The board of the £337m BlackRock Throgmorton investment trust is seeking shareholder approval for a number of changes to the vehicle's investment policy, after announcing the promotion of Dan Whitestone to sole manager in its annual results released this morning.
Whitestone, who has worked as co-manager alongside Mike Prentis since 2015, will take full responsibility for the trust effective immediately as the board has decided to change its structure.
Prentis will continue to support Whitestone as a key member of BlackRock's UK small-cap team, having managed the trust since the group took over running the vehicle in 2008.
The trust previously had a structure consisting of two separate portfolios, but the board has now decided to combine them.
In the company's results, chairman Christopher Samuel said: "The benefits arising from the ability to vary market exposure and establish short positions through derivatives will now be achieved through a combined portfolio with a single manager, rather than in two separate portfolios."
Investment policy changes
Meanwhile, the board is also seeking to make a number of changes to the trust's investment policy, subject to shareholder approval.
These include the removal of the current restriction on having up to 35% of the portfolio permitted to be invested in AIM, and also changing the trust's benchmark index to include AIM stocks.
This change is in order "to better reflect the evolving nature of the listing environment for UK smaller companies, in which an increasing number of high quality companies are choosing initially to list (and thereafter remain listed) on AIM".
Samuel said the board is also conscious that "the geographical location of a company's listing can often reflect where the best valuations can be achieved at IPO and subsequently, and not necessarily where the company's business is located or where most of its turnover is derived".
In order to provide further flexibility, the board has decided to also request shareholder approval that up to 15% of the trust's gross assets may be invested in non UK-listed securities.
This will allow the manager to benefit from specific opportunities in the small-cap space that may be listed or conduct operations in countries other than the UK, the board said.
Samuel added: "We anticipate these would be predominately European smaller companies where we see a more encouraging outlook. Other mandates managed by the manager have similar flexibility, and this change may allow the company to take advantage of particular opportunities previously not available."
The changes come after the trust halved its management fee and increased its performance fee in July last year. At the same time, Crispin Latymer retired as chairman of the board and was replaced by Samuel.
The trust also reported strong performance during the year to 30 November 2017, with its NAV per share up 34% on a total return basis, compared with a total return of 21.3% from the Numis Smaller Companies excluding AIM (excluding Investment Companies) index.
Commenting on the outlook for the rest of the year, Samuel said: "There remain a number of headwinds for the UK economy, and UK GDP growth is being outpaced by both the eurozone and the US.
"However, in this context it is worth noting the UK equity market derives well over two thirds of its revenues from currencies other than sterling and the company's portfolio has significant overseas exposure, notably to the US.
"Against this backdrop, your investment managers continue to seek to identify attractive investment opportunities, either to add to existing holdings or to introduce new stocks to the portfolio.
"The managers believe the portfolio is well positioned and is constructed of companies which have robust business models, strong cash flows, favourable industry characteristics and which are led by strong management teams."
Over three years to 9 February, the trust is up 73% versus its AIC UK Smaller Companies sector average return of 59%, according to FE. It is currently trading on a discount of 14.6%.
Commenting on the changes, investment trust analysts at Numis Securities said "there is some logic in running the fund via a single portfolio in future".
Ewan Lovett-Turner, director of investment companies research, said: "Appointing Dan Whitestone as lead manager should help to differentiate the fund from the BlackRock Smaller Companies trust, which is managed by Mike Prentis.
"Given the team-based approach, we do not expect the change to have any significant impact on the portfolio positioning."
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