{"id":694826,"date":"2026-01-14T06:46:15","date_gmt":"2026-01-14T06:46:15","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/694826\/"},"modified":"2026-01-14T06:46:15","modified_gmt":"2026-01-14T06:46:15","slug":"the-battle-for-britains-investment-trusts","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/694826\/","title":{"rendered":"The battle for Britain\u2019s investment trusts"},"content":{"rendered":"

This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe\u00a0here.<\/a><\/p>\n

The dispatch<\/strong><\/p>\n

In the world of U.K. quoted companies, investment trusts are frequently disparaged as a sleepy backwater, a dull corner of the market offering little excitement.<\/p>\n

That is despite the fact that, with a combined stock market valuation of\u00a0around\u00a0\u00a3265 billion\u00a0($357 billion), U.K.\u00a0investment\u00a0trusts are the world’s biggest market in closed end funds, as they are known in the U.S.<\/p>\n

But there is no debate at\u00a0present;\u00a0the sector\u00a0is currently very newsy because of one individual, the U.S. activist investor Boaz Weinstein, founder and chief investment officer of the hedge fund Saba Capital.<\/p>\n

A general view of the London Stock Exchange in the City of London, U.K.. Picture date: Thursday January 8, 2026. <\/p>\n

James Manning | Pa Images | Getty Images<\/p>\n

He electrified the world of investment trusts\u00a0\u2014\u00a0known in some parts of Europe as SICAVs (Soci\u00e9t\u00e9 d’Investissement \u00e0 Capital Variable, a French expression which translates\u00a0to\u00a0investment company with variable capital)\u00a0\u2014\u00a0when, in December 2024, he launched a campaign to oust the boards of seven investment trusts.<\/p>\n

Saba requisitioned general meetings at three trusts run by the venerable Edinburgh fund manager Baillie\u00a0Gifford\u00a0\u2014\u00a0the Baillie Gifford US Growth Trust, the Edinburgh Worldwide Investment Trust (EWIT) and Keystone Positive Change\u00a0\u2014\u00a0and two run by Janus\u00a0Henderson:\u00a0the Henderson Opportunities Trust and the European Smaller Companies Trust.<\/p>\n

It also targeted the CQS Natural Resources Growth & Income Trust and, most explosively of all, Herald Investment Trust\u00a0\u2014\u00a0the\u00a0\u00a31.2\u00a0billion fund managed by Katie Potts, the foremost investor in U.K. small caps, who is lionized in London’s Square Mile for her successful early stage backing of countless growth companies. These include a clutch of businesses that went on to\u00a0FTSE\u00a0100\u00a0membership, such as Arm Holdings, Diploma Group, Informa, Admiral and Misys, as well as the likes of Bloomsbury Publishing, publisher of author JK Rowling’s best-selling Harry Potter novels.<\/p>\n

All these trusts had seen their share prices trading at a significant discount to their net asset value (the sum that could be raised\u00a0if\u00a0they were closed and\u00a0all assets\u00a0sold).\u00a0Weinstein’s\u00a0aim was to replicate the success he had in the U.S. where he took over a number of similarly afflicted\u00a0trusts.<\/p>\n

But despite having taken stakes of between 19% and\u00a029% in each of the trusts\u00a0\u2014 \u00a0and, in the\u00a0process,\u00a0helped\u00a0narrow the discounts at which they were trading\u00a0\u2014 \u00a0by\u00a0St Valentine’s Day last year,\u00a0Saba had been defeated in all seven shareholder votes.<\/p>\n

Weinstein\u00a0told\u00a0the\u00a0Wall Street Journal\u00a0at the time: “I’ve never had this happen before. I didn’t realise just how clubby the U.K. financial world is.”<\/p>\n

If at first you don’t succeed?<\/strong><\/p>\n

Undeterred by that experience, Weinstein\u00a0\u2014\u00a0a chess and poker whizz who famously made a fortune in 2012 betting against Bruno Iksil, a JP Morgan trader nicknamed the\u00a0“London Whale”\u00a0\u2014\u00a0is trying again.<\/p>\n

