Saba Capital and HANetf launch active ETF targeting UK investment trust discounts

New actively managed fund selects trusts trading below net asset value, seeking to benefit from corporate actions and market inefficiencies

The fund began trading today on the London Stock Exchange and Borsa Italiana under the ticker UKIT, and on Deutsche Börse Xetra under the ticker UK1T. It carries a total expense ratio of 1.5 per cent and will accumulate income rather than distributing it .

Strategy targets discount narrowing

The ETF seeks capital appreciation by building a portfolio of investment trusts that trade at what Saba considers attractive discounts to NAV. The manager applies a combination of fundamental analysis, quantitative methods and proprietary screening tools to select holdings, evaluating factors including discount levels, peer valuation, liquidity, shareholder structure and fund size .

Saba may invest in trusts where active shareholder engagement could lead to corporate actions such as share buybacks, tender offers or restructurings – events that historically have helped narrow discounts over time.

The fund provides exposure to trusts whose underlying holdings span multiple asset classes: public and private equities, government and corporate bonds (both fixed and floating rate), private equity, venture capital, real estate investment trusts, and cash equivalents including bank deposits and commercial paper .

According to Saba, UK investment trusts are currently trading at an average discount of 12.5 per cent to NAV, based on Association of Investment Companies data from year-end 2025. The firm attributes the widening of discounts to higher interest rates and reduced retail investor demand .

The ETF is expected to hold an initial portfolio of 40 to 60 trusts domiciled in the UK, Guernsey and Jersey. Across these three jurisdictions, investment trusts represent an estimated £15 billion in aggregate discounts, based on Bloomberg data .

Portfolio managers and track record

The fund is managed by Boaz Weinstein, Saba’s founder and chief investment officer, and Paul Kazarian, partner and portfolio manager. Both have managed a similar US-focused closed-end fund ETF since its 2017 inception, giving the team a nine-year track record in the ETF structure .

Saba has invested in investment trusts and closed-end funds for more than a decade and describes itself as one of the world’s largest investors in the sector .

Active ETF momentum

The launch adds to HANetf’s growing roster of active strategies. The platform now hosts more than 20 active ETFs, reflecting broader market trends in European asset management.

European active ETF assets grew 86 per cent in 2025, following 68 per cent growth in 2024, according to industry data . The segment reached $95.9 billion in assets under management by the end of 2025, up from $48.9 billion a year earlier, with net new assets of $32.2 billion flowing into active strategies during the year.

Hector McNeil, co-founder and co-CEO of HANetf, said: “We are delighted to be partnering with Saba to launch the Saba Capital Investment Trusts UCITS ETF. Saba brings deep expertise in the investment trust and closed-end fund universe, with a long track record of identifying opportunities created by discounts to net asset value and corporate actions within the sector.

“Active ETFs are one of the fastest-growing segments of the European ETF market, with assets expanding by a record 86% last year following 68% growth in 2024. With more than 20 active ETFs now on the HANetf platform, this launch reflects the continued momentum behind actively managed strategies in the ETF wrapper and the growing demand from investors for specialist expertise delivered in an efficient format.”

Market context

The UK investment trust sector has seen increased focus on discount levels in recent months, with several trusts facing shareholder pressure to address wide discounts through corporate action. Saba itself has been involved in engagements with UK trusts, including a recent proposal from Impax Environmental Markets PLC for a tender offer following the firm’s involvement as a significant shareholder .

The structure of investment trusts as closed-end funds means their share prices can diverge from the underlying value of their assets, creating persistent discounts that have characterised the sector for decades. Saba’s approach seeks to benefit from the narrowing of those discounts rather than from the performance of the underlying assets themselves.