A fierce battle is underway over the control of several investment trusts, a matter of great importance for anyone investing in the stock markets.

Investors need to act swiftly, or they might find their funds managed by someone who may not prioritize their financial interests.

Saba Capital, a hedge fund based in New York and helmed by Boaz Weinstein, known for his blackjack prowess, has launched an aggressive move on the Herald, a highly successful tech trust.

Another target of Saba is the Edinburgh Worldwide Investment Trust (EWIT), a tech-focused trust with a significant stake in SpaceX, Elon Musk’s £1.1 trillion aerospace company.

This weekend, 24,000 private investors of EWIT face an uncertain future as a closely contested vote looms over the trust’s direction. By next week, their investments could be in the hands of Saba, whose reputation as a diligent manager is uncertain.

Today marks the deadline for direct shareholders of EWIT to cast their votes. However, many investors who utilize platforms such as AJ Bell, Hargreaves Lansdown, and Interactive Investor have already missed their opportunity due to earlier cut-off dates imposed by these services.

Smash-and-grab: A battle is raging for control of several investment trusts in a struggle that concerns everyone saving in the stock markets

A vote on the £1.1billion Herald trust’s future will be held on February 5. Proxy votes must be cast by 10am on February 3, but platforms have again imposed earlier deadlines. AJ Bell has a cut-off date of February 2, for example.

Last summer Saba tried unsuccessfully to snap up seven trusts. Now it’s not only Herald and EWIT that are in its sights, but also Pantheon International, a private equity specialist, and Workspace, an office provider. Impax Environmental yesterday took pre-emptive measures to thwart Saba’s onslaught.

Baroness Altmann, the campaigner and former pensions minister, is warning of the risk of an assault on the other trusts in which Saba has bought shares. She says the Government is looking the other way, having been ‘captured’ by the hedge fund industry.

She added: ‘Ordinary shareholders have been left at the mercy of flawed regulations, failing protections and official negligence.’

Against this background, Weinstein is ramping up the rhetoric. But he is less specific about his true objective. As a result, critics say the hedge fund’s aim is to increase Saba’s assets under management (AUM) to boost fee revenues.

Saba contends that its intervention in 2025 has forced investment trusts to raise their game. But this does not mean that you should necessarily entrust your money to this Saba. Here is what you need to know to retain power over your savings.

On the attack again: Boaz Weinstein

A CHANGE AT HERALD?

Anyone who bought shares in 1994 when Herald was set up is sitting on a 2,562 per cent gain.

But the trust’s board says that progress is being held back by the belief that Saba will achieve sway over the trust through ‘a process of attrition’.

To pre-empt this, the board, which has already twice seen off Saba, is taking an extraordinary step that would reduce the size of the trust but ensure its continued existence.

All shareholders have the option to cash in their stake at net asset value (NAV). At present, the ‘discount’, or gap between the trust’s share price and the NAV, is 7 per cent.

In theory, Saba ought to accept the offer, which represents a gain of about 30 per cent on its holding.

But if it declines to do so at the general meeting on February 5, other shareholders will be offered an exit rather than be left in a fund under the raider’s management. Saba did not comment on the tender offer. Quoted Data, the analytics group, says Saba’s flagship Capital Master fund has produced a return of 151 per cent since its debut in 2009. Over the same period Herald has delivered a 907 per cent return.

James Carthew of Quoted Data said: ‘If Saba blocks the tender, it will be proof that its real goal is to find ways of trapping investors in funds that it can extract management fees from.’

If you are a Herald investor, do not miss your chance to cast your vote. More details here: 

WHAT NEXT FOR EWIT?

At a meeting next Tuesday, Saba will seek to immediately sack all of EWIT’s board. They would be replaced by three US directors selected by the hedge fund.

The hedge fund, which owns 30 per cent of EWIT’s shares, claims the trust’s board is ineffective. Another complaint is that the board is too close to the trust’s managers, Baillie Gifford. Weinstein has a low opinion of the Edinburgh business. He told his 52,000 followers on social media platform, X: ‘There’s something rotten in Edinburgh – and it’s not the haggis.’

A particular bone of contention is EWIT’s stake in SpaceX, which is expected to make its stock market debut this year.

EWIT says it has already made a 1,000 per cent return on this investment. Weinstein contends that the timing of the disposal of a portion of this holding cost shareholders £37m.

Note, however, that this statement, in common with Saba’s other pronouncements, does not need to be verified, unlike any material which comes from the trust’s board.

Over past weeks, Saba has had plenty to say, but it has not revealed its plans for EWIT – these are the ‘key missing piece of the puzzle’, according to analysts at brokers Numis.

A request for more information on the plans brought this response from a Saba spokesman: ‘All decisions about the future of the trust will be made solely by the new, experienced and independent board – not Saba. If elected, they will have the sole mandate of maximising value for all shareholders.’ The possible fate of EWIT should serve as an alert to holders of Pantheon International, Workspace, Smithson and other trusts in which Saba is a shareholder. Watch out for any notifications so that you can have your say early in the proceedings.

A FIELD OF OPPORTUNITY

You may not be impressed by Saba’s behaviour and apparent lack of Government concern in the hedge fund’s offensive on our savings.

But this does not mean you should overlook Saba’s strategy, which indicates that there is value – and sometimes bargains – in the investment trust world.

If you are diversifying in 2026, maybe you should explore the sector. Darius McDermott, managing director at FundCalibre suggests Brunner (which is one of my bets), a trust with ‘an all-weather portfolio’; Mid Wynd, which aims for capital growth rather than income; and Murray International, a good source of dividends. Why should Saba have all the fun?

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