Hedge funds are pouncing on the UK’s £200bn investment trust sector as it is shunned by investors and hit by competition from cheaper rivals.
Investment trusts, a cornerstone of UK equity markets with roots stretching back more than a century, have seen a gap open up between their share prices and the value of the assets they hold while they battle the worst year for raising capital in a decade.
The discount, which stands at an industry average of 9 per cent to net asset value, has put some investment trusts on the brink of being wound up or targeted by hedge funds including Paul Singer’s Elliott Management and Boaz Weinstein’s Saba Capital.
Their troubles have weighed down the broader UK equity market. The FTSE 100 is closing in on its February 2023 record, in contrast with US and European indices that have hit a succession of all-time highs this year.
“Investment trusts used to be a uniquely British success story and a…