He unveiled\u00a0two new positions in U.K. trusts<\/a>\u00a0at the Sohn investment conference in London last November and, just before Christmas, launched a\u00a0fresh assault on EWIT<\/a>.<\/p>\n

The feeling is that, this time around, he may achieve his objective of removing the EWIT board.<\/p>\n

For a start, since the vote last February, Saba has raised its stake in EWIT from 25% to just over 30%.\u00a0EWIT Chairman\u00a0Jonathan Simpson-Dent\u00a0acknowledged to The Sunday Times last weekend that, as the vote is based on a simple majority of those casting ballots, EWIT must get at least half of the 24,000 retail shareholders who collectively own half of the company to rally behind the board.<\/p>\n

“We’ve got to get 12,000 people out to vote [against Saba],”\u00a0he told the paper. “There’s a distinct scenario that he could grab control of the trust even though we can only mobilise 10,000 rather than 12,000 people.”<\/p>\n

Weinstein has also threatened legal action against EWIT unless it provides more information about the sale last October of part of its stake in Elon Musk’s SpaceX.<\/p>\n

EWIT, which first invested in SpaceX in 2018, is\u00a0thought\u00a0to have achieved a return of nearly 950% on the investment but, in a move which Saba said “appears to defy commercial logic,” trimmed its holding ahead of a proposed merger with the Baillie Gifford US Growth Trust, which also owns shares in SpaceX.\u00a0It\u00a0came just before a secondary share sale in December\u00a0that\u00a0put SpaceX’s\u00a0valuation\u00a0at\u00a0$800\u00a0billion,\u00a0and Saba has said that, as a result, EWIT left \u00a337\u00a0million on the table.<\/p>\n

EWIT is expected to say the sale was necessary because, once the merger is complete, SpaceX would have accounted for more than a quarter of the enlarged company’s assets\u00a0\u2014\u00a0breaking a self-imposed rule that no more than 25% of total assets may be invested in private companies.<\/p>\n

But Simpson-Dent admitted to The Sunday Times of the sale: “I can understand why people are saying the optics don’t look good.”<\/p>\n

Weinstein’s aggressive tactics have won him few friends in U.K. financial circles.<\/p>\n

However, win or lose, he has had an impact. A number of the trusts he targeted a year ago have since taken action to reduce the discount at which their shares trade.<\/p>\n

One of them, Herald, announced last Friday that it was launching a tender offer to all shareholders, including Saba, which owns 30.7%, allowing them to sell all of their shares at close to net asset value provided Saba itself tenders all or most of its shares.<\/p>\n

And there is no doubt some investment trust boards remain too complacent. Data published last week by the Association of Investment Companies, the industry body, suggests the average investment trust discount remains at 15% and has been in double digits since May 2022\u00a0\u2014\u00a0a\u00a0run\u00a0not\u00a0seen\u00a0since between\u00a0June 1997 and January 2001.<\/p>\n

If Weinstein can galvanize more boards to act decisively, he\u00a0may well\u00a0have done the sector a favor.<\/p>\n

\"Watch<\/p>\n

Chris Bryant, Minister of State for Trade Policy for the UK, speaks to CNBC’s Ritika Gupta in a wide-ranging interview<\/p>\n

\"What's<\/p>\n

Kallum Pickering, chief U.K. economist at Peel Hunt, discusses the outlook for the U.K. housing market, given expected Bank of England rate cuts this year.<\/p>\n

\"UK<\/p>\n

Derren Nathan, Hargreaves Lansdown’s head of equity research, says lower-end retailers are facing “insane” competition \u2014 with AB Foods’ Primark among the names worst hit.<\/p>\n

