March Investment trust sector newsletter
The Saba effect: Reshaping the sector
Saba Capital continued to reshape the investment trust landscape in March. The US hedge fund started the month by launching its highly anticipated ETF in Europe, explicitly targeting UK trusts trading at significant discounts, with initial positions including HarbourVest Global Private Equity, IP Group and Syncona. Moreover, Founder Boaz Weinstein has questioned the relevancy of closed-ended structures for trusts that hold large-cap stocks and employ no gearing.
Saba’s aggressive activism has triggered a wave of defensive liquidity events. Edinburgh Worldwide Investment Trust (EWI) proposed a 100% tender offer to end its long-running standoff with the firm, offering an 85% cash exit at close to NAV, with 15% deferred pending an anticipated SpaceX liquidity event. In a similar vein, Impax Environmental Markets has announced a full exit tender offer. This is a direct move by the board to protect non-Saba shareholders after Saba, which held 22.1% of the trust, declined to participate in the previous continuation offer, causing it to fail. With activist pressure mounting, some boards across the sector are increasingly being forced to consider liquidity events or other defensive options.
Listing rules: The reform begins
The UK's financial regulators have announced a review of the listing rules targeting investment entities, aimed at enhancing primary market effectiveness. Prompted by feedback that eligibility criteria may be unduly restrictive, the review will assess whether these should be eased to encourage new listings. It will also examine how existing rules and company law can better support shareholder rights and the management of conflicts of interest. A formal consultation paper is expected shortly, with regulatory changes targeted by the end of 2026. With discounts stubbornly wide and the pipeline of new launches well below historical norms, a meaningful easing of listing requirements could provide a welcome structural tailwind.
Murray International delivers very strong results
Murray International (MYI) delivered a standout 2025. Its shares have returned to a premium to NAV, and the board is issuing shares for the first time in three years. Managers Martin Connaghan and Samantha Fitzpatrick are encouraged by the FY25 21.9% NAV total return, which outpaced the benchmark by more than nine percentage points. Latin America and Asia were the strongest regional contributors, with TSMC and Philip Morris International among the leading stock-level drivers. The trust increased its dividend by 5.1% to 12.4p, extending its AIC Dividend Hero record to 21 consecutive years of growth.
Edison’s recent note highlights MYI’s US weighting of around 30%, well below the benchmark’s 50%, as an important differentiator, which should continue to provide a performance tailwind if market leadership broadens beyond US mega caps. The managers have been recycling gains from technology holdings into pharmaceuticals and premium beverages. Edison also points to the trust’s policy of paying dividends solely from income rather than capital as a feature that sets it apart from most of its global equity income peers.
Law Debenture’s long-term stock picks shine again
The Law Debenture Corporation (LWDB) delivered another year of strong outperformance in 2025, achieving a 28.4% NAV total return and beating its broad UK equity market benchmark by 4.4 percentage points. UK banking holdings – Barclays, HSBC and Standard Chartered – were the key performance drivers, benefiting from interest rates falling less quickly than expected and supporting net interest margins, alongside gains from Rolls-Royce and Babcock in aerospace and defence. The trust increased its dividend for the 47th consecutive year.
Edison’s recent note on LWDB highlights that the trust's differentiated structure underpins its long-term edge. Its professional services operating business (IPS), which delivered its eighth consecutive year of mid- to high-single-digit growth, funds around 30% of dividends, giving managers Laura Foll and James Henderson the freedom to invest in lower- or non-yielding stocks with greater total return potential. Five of the top 10 three-year return contributors were non-yielding at the point of purchase, including Rolls-Royce and Marks & Spencer. With UK valuations remaining moderate by historical standards and a high level of takeover activity underscoring the opportunity, Edison’s view is that LWDB's investment case remains compelling.
On the road
Rockwood Strategic will host a webinar on 14 April, followed by The Diverse Income Trust roadshow, which stops in London and Edinburgh on 15 April, and concludes in Dublin on 16 April. The HBM Healthcare roadshow is visiting Dublin (28–29 April), and there is a Baker Steel Resources webinar on 6 May. Looking further ahead, the Vietnam Holdings roadshow takes place in Dublin on 12 June and Zurich on 22 June.
Two key industry dates for the diary: the Edison Growth Conference is on 12 May, followed by the AIC dinner on 14 May.
