Boaz Weinstein, founder of New York-based Saba Capital, has taken a bold step into the heart of the UK’s £266 billion investment trust sector. His plan? To take over seven investment trusts, combine their assets, and redirect them toward underappreciated UK equities. It’s a move Weinstein describes as a “white knight” effort to support the London Stock Exchange and small UK investors, but it’s already stirring up debate.
Weinstein’s proposal includes selling off holdings in expensive US stocks, like Tesla and Nvidia, to invest in UK-listed trusts and companies. Given the significant discounts to net asset value (NAV) that many UK trusts are trading at—averaging 15.4%, close to levels last seen during the 2008 financial crisis—there’s clear appeal in buying undervalued assets. Weinstein’s argument is that these discounts represent a failure of the status quo. By consolidating these trusts, Saba Capital aims to introduce a new investment vehicle focused on UK opportunities.
For Weinstein, the initiative isn’t about siphoning assets to the US. Instead, he’s pitching it as a revitalization of the London market, where a gloomier investment climate has led to fewer IPOs, delistings, and a sense that UK stocks are overlooked compared to their American counterparts.
However, his plan isn’t without its critics. Fund managers like James Budden from Baillie Gifford argue that consolidation could reduce investor choice, leaving fewer companies and less diversification in the sector. The Baillie Gifford US Growth Trust, one of Saba’s targets, illustrates this tension. Its portfolio is heavily weighted toward US tech giants, and Weinstein’s approach would replace this focus with broader UK-oriented strategies.
Critics have also labeled Saba’s approach “opportunistic,” citing concerns that retail shareholders might not vote or understand the implications of such a significant shift. There’s also the risk that investors could find themselves in a vehicle vastly different from what they originally bought into. For Weinstein, the rebuttal is simple: if shareholders are apathetic, perhaps they haven’t been well-served by the existing trusts in the first place.
If Saba Capital’s campaign succeeds, it could mark one of the most transformative changes in the UK investment trust sector in years. But whether it will truly act as a lifeline for the London Stock Exchange or reduce investor options is a worthwhile debate that gets to one of the existential questions of asset management itself: what are funds and money managers really for?