the longest ever project pipeline with Rolex. We’ve moderated the position to take into account this evolution in investment case, but with a net cash balance sheet, and a valuation of about 11 times current year’s earnings and a free cash flow yield of over 7% we still retain a meaningful position. YouGov fell on in-line results, albeit results that showed a slowing in growth and Management commented on some slower customer decision making. We’ve retained the position as see lots of potential but haven’t added to the position, preferring to wait for the next update to reassess. Other notable detractors were mainly shares that we do not own that outperformed the market, for example EMIS Group.

The development in Watches of Switzerland is certainly frustrating but despite this single stock setback and the negative market backdrop, we take comfort in the broad strength across the majority of holdings in the portfolio that continue to trade extremely well. We continue to feel confident in the Company’s positioning, overall balance, and also the increasing role stock specifics are having. We are also pleased that our short positions are providing protection in periods of relative market turbulence. We retain the strong view that there are many significant mis-pricings in the market, and we continue to see many potential opportunities. Despite our optimism in the prospects for holdings within the portfolio, we remind ourselves that the backdrop remains volatile, and this is reflected in the gross and net which remain around 116% and 107% respectively.

Source:
Unless otherwise stated all data is sourced from BlackRock as at 31 August 2023.
¹Datastream and London Stock Exchange as at 31 August 2023

Any opinions or forecasts represent an assessment of the market environment at a specific time and are 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 UIL Limited, its subsidiary UIL Finance Limited and Quilter plc. He is also the Non-Executive Chairman of JP Morgan Japanese Investment Trust plc and Quilter Financial Planning. Mr Samuel was formerly a Non-Executive Director of the Alliance Trust plc. 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 a Non-Executive Director of Pacific Horizon Investment Trust plc and Dunedin Enterprise Investment Trust plc, where she is also Chairman of the audit committees, as well as a Non-Executive Director of 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 and is currently a Non-Executive Director of Murray Income Investment Trust plc. She is also a former Non-Executive Director of 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.

Our approach to ESG

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.

Environmental, Social and Governance (ESG) investing is often conflated or used interchangeably with the term “sustainable investing.” BlackRock has identified sustainable investing as being the overall framework and ESG as a data toolkit for identifying and informing our solutions. BlackRock has defined ESG Integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. BlackRock recognises the relevance of material ESG information across all asset classes and styles of portfolio management. The Investment Manager may incorporate sustainability considerations in its investment processes across all investment platforms. ESG information and sustainability risks are included as a consideration in investment research, portfolio construction, portfolio review, and investment stewardship processes.

The Investment Manager considers ESG insights and data, including sustainability risks, within the total set of information in its research process and makes a determination as to the materiality of such information in its investment process. ESG insights are not the sole consideration when making investment decisions and the extent to which ESG insights are considered during investment decision making will also be determined by the characteristics or objectives of the Company. The Investment Manager’s evaluation of ESG data may be subjective and could change over time in light of emerging sustainability risks or changing market conditions. This approach is consistent with the Investment Manager’s regulatory duty to manage the Company in accordance with its investment objective and policy and in the best interests of the Company’s investors. The Investment Manager’s Risk and Quantitative Analysis group will review portfolios, in partnership with the portfolio managers, to ensure that sustainability risks are considered regularly alongside traditional financial risks, that investment decisions are taken in light of relevant sustainability risks and that decisions exposing portfolios to sustainability risks are deliberate, and the risks diversified and scaled according to the investment objectives of the Company.

BlackRock’s approach to ESG integration is to broaden the total amount of information the Investment Manager considers with the aim of improving investment analysis and understanding the likely impact of sustainability risks on the Company’s investments. The Investment Manager assesses a variety of economic and financial indicators, which may include ESG data and insights, to make investment decisions appropriate for the Company objectives. This can include relevant third-party insights or data, internal research or engagement commentary and input from BlackRock Investment Stewardship.

Sustainability risks are identified at various steps of the investment process, where relevant, from research, allocation, selection, portfolio construction decisions, or management engagement, and are considered relative to the Company’s risk and return objectives. Assessment of these risks is done relative to their materiality (i.e. likeliness of impacting returns of the investment) and in tandem with other risk assessments (e.g. liquidity, valuation, etc.).

ESG integration does not change the Company’s investment objective or constrain the Investment Manager’s investable universe, and does not mean that an ESG investment strategy or exclusionary screens has been or will be adopted by the Company. Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks.