Updated 3 February

Shareholders in five of the seven investment trusts under attack from New York hedge fund Saba Capital this week vote on its call for their boards to be sacked and replaced with new directors.

US Growth and Keystone Positive Change – managed by Edinburgh-based Baillie Gifford – hold meetings on Monday, followed by Henderson Opportunities, and CQS Natural Resources Growth & Income on Tuesday and European Smaller Companies on Thursday.

Investors in Herald Investment Trust have already overwhelmingly rejected the proposal. European Worldwide, also managed by Baillie Gifford holds a meeting on 14 February.

The board of USGT said in a circular to shareholders that it is “very concerned about the future of your company and the potential value destruction for long-term investors if the proposals put forward by US hedge fund manager, Saba, are voted through.”

Urging shareholders to cast their vote, it adds that “Saba is counting on you not voting your shares to give them the best chance of taking effective control of your company. Accordingly, it is very important that you vote on the requisitioned resolutions as the future of your investment depends on it.”

Tom Slater, manager of Scottish Mortgage Investment Trust, which is not among those targeted, told a forum of investment professionals in Edinburgh last month that he was a shareholder in three of the Baillie Gifford trusts under attack and he was satisfied with the returns he had received.

Defensive campaigns are being waged by the other trusts. Edinburgh Worldwide has published the voting recommendations from independent voting advisers Glass Lewis, ISS and PIRC, in relation to the meeting next week.

Jonathan Simpson-Dent, chair of Edinburgh Worldwide Investment Trust, said: “I’m encouraged that the independent voting advisers, which many institutional investors widely rely upon, have all highlighted serious concerns about Saba’s plans to replace an independent and expert board with one which we firmly believe is conflicted from the outset and not fully aligned to your interests.

“The board of Edinburgh Worldwide acknowledges a clean sweep, with shareholders at all 7 trusts under attack receiving independent voting advice unequivocally opposing Saba’s proposals.

“The message could not be clearer: reject Saba’s overt land grab, vote against its resolutions and vote to back the board.”

Saba insists that the trusts are underperforming. “We are here to not just buy your trusts, we are here to buy billions more and rehabilitate this broken set of trusts and what is – in some ways – a broken industry that hasn’t been able to grow,” it said.

See outcome of today’s votes here

Diageo

The world’s biggest drinks company recently had to deny a report that it was interested in selling its Guinness business and 34% stake in Moet Hennessy, but this is likely to come up again when the company reports first half results on Tuesday.

CEO Debra Crew is under pressure to revive flagging parts of the business and boost its shares which languish at a five-year low.

Disappointing results for the fiscal year to June 2024 and a profit warning for fiscal 2025, thanks in part to problems at the Latin American operation, have weighed heavily on the stock.

AstraZeneca

AstraZeneca which reports full-year results on Thursday is bound to be questioned about its decision to withdraw a planned £450 million investment on Merseyside.

The pharmaceutical giant announced its decision just two days after Chancellor Rachel Reeves set out her plan to go “further and faster” to boost economic growth.

AstraZeneca said that after “protracted” talks, a number of factors influenced the move, including “the timing and reduction of the final offer compared to the previous government’s proposal”.

The Treasury said a change to the “make-up of the investment” that had originally been proposed led to the government grant being reduced.

Interest rates

Conditions point to the Bank of England trimming interest rates on Thursday. A quarter point cut to 4.5% from 4.75% has been priced in by the markets.

Economic signals have been weak and services inflation has fallen back substantially since the last meeting in December, at which point three members of the Bank’s Monetary Policy Committee voted for a cut to 4.5%.

Investment platform AJ Bell says: “The market is currently pricing in a 90% chance of a rate cut on 6 February and that feels about right. There’s the possibility of a surprise, but a small one.”

However, it notes that “the latest wage growth reading was a hot one, which will give the Bank some pause for thought before it cuts rates.”

It adds: “There is a significant divergence of views on how many rate cuts we’re going to get from the Bank of England this year. Morgan Stanley reckons five, Goldman Sachs reckons four, and the market is pricing in two to three.”

DIARY

Monday 3 February

• General meetings of US Growth Trust, Keystone Positive Change Trust
• Purchasing managers’ indices (PMIs) for manufacturing
• EU inflation

Tuesday 4 February

• Full-year results from Crest Nicholson
• First half resuls from Diageo
• General meetings of Henderson Opportunities, CQS Natural Resources Growth & Income 
• Trading updates from  Entain and Vodafone
• Kantar supermarket figures

Wednesday 5 February

• Full-year results from Banco Santander, GSK, Pressure Technologies
• Trading update from SSE
• General meeting of European Smaller Companies Trust 
• Purchasing managers’ indices (PMIs) for services 

Thursday 6 February

• Full-year results from AstraZeneca
• Trading updates from Compass, Anglo American and Watches of Switzerland
• Bank of England interest rate decision
• Purchasing manager’s index (PMI) for the UK construction industry

Friday 7 February

• Halifax UK house price index
• US non-farm payrolls, wage growth and unemployment rate