Boaz Weinstein's Activist Campaigns and the Future of UK Investment Trusts

The UK investment trust sector has long been a fertile ground for activist campaigns, but the arrival of Saba Capital Management-led by Boaz Weinstein-has intensified the debate over governance, liquidity, and shareholder value. From 2023 to 2025, Saba's aggressive tactics, including board challenges and calls for structural reforms, have forced the sector to confront persistent discounts to net asset value (NAV) and outdated governance practices. While its direct attempts to replace boards were largely rejected, the ripple effects of its campaigns have reshaped the landscape, prompting both defensive measures and meaningful reforms. This article examines how activist investing has catalyzed discount reduction strategies and governance evolution in closed-end funds, while assessing the long-term implications for stakeholders.

Saba's Strategies and the Discount Conundrum

Saba's campaigns targeted UK investment trusts trading at wide discounts to NAV, often exceeding 15% by 2025. The hedge fund's playbook included proposing board replacements, fee reductions, and conversions to open-end funds to address liquidity gaps. For instance, in 2023, Saba secured a partial victory at the European Opportunities Trust, where a tender offer allowed 25% of shareholders to exit at a small discount to NAV. However, its broader strategy- replacing entire boards-failed in seven trusts, with shareholders overwhelmingly rejecting the proposals.

The persistence of wide discounts, which grew from 2% in 2021 to 16% by 2025, created a vacuum for activism. Saba's campaigns highlighted the structural inefficiencies of closed-end funds, where illiquidity and misaligned incentives between managers and shareholders often exacerbate discounts. As one analyst noted, "The sector's failure to address discounts proactively made it an easy target for activists who framed their campaigns as a solution to systemic underperformance."

Governance Reforms and Shareholder Engagement

Despite Saba's setbacks, its campaigns spurred significant governance reforms. Trusts began adopting measures such as fee reductions, enhanced buyback programs, and revised fee structures. For example, the Gresham House Energy Storage Fund adjusted its management fee to balance market capitalization and NAV, a move seen as a direct response to activist pressure. Similarly, the Schroder UK Mid Cap Fund introduced regular continuation votes and fee cuts.

The Association of Investment Companies (AIC) raised concerns about the implications of Saba's tactics, particularly the potential for conflicts of interest if a shareholder could simultaneously influence board appointments and management. This prompted calls for regulatory review of board independence rules under the Financial Conduct Authority (FCA) Listing Rules. By 2025, the FCA had engaged in broader reforms, including updates to transaction reporting and corporate governance disclosures.

Shareholder engagement also improved, with platforms like Hargreaves Lansdown and AJ Bell making it easier for retail investors to vote their shares. This shift, driven by Saba's campaigns, has increased transparency and accountability, though critics argue that retail investors remain underrepresented in decision-making.

Long-Term Implications for Stakeholders

For shareholders, the campaigns underscored the importance of liquidity and alignment with management. Trusts that implemented buybacks or tender offers saw narrower discounts, as seen in CQS Natural Resources and European Smaller Companies Trust. However, the risk of premature closures-where undervalued trusts are liquidated at the behest of activists-remains a concern.

Managers faced a dual challenge: defending long-term strategies while adapting to activist demands. Boards that resisted Saba's proposals, such as those at Baillie Gifford US Growth Trust and Henderson Opportunities, emphasized their focus on specialized assets and long-term value creation. This highlights a broader industry trend: trusts must differentiate themselves through unique strategies (e.g., renewable energy or infrastructure) to justify their structure.

For institutional investors, the campaigns revealed vulnerabilities in the closed-end fund model. While Saba's efforts exposed governance gaps, they also demonstrated the resilience of UK investment trusts. As one industry report noted, "The sector's ability to defend its governance model while implementing reforms suggests a path toward sustainable discount reduction without sacrificing long-term value."

Regulatory and Structural Evolution

The FCA's 2025 reforms, including stricter transaction reporting and updated governance guidelines, reflect the sector's evolving regulatory environment. Meanwhile, the UK Stewardship Code 2026, emphasizing transparency in governance reporting, further aligns with the post-Saba landscape. These changes aim to prevent conflicts of interest and ensure that activist campaigns do not undermine the structural advantages of closed-end funds, such as their ability to invest in illiquid assets.

Conclusion

Boaz Weinstein's campaigns have acted as a catalyst for change in the UK investment trust sector, exposing weaknesses in governance and liquidity management while pushing for reforms. While Saba's direct attempts to replace boards were unsuccessful, its influence is evident in the sector's improved fee structures, shareholder engagement, and regulatory scrutiny. The long-term sustainability of these changes will depend on the sector's ability to balance activist demands with its unique advantages-such as specialized investing and long-term horizons. For investors, the lesson is clear: activism, while disruptive, can drive necessary evolution in even the most entrenched markets.