Bird, head of investment trust research, warned voter fatigue among retail shareholders could hand the activist’s seats on the board it failed to gain 19 months ago following a 78% turnout at the fund’s AGM in February 2025.

It comes as the Edinburgh-based trust received a requisition notice in August from Saba Capital Management which wants shareholders to back the appointment of three directors, Jason Chen, Thomas H McGlade, and James Waterlow.

Saba wants a vote at the forthcoming annual general meeting. The board of Baillie Gifford US Growth Trust has advised shareholders to take no action at this time and await further company announcements.

Chen was among four Saba nominees elected to the board of Impax Environmental Markets (IEM), a separate trust, when Saba won control in June 2026. McGlade, a hedge fund executive, has previously been nominated by Saba in its campaigns against US closed-end funds, including those of BlackRock. Waterlow, a former partner at broker Singer Capital Markets, joined Saba in February as its UK managing director.

She told Scottish Financial News: “The ‘independence’ of investment trust directors refers to being independent of the investment manager. As such, if James Waterlow and Jason Chen are appointed as directors of USA, they would be independent of the incumbent fund manager, Baillie Gifford.

“However, if Saba were to be appointed manager, James Waterlow would certainly not be considered independent. In addition, under the FCA’s proposals, Jason Chen would not be considered independent as a director who has been appointed following nomination by Saba. 

“Even if Saba is not appointed manager, there may be governance concerns beyond traditional ‘independence’ as a result of the board having close connections with such a substantial shareholder.”

Bird believes the activist investor’s ultimate goal is to put itself forward as manager following the “appointment of its nominees as Directors (if successful) and change the fund’s investment policy to one of investing in UK closed-ended funds.”

She explained her “suspicion” is partly based on conversations and the fact Saba previously stated its intention to do this with stablemate, Edinburgh Worldwide Investment Trust (EWI).

The analyst suggested the UK could soon see a situation where Saba is appointed manager of a UK investment trust, noting its nominated directors have already replaced the boards at IEM and EWI, with IEM’s new board having served notice of termination to the incumbent manager, and that a similar outcome could unfold at USA.

Bird added: “However, whether Saba can or will be appointed manager at these investment trusts will also depend on the outcome of the FCA consultation, which was triggered by the industry’s concerns over Saba’s numerous apparent attempts to change boards to get itself appointed as manager.” 

The FCA made proposals to strengthen rules on the independence of boards and the conflict of interest where a large shareholder is also a fund manager, which saw a seven-week consultation period launched.

The US hedge fund claimed that the trust has underperformed the S&P 500 by 88.4% on a share-price basis and 79.1% on a net asset value basis over a five-year period, as it urged its nominees to provide shareholders with a 100% cash exit.

Bird confirmed Saba’s data at the date of the press release aligned with Winterflood’s research, adding: “We have some sympathy with the fact that the last five years has been an extremely challenging time for Baillie Gifford’s long-term, high-growth investment approach, with the rising or higher for longer interest rate environment proving a material headwind to the strategy.

“In addition, in recent years, the S&P 500 index has been notoriously difficult to outperform as an active manager, because of its increasing concentration in a small number of stocks and the dominance of momentum effects.

“However, a five-year track record is a common timeframe used to assess fund performance and the extent of USA’s underperformance would likely raise concerns for a range of investors.

“Having said that, we note that Saba did not recognise USA’s more recent strong performance (NAV TR +22% and +89% vs S&P 500 +19% and +68% over 1 and 3 years, respectively to 23 August 2026), albeit this has been materially boosted by the valuation increase and ultimate IPO of its largest holding, SpaceX.”

Saba Capital’s requisition proposal to appoint three nominated directors as ordinary resolutions means “they would only require 50% of shares voting at the AGM (NOT 50% of all share capital) to be in favour for them to pass.”

Bird explained: “As such, we think there is a reasonable chance that the resolutions will pass, further supported by: the high ownership by Saba itself (29%); the high proportion of retail shareholders, who tend to be less actively engaged in the voting process; and a potential element of voting fatigue following numerous requisitioned votes in the investment trust sector in recent years.

“We would not be surprised to see a notably lower overall voter turnout at this AGM, given that only USA is being requisitioned on this occasion so there is no industry-wide campaign, combined with the fact that the sector has seen numerous requisitions of this kind over the last two years, leading to an element of voter fatigue amongst retail investors, which make up a significant proportion of USA’s share register. A lower voter turnout increases Saba’s chances of success as it is only votes cast at the AGM that matter, not total share capital.”

Saba Capital declined to comment.