Trust news: Saba’s new tactic, £1bn infrastructure trust bid and more

The American ‘activist’ investor that has tried to unseat the boards of seven investment trusts has changed tack and is now seeking to turn four trusts into ‘open-ended’ funds not listed on the stock market.

Saba Capital, whose attempts to sack existing boards have been rejected by shareholders of six of the seven trusts targeted, said this week that it planned to ‘requisition’ new votes to scrap trust status at four listed funds, as it is entitled to do by virtue of its large stakes in them.

The four are CQS Natural Resources Growth & Income, European Smaller Companies (both of which were targets of the original campaign to unseat boards), Middlefield Canadian Income and Schroder UK Mid Cap. It will ask shareholders to approve their conversion to open-ended funds.

Such funds automatically trade without premiums or discounts, so shareholders would have the opportunity to sell their holdings at net asset value (‘par value’) as opposed to suffering the discounts at which the four trusts have tended to trade. However, loss of investment trust status would also entail the loss of advantages such as the oversight of an independent board and the ability to borrow (‘gear’) or to hold assets that are hard to buy and sell. Formal requisition notices had not been served at the time of writing so no dates for shareholder meetings have yet been set.

The only one of the seven trusts originally targeted by Saba not to have held its vote yet is Edinburgh Worldwide, whose extraordinary meeting at which the vote will be held is due to take place on Friday.

Boaz Weinstein, the founder of Saba, has reportedly said that ‘we do not need investment trusts’. Saba has stakes in many trusts beyond those at which it has sought change so far.

Saba has also agreed with four trusts managed by BlackRock that, until 2027, it will not seek to influence the board or the trust and that it will vote in line with the board’s recommendations. The four trusts are BlackRock Smaller Companies, BlackRock World Mining, BlackRock Energy & Resources Income and BlackRock American Income.

Five other BlackRock-managed trusts have not announced an agreement with Saba: BlackRock Greater Europe, BlackRock Throgmorton, BlackRock Frontiers, BlackRock Latin American and BlackRock Income & Growth. 

• Read: What investment trusts did investors buy in January?

Abrdn Asian Income boosts divi ‘thanks to Saba’

Abrdn Asian Income is to pay a dividend equivalent to 6.25% of net asset value. The first quarterly payment under the new policy will be paid on 21 February at a rate of 6.78p per share, taking the total divi for the year to 14.43p, 22.8% more than the previous year. The fund has also introduced a continuation vote, which will take place in 2028 and every three years thereafter. Continuation votes are seen as a way to give shareholders the chance to liquidate their holdings at close to net asset value, rather than risk a discount if they sell in the market.

Analysts at Stifel, the broker, said the measures ‘look to be a reaction to Saba’s campaign against trusts languishing on large discounts, with Abrdn Asian Income … perhaps not wanting to be the next target’. Stifel added: ‘We think this won’t be the last trust to react to recent events [connected with Saba], with boards being kicked into action undoubtedly a positive for the sector.’

BBGI Global Infrastructure receives £1bn bid

BBGI Global Infrastructure has received a cash offer of 147.5p a share from British Columbia Investment Management. The offer price is 21% higher than the closing price the previous day and values the trust at just over £1bn. The board has recommended that shareholders accept the offer.

Analysts from Panmure Liberum, the broker, described the bid as ‘a bolt from the blue that will reverberate around the industry … [it is] the most significant single news item in several years within renewables and infrastructure funds’.

The news buoyed shares in other infrastructure trusts. International Public Partnerships, a member of Fidelity’s Select 50 list of favourite funds and one of Tom Stevenson’s fund picks for 2025, rose by 4.5% on the day of the BBGI bid.

• Investment ideas for 2025 - Tom’s picks

Polar Capital Tech joins FTSE 100

Polar Capital Technology, one of the 10 trusts most bought by Fidelity customers last month, has been promoted to the FTSE 100 index of Britain’s most valuable listed companies.

JPMorgan Global Growth & Income to absorb Henderson trust

JPMorgan Global Growth & Income, another popular choice among Fidelity clients, is to merge with Henderson International Income, subject to the approval of both sets of shareholders, to create a fund with net assets of more than £3.4bn. Henderson International Income investors will pay lower fees when their holdings become shares in the JPM trust.

Manager changes at Bankers and Henderson European

Fund managers Tom O’Hara and Jamie Ross have resigned from Janus Henderson. They managed the Henderson European Trust while Mr Ross ran the European portion of the Bankers trust. The board of Henderson European is ‘soliciting shareholder views on the strategic direction’ of the trust. Bankers’ European portfolio will be taken over by Alex Crooke, the trust’s existing lead manager.

Schroders Capital Global Innovation recommends liquidation

The board of Schroders Capital Global Innovation, the former Woodford Patient Capital, has advised shareholders to vote in favour of discontinuation at a general meeting to be held on 27 February and to approve a managed wind-up of the fund.

More trusts cut fees

The fees paid by Warehouse REIT and Brown Advisory US Smaller Companies to their investment management companies are to be calculated on the basis of the lower of net asset value and market value. At present the fees are always based on net asset value. As both trusts currently trade at a discount, in other words the market value is less than the net asset value, fees will fall. The Brown Advisory trust will also pay its manager a slightly smaller percentage of assets or value.

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Investment trust shares are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.