Janus Henderson's chief executive has criticized the US hedge fund's bid to take over management of seven UK investment trusts as "very aggressive".
Ali Dibadj, head of the $382 billion asset manager, said Boaz Weinstein’s Saba Capital was stepping in to try to run the trusts Funds to "take advantage of management fees".
Saba Capital has taken stakes in seven trusts, two of which are managed by Janus Henderson, and is seeking shareholder approval to overhaul the board and appoint its own candidates.
“If you haven’t seen what is happening in the UK investment trust world today, please pay attention on behalf of your clients,” Dibagi told professional investors at the Janus Henderson UK Investment Conference in London on Wednesday.
“You have a puny little but very aggressive . . . hedge fund stepping in and deciding to bet on you and your clients not voting and taking over these funds to take advantage of management fees.
"They are betting on complacency. Please don't get complacent and don't let them take over." He added that the entire £266 billion UK investment trust industry was effectively "under attack".
Saba Capital said: “The board members of all these trusts are part of this ecosystem... What’s the use of charging pensioners fees? They should be working for you (shareholders) while they themselves are sitting on Other trust funds trade at similar discounts.
"We are here to restore these broken trusts... a broken industry that cannot grow."
Saba added that it is one of the world's largest backers of investment trusts and similar products, with $6.6 billion invested.
Dibaji's comments come as Saba's campaign faces strong opposition. The trusts, which are also managed by Baillie Gifford, Herald Investment Management and Manulife, have raised concerns about Saba's plans to put his own candidates on the board.
ShareSoc, the individual investor industry body, also said on Wednesday it was "strongly opposed" to Saba's proposal. ShareSoc director Mark Northway said the activist's plan "envisions a lack of independent governance and an incestuous and self-serving misappropriation of the trust's investment mandate."
Saba focused on the performance of the seven trusts and the fact that their share prices lagged behind the value of their assets.
Its target trusts include: Baillie Gifford US Growth, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment, European Smaller Companies, Henderson Opportunities, Herald Investment and Keystone Positive Change. The hedge fund holds between 19% and 29% of each trust, worth a total of £1.5bn.
The UK investment trust industry has been under pressure from rising interest rates, regulation and a focus on fees, prompting some investors to exit.
"Now is the time to put up roadblocks against nasty opportunistic attacks, while also doing some industry self-reflection," said Investec analyst Alan Brierley.