BlackRock Throgmorton Trust delivered 9.1% net return over the period, outperforming benchmark by +5.3%

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

All information is at 30 November 2020 and unaudited.

To learn more about the BlackRock Throgmorton Trust plc please follow this link:

Performance at month end is calculated on a cum income basis

Net asset value10.
Share price9.310.28.257.3121.2

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:675.61p
Net asset value incl. income:681.23p
Share price682.00p
Premium to cum income NAV0.1%
Net yield1:1.5%
Total Gross assets2:£596.2m
Net market exposure as a % of net asset value3:118.6%
Ordinary shares in issue4:87,518,929
2019 ongoing charges (excluding performance fees)5,6:0.59%
2019 ongoing charges ratio (including performance

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
Consumer Services18.2
Consumer Goods10.1
Health Care6.9
Basic Materials2.5
Net current assets                                0.5
Country Weightings% of Total Assets
United Kingdom87.7
United States7.5

Market Exposure (Quarterly)

Gross exposure128.2120.7123.4122.3
Net exposure110.4116.6118.6118.6

Ten Largest Investments

Company% of Total Gross Assets
Games Workshop3.3
Watches of Switzerland2.8
Gamma Communications2.5
Pets at Home2.4
Avon Rubber2.2
Dechra Pharmaceuticals2.2
Impax Asset Management2.1

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

During the month the Company returned 10.2%1 (net of fees), modestly trailing our benchmark which returned 11.1%1. The long book delivered a positive return during the month, while the short book detracted marginally. November marks the end of the Company’s financial year, and despite what has been a difficult 12 month period to say the least, we are pleased to report that the Company delivered a positive 9.1%1 net return over the period, outperforming our benchmark by +5.3%1.

November was an extreme month. It included several major events including the US election, a return to national lockdowns in several European countries (including the UK), followed by the significant announcement of effective vaccines against COVID-19. Global stock markets were initially weak on lockdowns, but very quickly surged after the US election and particularly after the announcement of the >90% efficacy of the Moderna vaccine. What particularly characterised the nature of the stock market rise in November was the extremely strong reversal towards value and away from growth shares. And therefore, while many global indices rose more than 10% in the month, the skew within these indices was substantially towards the sectors that had been hardest hit in the year (leisure, travel, oil and financials).

Despite marginally trailing our benchmark, we feel that considering the headwind to our strategy from the quantum of the “growth-value” reversal witnessed during the month, most particularly acute in the UK market, we think the overall result is respectable. We would also highlight that the decision taken earlier during the year to close a number of our short positions, thereby locking in some profit, was beneficial during the market rally this month.

Many of the largest detractors to performance during the month were companies that were caught by the market rotation, rather than being impacted by any stock specific issues. The largest detractor was Games Workshop, which we think simply fell back as investors took profits to fund the purchases of “value” stocks as the rotation took hold. This was despite another big upgrade delivered in the month, and to illustrate our point, with a c.15% upgrade to profits and a c.15% fall in the share price, Games Workshop is now 30% cheaper now than at the start of the month, and yet we have even more conviction in its outlook. The same “profit taking” dynamic led to YouGov appearing among the top detractors in the month. We’ve used the weakness to add to our positions in both companies.

The largest positive contributor to performance was Watches of Switzerland which continued to rise after their incredibly strong trading update in October (when it was also a large contributor to performance). Shares in Trade Desk rose after reporting strong third quarter results which were ahead of expectations, showing that net income had more than doubled year-on-year, resulting in upgrades to forward guidance. Within Travel & Leisure our holdings in Whizz Air and Jet2 rallied on hopes of increased international travel once a vaccine begins to be rolled out.

There has been much discussion about whether this is now the end of growth. We do not share this view. As discussed in previous communications, we believe that the powerful structural trends we have identified at industry levels will continue and the companies that lead in these areas should be able to deliver double digit compound growth for many years to come. We believe this will translate into rising share prices as valuations are not stretched, especially in light of super low interest rates and the new doses of monetary stimulus that are being widely promised. We are watchful of inflation but overall, we expect rises in inflation, if they occur, to be tolerated by monetary authorities rather than aggressively curtailed. Therefore, we continue with a central expectation that rates will stay low and that genuinely cash generative growth companies remain highly differentiated and highly attractive. We see November as a small set back, understandable if not desirable in light of the rapid changes of events and the scale of market reactions. We remain confident in the holdings in the portfolio, and those that have retraced in November we see as merely a pause in a long-term upward path and remain very positive on their prospects. We have therefore used share price weakness to add to a number of our core holdings and we look to the future with high conviction in the portfolio.

1Source: BlackRock as at 30 November 2020

To learn more about the BlackRock Throgmorton Trust plc please follow this link:

23 December 2020

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