The managers of the £16 billion Scottish Mortgage Investment Trust provided much food for thought when they presented its annual results last week.

This was hardly a surprise, given the Baillie Gifford-run trust’s sizeable holding in Elon Musk’s SpaceX and its exposure to companies at the forefront of the artificial intelligence revolution.

However, what was particularly eye-catching at a time when the investment trust sector has been rocked by bids to oust boards and other dramatic action from US hedge fund manager Boaz Weinstein’s Saba Capital Management was what Scottish Mortgage’s managers had to say about the value of these vehicles.

Saba ousted the entire board of the Baillie Gifford-run Edinburgh Worldwide Investment Trust on April 30, replacing it with three US-based individuals it had nominated. This was the US hedge fund's third attempt to oust Edinburgh Worldwide’s board, after Saba was overwhelmingly opposed by other shareholders in the trust and defeated in crunch votes on Valentine’s Day 2025 and January 20 this year. Saba had a stake of about 30% in Edinburgh Worldwide at the time of its third attempt.

The targeting by Saba of a raft of investment trusts has understandably caused concern among players in the sector and more broadly, given the value of investment trusts as long-term savings vehicles.

Amid the Edinburgh Worldwide saga, in the run-up to the second vote on January 20 forced by Saba, former UK pensions minister Ros Altmann said: “Allowing a determined hedge fund to keep returning to the register until fatigue or low turnout hands it victory is not healthy shareholder democracy.”

She flagged the long-term nature of investment trusts, declaring they were “ideal investments for pension funds”.

Baroness Altmann declared: “UK investment trusts are one of the strengths of our financial system, channelling patient capital into innovative, long-term assets which open-ended funds often struggle to hold. But this model depends on boards acting for all shareholders, not just an aggressive minority with a short time horizon.”

Baillie Gifford partner Tom........

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