AIC comments on Saba's proposals to convert four investment trusts into open-ended funds
Saba Capital intends to requisition four general meetings at investment trusts.
The Association of Investment Companies (AIC) has commented on today’s announcement that Saba Capital intends to requisition four general meetings at CQS Natural Resources Growth & Income, The European Smaller Companies Trust, Middlefield Canadian Income Trust and Schroder UK Mid Cap Fund.
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “We’ve seen Saba’s proposals decisively rejected at six investment trusts. This demonstrates shareholders value the investment trust structure which has delivered strong long-term performance and the independent oversight of boards.
“We have not yet seen the requisition notices that Saba has said it intends to deliver to these four investment trusts or the detailed proposals. It is therefore unclear how they intend to provide any conversion or rollover into an open-ended vehicle with the same manager and strategy. This marks a significant shift in strategy by Saba. They now appear to recognise the proposals already put forward by the boards of two other trusts they had previously targeted – Henderson Opportunities Trust and Keystone Positive Change.
“Once published, it’s critical for shareholders to examine these proposals and their boards’ responses and vote at any meetings. We need to ensure that all shareholders have the opportunity to vote on the future of their trust. That’s why we have recently launched our ‘My share, my vote’ campaign to change the Companies Act so that nominees, including platforms, must pass on voting rights and information to their customers.
“Investment trusts are a UK success story. Over the last ten years investment trusts have outperformed open-ended funds in eleven out of fifteen sectors. The closed-ended investment trust structure works well for investing in smaller or less liquid companies. Governed by independent boards acting in the interests of all shareholders, the closed-end structure has a number of significant advantages. These include the ability to be fully invested, to invest in less liquid assets, to borrow and to smooth income. These all can deliver superior performance relative to open-ended funds and consistent and rising income over long periods.”
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- The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 308 members and the industry has total assets of approximately £274 billion.
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