Portfolio Update

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 Month %	Three months %	One year %	Three years %	Five 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 yield1:	2.1%
Total Gross assets2:	£552.4m
Net market exposure as a % of net asset value3:	99.7%
Ordinary shares in issue4:	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.

¹Source: 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.