Linus Uhlig, Investment Week, 02 May 2025:
The first-of-its kind proposed rollover of an investment company into an actively managed UCITS ETF shows that Saba’s push for liquidity is beginning to bear fruit, according to analysts.
Today (2 May), Middlefield Canadian Income (MCT) said it intends to propose an option to offer liquidity to shareholders, making it the second investment trust of the nine targeted by US hedge fund Saba Capital to propose some form of solution.
Middlefield’s changes would see the trust wound up and rolled over into an actively managed ETF, marking a first for the UK-listed investment company sector.
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“While we have seen traditional rollovers into open-ended funds or passive ETFs before, a move into an actively managed ETF structure is uncharted territory,” said Matthew Read, senior research analyst at QuotedData..
Read questioned the benefit of accessing and offering liquidity, noting “a realigned portfolio that is suitable for an ETF would not be able to hold the less liquid and potentially more profitable holdings that a closed end fund can”.
Similarly, he argued that the new vehicle will lose out on “other benefits such as having an independent board to hold the manager to account, gearing the portfolio and having the flexibility to maintain a revenue reserve to smooth income”.
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