Quilter Cheviot has told Citywire it will vote against Saba’s proposals to take control of multiple investment trusts. 

Last month, Saba Capital sent shockwaves through the investment company world as it launched a campaign to unseat the boards of seven closed-end funds. 

In response, Quilter Cheviot’s head of investment fund research Matt Ennion described the campaign as ‘aggressive’, ‘opportunistic’ and ‘self-serving’.

The firm has become the second top UK wealth manager, after Evelyn Partners, to publicly state it will vote against the US hedge fund manager, as boards scramble to persuade shareholders to vote with them.

Rathbones also suggested on Friday that it was opposed to Saba’s plans, which a statement suggested did not ‘align’ with its customers’ interests, but the firm did not explicitly say it would vote against them at upcoming shareholder meetings. 

Citywire reported in December that New York-based Saba had requisitioned general meetings at seven investment trusts: Baillie Gifford US Growth (USA ), Keystone Positive Change (KPC ), Edinburgh Worldwide (EWI ), Herald (HRI ), CQS Natural Resources Growth & Income (CYN ), Henderson Opportunities (HOT ), and European Smaller Companies (ESCT ).

Saba accused the boards of presiding over poor performance and wide prevailing share price discounts.

Quilter Cheviot is one of the top shareholders in the targeted £772m Baillie Gifford US Growth trust, holding 5.2% of its shares, according to Refinitiv data. 

Ennion explained that the decision to vote against Saba stems from the uncertainty of its proposition.

‘Saba is proposing to take over these trusts and manage them in a completely different way, with no clarity whatsoever in terms of what they will be doing with each one,’ said Ennion.

Saba plans to replace boards with two of its own nominees – a decision which Ennion argues does not serve shareholders – before potentially appointing itself as manager and creating vehicles to attack other discounted investment companies. 

‘I wouldn’t be surprised if a couple of these trusts happen to fall into Saba’s hands,’ added Ennion, as he emphasised the potential risk of shareholders not voting. 

However, Ennion did acknowledge that some of Saba’s attacks were valid. He said that within some of these trusts, there are ‘potentially unhappy shareholders, and performance perhaps hasn’t stacked up’.

Rathbones also signalled its opposition to Saba’s plans, but stopped short of saying it would vote against them. 

A spokesperson said: ‘We are active owners and will be exercising our vote and engaging with boards to help drive additional value for our clients.

‘Based on the information available, Saba’s proposals do not appear to align with our clients’ interests. We will consider every case carefully and will use our voting power and heft in engaging to promote our clients’ interests.’

Following its combination with Investec in 2023, Rathbones is a major shareholder in several of Saba’s targets, including having a 10.8% stake in Keystone and a 14.8% interest in Herald.

James Burns, head of managed portfolio service at Evelyn Partners, shared Ennion’s broad concerns, adding that a ‘completely non-independent board [could] do whatever Saba wants’.

Speaking to Citywire, he described the campaign as a ‘land grab’. However, he also warned boards about the dangers of wide share price discounts, saying that ongoing discount controls needed to be ‘more robust, or else something like this [campaign] will just come around again’.

‘The whole sector now needs to be brought into a different era where discounts are much tighter than they have been. There’ll be some fluctuations, but the mid-high teens is unacceptable,’ said Burns. 

‘We’ll expect to have these conversations when [the boards] hopefully get through these votes.’