Investment trust urges ministers to overhaul rules amid Saba ‘threat’
An investment trust which holds shares in SpaceX has urged the City minister to overhaul the rule book to stop the “threat” of a notorious US activist hedge fund.
Tom Burnet, chair of the Baillie Gifford US Growth Trust, has written to City minister Lucy Rigby as well as Scottish secretary Douglas Alexander to plead for a change in the rules as it gears up for shareholders to vote on its future in two weeks.
The letter comes as the investment trust finds itself locked into a fierce battle with Saba Capital, which has amassed a near 30 per cent stake in the trust.
The hedge fund, run by Boaz Weinstein, has become known for its long-running offensive against London-listed trusts, with the Baillie Gifford trust the latest of Saba’s targets over the last 18 months.
In the letter, which was shared with City AM, Burnet wrote: “Without swift action, more investment trusts will fall prey to such tactics, and the ordinary savers who rely on them will be the ones who suffer.”
Saba attempted to wind down Gore Street Energy Fund in September after investors narrowly voted against its discontinuation, but succeeded in ousting Edinburgh Worldwide Investment Trust’s board and chair Jonathan Simpson-Dent in April.
Saba’s actions
Saba has accused the trust of chronic under performance and Weinstein has put forward a trio of executives for shareholders to consider for board roles at its annual general meeting on 23 October.
The proposal is the third move against the trust in less than two years, after two other attempts were rebuffed since the start of 2025.
Saba also claimed that his interventions have produced more than £600m of profits for investors in the trusts “it has targeted”, but Burnet argued that figure has not been scrutinised.
He wrote: “Whatever the merits of that claim, neither it nor its proposal for a cash exit for shareholders has been subject to the scrutiny a board’s own statements must undergo.”
Burnet added that Saba has “not been explicit with shareholders about what it would do with the company if it gained control”.
Swift reforms
He called on Rigby and the government to introduce urgent reforms, arguing it requires “merit attention at the highest level”.
This included holding activist shareholders to the same standards of information disclosure as the boards of listed companies.
Directors of listed companies are rightly required to ensure that what they tell shareholders and the market is fair, accurate and not misleading, and to provide the necessary information which is material to an investor,” Burnet wrote.
“A shareholder campaigning to take control of the same company…faces no equivalent obligations.”
Burnet also recommended the government support the Financial Conduct Authority’s work on closed-end funds, which looks to “strengthen board independence and manage the conflicts” that arise when a significant shareholder installs its own directors.
Burnet also urged ministers to make it easier for investors who hold shares through intermediaries, such as investment platforms, to vote in meetings.
He added that Saba’s campaign against the trust was a “threat” not just to Baillie Gifford but the investment trust industry as a whole, calling investment trusts one of “Britain’s great contributions to finance”.
He said: “They have contributed greatly to the prosperity of ordinary savers…Yet investment trusts are now being targeted in ways the existing rules were not designed to handle.”