Tom Burnet

Burnet has been calling on retail investors to vote on the future of the £1.1bn trust after activist investor Saba Capital Management requisitioned the board in a third attempt to replace the existing directors with its own nominees at the trust’s AGM on 23 October.

As first reported by Scottish Financial News, questions have been raised over whether existing company law is equipped to deal with repeated activist campaigns targeting investment trusts.

And now, Burnet called on the Government to take action, arguing that investment trusts are being targeted in ways that “existing rules were not designed to handle”.

The chair wrote in a letter to the UK Government that the threat facing Baillie Gifford US Growth extended beyond the individual trust and raised wider questions about the UK’s investment trust framework.

He argued that the structure of shareholder voting could leave investment trusts vulnerable because resolutions are decided by a simple majority of votes cast, while private investors hold more than half of Baillie Gifford US Growth’s shares and turnout among those investors can be variable.

Saba recently increased its stake to around 29.9%, just below the threshold at which it would be obliged to make a takeover offer for the trust..

Fellow New York hedge fund Sessa Capital has also increased its stake in Baillie Gifford US Growth to 7.7% ahead of the vote.

Sessa has not disclosed how it intends to vote. Burnet claimed in his letter that the hedge fund had refused to engage with the board.

Baillie Gifford US Growth is preparing to fight a requisition notice filed by Saba in August, which calls for shareholders to appoint three Saba-nominated directors,  Jason Chen, Thomas H McGlade and James Waterlow, to the board.

The trust has said the appointment of the three nominees, who it described as being “linked with or employed by Saba”, would “severely compromise” the board’s independence.

During the financial year to 31 May 2026, the trust’s share price and net asset value returned 44.5% and 31% respectively, exceeding the 29.8% total return of its benchmark, the S&P 500.

Burnet also raised concerns about the way retail investors are notified of votes and the deadlines imposed by investment platforms.

“Platform deadlines for our AGM fall as early as 14 October – more than a week before the meeting,” he said. “Some wealth managers do not routinely tell their execution-only clients that a vote is taking place at all.”

He warned that this could allow “a determined minority shareholder” to take control of a company that the majority of its other shareholders wanted to retain.

Burnet said the issue “goes well beyond Baillie Gifford US Growth Trust” and threatened the wider UK investment trust sector and public equity markets.
The chair also questioned Saba’s proposal to offer shareholders a full cash exit at or near NAV if its nominees are elected.

He argued that the trust did not have sufficient legal reserves to fund such an exit and that Saba had not explained who would meet the costs.
Saba has also claimed to have generated more than £600m for shareholders across the investment trusts it has targeted.

Burnet said that, regardless of the merits of the claim, neither it nor Saba’s proposed cash exit had been subject to the same scrutiny as statements made by a company board.

The most significant policy proposal in Burnet’s letter was a call for the Government to consider whether activist shareholders seeking to replace boards or influence shareholder votes should be subject to the same standards as company directors.

“We would ask the Government to consider whether shareholders seeking to requisition meetings or replace a board, or otherwise influence or persuade shareholders to vote in a particular manner or to take or oppose any particular action, should be held to the same standards as the company’s directors,” he wrote.

“Investors deciding how to vote should be able to rely on the information and representations put forward by both sides.”

Burnet said the issue applied across UK-listed companies and not just investment trusts. He warned that without action, more investment trusts could become targets for similar strategies, with ordinary savers ultimately bearing the cost.