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Chief executive Janus Henderson has criticized a US hedge fund trying to take over the management of seven UK investment trusts as “very aggressive”.
But Dibadj, who runs the $382 billion asset manager, said Boaz Weinstein’s Saba Capital swooped in to try to manage the trusts to “take advantage of the management fee.”
Saba Capital has took over shares in seven trusts — two of which are managed by Janus Henderson — and is seeking shareholder approval to audit their boards and install their own nominees.
“If you haven’t seen what’s happening in the UK investment trust world today, pay attention on behalf of your clients,” Dibadj told professional investors at Janus Henderson’s UK Investment conference in London on Wednesday.
“You have an insignificantly small, very aggressive . . . hedge fund [that] came in and decided to bet that you and your clients would not vote, take those funds, use the management fee.
“They are betting on complacency. Please don’t be complacent, don’t let them take you over.” He added that the entire UK investment trust sector, worth £266bn, was effectively “under attack”.
Saba Capital said: “All these funds have board members who are part of this ecosystem. . . take away benefits from pensioners for what? They are supposed to be working for you, the shareholders, and they themselves are sitting in other trusts trading at similar discounts.
“We are here to restore this broken set of trust and . . . a broken industry that could not grow.”
Saba added that it is one of the world’s largest supporters of investment funds and similar products, with 6.6 billion dollars invested.
Dibadoj’s comments come as Sab’s campaign is facing a backlash. The foundations, which are also managed by Baillie Gifford, Herald Investment Management and Manulife, have raised concerns about Saba’s plan to put his own candidates on the boards.
Saba focused on the performance of the seven trusts and the fact that their share prices are lagging behind the value of their assets.
The foundations he targets are: Baillie Gifford US Growth, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment, European Smaller Companies, Henderson Opportunities, Herald Investment and Keystone Positive Change. The hedge fund’s holdings range from 19 to 29 percent of each of the trusts and add up to a total value of £1.5 billion.
The UK investment trust industry has come under pressure from higher interest rates, regulation and a focus on fees, forcing some investors to exit.
Alan Brierley, an analyst at Investec, said it was “time to put up the barricades against the outrageous and opportunistic attack, but also for some industry self-reflection”.
