Throgmorton Trust Regulatory News (THRG)

BlackRock Throgmorton Trust Plc - Portfolio Update

PR Newswire

London, January 29

BLACKROCK THROGMORTON TRUST PLC (LEI: 5493003B7ETS1JEDPF59) 

All information is at 31 December 2018 and unaudited.Performance at month end is calculated on a cum income basis

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 five year period indices have been blended to reflect this.

1. Calculated using the 2018 interim dividend declared on 26 July 2018 and paid on 29 August 2018, together with the 2017 final dividend declared on 12 February 2018 and paid on 29 March 2018.

2. Includes current year revenue and excludes gross exposure through contracts for difference.

3. Long positions less short positions as a percentage of net asset value.

4. Excluding 7,400,000 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 2018.

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 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).

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

During December the Company’s NAV per share fell by 5.0%1 to 493.19p on a cum income basis, outperforming our benchmark index, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which fell by 5.2%1; the large cap FTSE 100 Index fell by 3.5%1 (all performance figures are in sterling terms with income reinvested).

Equity markets around the world continued to fall during December as disappointing economic data sparked further fears of a slowdown in global growth, while ongoing trade tensions and European political uncertainty added to the concerns. Against the wider market falls, the Company has started its new financial year on a positive note by outperforming its benchmark. In aggregate the long book fell during the month while the short book made a positive contribution of 90bps (basis points).

Within the long book the Company benefitted from a number of core holdings which recovered some of the lost ground in the prior two months. As noted in our October and November updates, the market falls were most heavily concentrated in highly rated growth shares, with a number of holdings falling heavily despite no specific negative newsflow. It was therefore pleasing to see a number of these high quality businesses outperform the falling market, for example SSP, Robert Walters and Integrafin. The Company also benefitted from a strong contribution from UK investment platform AJ Bell, following its successful IPO (Initial Public Offering) during the month. This is a sector that we know well and we had engaged with the company many times ahead of the IPO.

Within the short book we saw a strong contribution from a number of companies that fell in response to negative stock specific newsflow. Most notably a short position in a well known UK electrical retailer fell by nearly 25% off the back of a trading update that resulted in a material downgrade to earnings and cashflow expectations. We also benefitted from some other stock specific shorts in December, reflecting negative market updates.

The largest detractor was from our long position in Craneware, a UK software company focused on the US healthcare market. The shares fell during the month for no specific reason other than being an ‘optically expensive’ growth share. The company did however issue a positive trading update towards the end of December which helped the shares recover some of the losses.

Our financial year has started with a continuation of the elevated levels of volatility seen last year and declining markets globally. We are of the view that this increased volatility looks unlikely to abate in the near term as there are growing challenges to the global growth outlook. With this increased volatility in mind we have continued to run with a lower gross and net exposure than we would have in normal market conditions. Despite this, we continue to believe that there is enough growth in the world for differentiated and disruptive companies to prosper, and we therefore maintain confidence in our long book and for a recovery in many of our investments. As a reminder within the long book we continue to focus on well capitalised companies, with strong and enduring growth prospects that we believe will continue to prosper regardless of the wider macro environment. New shorting opportunities continue to present themselves, so this combined with the market’s reappraisal of financial leverage and the ongoing wave of disruption undermining incumbents’ profit pools should serve us well.

1Source: BlackRock as at 31 December 2018

29 January 2019

ENDS

Latest information is available by typing www.blackrock.co.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.