\u2014 Holly Ellyatt<\/p>\n

Need to know<\/strong><\/p>\n

Global central bankers unite in defense of Fed Chair Jerome Powell. <\/strong>“We stand in full solidarity<\/a> with the Federal Reserve System and its Chair Jerome H. Powell,” central bank chiefs, including European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, said in a\u00a0joint statement<\/a> issued Tuesday.<\/p>\n

Rolls-Royce has hit a record high every trading day of 2026. <\/strong>The aerospace and defense firm reaps benefits from multiple directions<\/a> \u2013 from its exposure to defense, to its thriving power systems business and a wider\u00a0FTSE 100<\/a>\u00a0rally<\/a>. Its share are up nearly 1,200% over the past five years.\u00a0<\/p>\n

A million young Brits are unemployed. <\/strong>Young people are facing several challenges in the job market, from\u00a0artificial intelligence eliminating entry-level positions<\/a>\u00a0to increased competition for jobs.\u00a0It’s not just the economic climate, with employers and experts saying that\u00a0Gen Z are not adequately prepared<\/a>\u00a0to join the workforce.<\/p>\n

\u2014 Holly Ellyatt<\/p>\n

Quote of the week<\/p>\n

The U.K. is suffering from a textbook economic problem: it’s called crowding out, where bad behaviour by policymakers is reflected in ever-rising taxes and ever-rising spending, and more importantly, this moron premium that we see at the long end of the UK rates curve.<\/p>\n

\u2014 Kallum Pickering, chief economist, Peel Hunt<\/p>\n

In the markets<\/p>\n

U.K. stocks have held up over the past week, with the FTSE 100<\/a> rising following talk of a potential merger of mining giants Rio Tinto<\/a> and Glencore<\/a> as well as Rolls-Royce’s<\/a> strong start to the year. Britain’s blue-chip index reached 10,137.35 by the end of Tuesday’s session, up from 10,048.21 last Wednesday, despite edging lower on the day.<\/p>\n

Sterling<\/a> has been largely steady against the U.S. dollar in recent days, trading at $1.3431 on Tuesday afternoon, marginally lower against the greenback from $1.3457 a week ago.<\/p>\n

Meanwhile, yields on the U.K. government’s benchmark 10-year bonds<\/a> \u2014 also known as gilts \u2014 stood at 4.4024% on Tuesday, down from 4.4155% last week.<\/p>\n

Stock Chart IconStock chart icon\"hide<\/p>\n

The performance of the Financial Times Stock Exchange 100 Index over the past year.<\/p>\n

\u2014 Hugh Leask<\/p>\n

Coming up<\/p>\n

Jan.15: U.K. GDP data for November
Jan. 21: U.K. inflation rate for December; CBI’s Business Optimism Index for Q1<\/p>\n","protected":false},"excerpt":{"rendered":"This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe\u00a0here. The…\n","protected":false},"author":2,"featured_media":694827,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5018,3,4],"tags":[748,84818,3085,1395,472,136239,32,393,1880,31986,202396,4884,17178,1144,130398,209654,40974,6994,712,16,15,49,1764,136238],"class_list":{"0":"post-694826","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-britain","8":"category-uk","9":"category-united-kingdom","10":"tag-britain","11":"tag-british-10-year-gilt","12":"tag-business-news","13":"tag-china","14":"tag-christine-lagarde","15":"tag-cristiano-amon","16":"tag-donald-trump","17":"tag-england","18":"tag-ftse-100","19":"tag-gbp-usd","20":"tag-glencore-plc","21":"tag-great-britain","22":"tag-jerome-powell","23":"tag-northern-ireland","24":"tag-perella-weinberg-partners","25":"tag-rio-tinto-plc","26":"tag-rolls-royce-holdings-plc","27":"tag-saba","28":"tag-scotland","29":"tag-uk","30":"tag-united-kingdom","31":"tag-united-states","32":"tag-wales","33":"tag-walter-isaacson"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115892111713760926","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/694826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=694826"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/694826\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/694827"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=694826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=694826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=694826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}