Trust news: latest on Saba, more bids

Important information -  the value of investments and the income from them can go down as well as up, so you may get back less than you invest.

In another busy month for investment trusts, a Saba target lives to fight another day, more trusts attract bids and there are further fee cuts and management changes.

Saba targets

Herald, which had already fought off an attempt by the American activist investor Saba to take over its management, is to stay in business after investors voted in favour of its continuation at its recent annual meeting, despite Saba’s voting of its substantial stake against.

Schroder UK Mid Cap, which Saba has tried to turn into an open-ended fund, is to hold continuation votes in 2028 and then every three years, make more use of shares buybacks, which are often employed to control discounts, and cut the annual fee paid to the management company, Schroders, to 0.6% of market value.

Saba is to be given the chance to sell its stake in the European Smaller Companies Trust via a ‘tender offer’ – an offer by the trust to its shareholders to buy some or all of their stake. The tender offer is subject to approval by shareholders at a special meeting on 7 May.

The seven investment trusts targeted by Saba in the first wave of its campaign have collectively spent several million pounds to hold meetings ‘requisitioned’ by the activist investor, according to a report in Investment Week. The publication said ‘not every [trust] was willing to comment, but one … said it had cost up to £800,000 just to cover the bare bones to put on Saba’s vote’.

Richard Stone, head of the Association of Investment Companies, the trade body for trusts, told Investment Week ‘the total cost of the defence undertaken by the seven companies ran into several million pounds’.

• Get expert insights straight to your inbox with our free investor emails

More takeover bids

The board of Harmony Energy Income Trust has recommended a cash offer from funds managed by the Foresight group at 92.4p a share.

Urban Logistics REIT has received a cash-and-shares offer from another property trust, LondonMetric. At the latter’s current share price of 191p, the offer values Urban Logistics at 150p a share. The trust, which said it was ‘minded’ to accept the offer, had attracted the attention of activist investors from the Achilles Investment Company.

Assura has accepted a 49.4p-a-share offer from two American investment firms.

The board of AVI Japan Opportunity Trust has proposed a merger with Fidelity Japan Trust, which rejected the proposal. The Fidelity trust’s board later said it did not expect the continuation vote due next month to be approved by shareholders and had immediately begun a formal review process to consider the trust’s future, to include an appraisal of potential new management companies. Before AVI Japan’s interest emerged, Fidelity Japan had announced that its manager, Nicholas Price, planned to retire at the end of the year after a 30-year career with Fidelity and that his assistant manager, Ying Lu, would take over on 1 October.

Abrdn Diversified Income & Growth has said it will not proceed with a potential offer from an unnamed bidder and will instead begin to sell its remaining assets under a managed wind-down approved by shareholders in February last year.

• See our current offers to help your money go further

Disappearing trusts

Shareholders have overwhelmingly backed the winding up of two trusts – 99.8% of those who voted elected to liquidate Menhaden Resource Efficiency and 99.6% to wind up Miton UK Microcap.

More fee cuts

International Public Partnerships, a member of our Select 50 list, will pay its management company a fee based on a 50:50 split of net asset value (NAV) and market value. ‘Based on the current share price discount to the NAV, this fee change is expected to reduce the ongoing management fee by approximately 10%,’ the trust said.

The same change will be made at Renewables Infrastructure Group. At the prevailing share price it would result in a 28% fall compared with the management fee paid in 2024, the trust said.

Montanaro European Smaller Companies’ management fee will change from 0.9% to 0.825% on the first £500m of market value (currently £258m). It will introduce semi-annual tender offers for up to 5% of the shares at a 5% discount to NAV and said it would pursue a more active share buyback policy. Both measures should help to control the discount, currently 7.7%.

Janus Henderson Investors, the manager of Henderson High Income, is to receive an annual management fee of 0.45% of gross assets, compared with 0.5% previously.

Polar Capital Global Financials’ management fee is to be based on 50% NAV and 50% the lower of NAV and market value. Previously it was based on NAV. It will also be tiered. The performance fee is being removed.

Management changes

Neil Hermon, the veteran manager of Henderson Smaller Companies, is to retire in September. He will be succeeded by Indriatti van Hien, who has worked with Mr Hermon for nine years.

Tomasz Boniek is to become co-manager of STS Global Income & Growth alongside James Harries while Charlotte Yonge is to become co-manager of Personal Assets alongside Sebastian Lyon. Both trusts are run by Troy Asset Management.

Sudaif Niaz is stepping down as a co-manager of BlackRock Frontiers. Sam Vecht and Emily Fletcher remain as co-managers.

Gordon Fraser is to become co-manager of BlackRock Latin American, replacing Christoph Brinkmann. Sam Vecht will continue as lead co-manager.

Peter Hewitt, a veteran of the sector, is to retire as manager of the CT Global Managed Portfolio Trust.

Other news

Martin Currie Global Portfolio has changed its name to Franklin Global Trust.

Bellevue Healthcare is to introduce a zero discount policy, which will aim to prevent the shares from trading at either a discount or premium. The trust will seek to buy back shares if they are trading at a discount to their NAV and to issue shares (or sell ‘treasury’ shares held by the trust) if the shares are trading at or above NAV. Such policies are becoming increasingly common as a means to encourage investors put off by the way widening discounts can negate gains in a trust’s NAV.

• Read: The top-10 best-selling investment trusts in March