Herald must be rescued from Saba, says ALEX BRUMMER
Britain's £265.5billion investment trusts are a vital part of the nation's savings culture. The sector offers investors simple access to 'patient' savings, start-ups, pioneering tech and unlisted enterprises.At a time when so much investment is driven by lower-cost tracking of indexes, investment trusts provide active management through stock market listings.Baillie Gifford's Scottish Mortgage Investment Trust (SMIT) offers long-term holders early stakes in Silicon Valley.Herald Investment Trust specialises in semiconductor innovators, such as Super Micro Computers, which are driving the AI revolution. Another group of funds, including Rothschild Investment Trust and Brunner, started out as managers of family wealth and gave ordinary savers access to their expertise.Investment trusts are not without problems. I remember the great scandal of the 1970s – the collapse of a group of investment trusts run by a former Lord Mayor of London Sir Denys Lowson.A probe by the Investors Chronicle revealed that the empire was a giant Ponzi scheme in which the Lowson trusts invested in each other. Predator: Boaz Weinstein's Saba Capital has launched assaults on seven UK trustsThere was a smell of this when Neil Woodford's savings empire came to grief in 2019. As the once-respected guru sought to save his flagship Equity Income Fund, less liquid stocks were dumped in his Patient Capital investment trust, costing retail savers dearly. When American Boaz Weinstein launched his assault on seven UK trusts last year, it exposed a complacent, cosy sector badly in need of reform.Since then, there has been an effort to reach out to retail investors with opportunities to engage with managers at briefings with refreshments.There is suspicion that it is not just the funds that are closed. In the case of some of the bigger management groups, hand-picked directors and managers receiving generous fees are drawn from a narrow gene pool. Shareholder democracy has been a chimera.The sector has been an easy target for predators. A decade ago, Elliott Management dismantled Alliance Trust. Activist Edward Bramson successfully defenestrated Electra.Next week it is Herald Investment Trust, managed by the intuitive Katie Potts, which will be on the line. Under her leadership, Herald has achieved a fantastic 907.3 per cent increase in net asset value since 2009. In the same period, Weinstein's Saba Capital Master Fund produced returns of 150.9 per cent. Saba began its stake-building in Herald back in 2023 but bought most of its 29 per cent holding in the autumn of 2025. As UK retail investors fled the trust – amid fears of Rachel Reeves raising capital gains taxes in November's Budget – Weinstein moved in for the kill.There are two options at the upcoming vote. First, there is a special resolution requiring a 75 per cent majority. This offers Saba the chance to vacate, pocketing net asset value, leaving behind a smaller trust and allowing other investors to avoid a capital gains liability.The nuclear resolution comes into play should Weinstein refuse to sell. A simple tender offer will essentially allow savers to exit and avoid their holding being left in the hands of the American.Losing Herald would be a serious blow to investors wanting exposure to innovation in the US and Britain. In the interests of private investors, Boaz Weinstein would be advised to pick up his marbles, take a profit and go home.DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Herald must be rescued from Saba, says ALEX BRUMMER
