Saba launches investment trust ETF

Saba Capital Management (Saba), the New York-based activist hedge fund that has shaken the UK’s investment trust sector over the last year and a half, has launched a product enabling investors to buy into its strategy.

Saba, in partnership with exchange-traded fund (ETF) white-labeller HANetf, launched the Saba Capital Investment Trusts UCITS ETF (LON:UKIT) on 5 March.

This actively-managed ETF will hold UK-domiciled investment trusts trading at a discount to net asset value (NAV), similar to those that Saba has targeted since November 2024.

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“Saba brings deep expertise in the investment trust and closed-end fund universe, with a long track record of identifying opportunities created by discounts to NAV and corporate actions within the sector,” said Hector McNeil, co-founder and co-CEO of HANetf.

As an activist investor, Saba’s strategy revolves around building a stake in discounted closed-ended funds and then pushing for corporate actions that will narrow the trust’s discount in the short term. This is known as closed-ended fund arbitrage.

The ETF will be managed by Saba’s founder and CIO Boaz Weinstein as well as partner and portfolio manager Paul Kazarian.

“The £250 billion-plus UK investment trust sector is undergoing a fundamental realignment, with renewed attention on narrowing discounts creating an ideal environment for a trust-focused active ETF,” said Weinstein. “We designed UKIT to help investors capitalise on this shifting landscape – empowering investors to profit from discounts to NAV, rather than suffer from them.”

Which investment trusts does Saba’s ETF hold?

As of 5 March, the top three non-cash holdings in Saba’s investment trust-focused ETF were IP Group PLC (LON:IPO), an investment company that invests in technologically and scientifically innovative businesses; biotech-focused investment trust Syncona (LON:SYNC); and private equity investment trust Harbourvest (LON:HVPE).

UKIT’s fourth-largest holding was Edinburgh Worldwide (LON:EWI), the growth-focused investment trust whose board Saba attempted to displace earlier this year, as well as at the start of 2025.

The ETF also holds Allianz Technology Trust (LON:ATT), in which Saba disclosed a 4.9% stake on 5 March, as well as Unite Group (LON:UTG), Pantheon International (LON:PIN), Henderson Smaller Companies (LON:HSL), Montanaro European Smaller Companies (LON:MTE), Polar Capital Technology (LON:PCT), Baillie Gifford Japan (LON:BGFD), Brown Advisory US Smaller Companies (LON:BASC), Bankers Investment Trust (LON:BNKR), Scottish American (LON:SAIN) and Schroder UK Mid Cap Fund (LON:SCP).

As of 5 March, 55% of UKIT’s assets were held in cash.