It’s crunch time for UK investment trusts. Already dealing with issues around disclosure on charges, the intervention of US hedge fund Saba just before Christmas, leveraging its large stakes in several trusts, is also shaking the foundations of the industry.

We plan to look at this story in lots of detail in next week’s magazine, along with a broad view of trusts after a period when the universe has shrunk materially. This shrinkage has resulted from a series of mergers and several names being wound up amid a lack of investor interest and persistent discounts to net asset value.

A series of meetings requisitioned by Saba and aimed at shaking up the trusts in its crosshairs are now looming large, so it is the perfect time to take an in-depth look at the space.

Investment trusts may be in a ‘tough moment’, to borrow from football parlance, but some of them have been around since the 19th century and this longevity suggests they are likely to remain relevant for investors well into the future.  

There are certainly plenty of trusts we at Shares really like. You can read about four of them as Steven Frazer, James Crux, Martin Gamble and Ian Conway reveal their top fund and trust picks for 2025. One of them, Ian Conway’s selection Edinburgh Worldwide (EWI), is actually caught up in the Saba-related drama,

Also, this week we have the second part of our exercise canvassing the opinions of the UK’s top fund managers. This time hopes and fears for 2025 are up for discussion for Terry Smith and co.

The start of the year is often dominated by bargain hunting as shoppers hit the January sales, hoping to pick up discount purchases as retailers slash prices to clear excess Christmas stock.

It seems a similar dynamic might be at play in the stock market. At the time of writing, four of the top five worst performing FTSE 350 stocks of 2024 were beating the wider UK market in 2025 and all of them were in positive territory (see table).

While investing in stocks which have been heavily sold off can be a successful strategy, it is also one which is fraught with risk.

You need to have a really clear picture of why the shares have been so weak, whether the issues a company is facing are fixable and what catalysts there might be to shift market sentiment.

Unless these points are properly addressed then the danger is you simply end up in a ‘value trap’ – a situation where a seemingly attractive valuation remains depressed indefinitely.

I may well repeat this exercise at the end of the year to see if the momentum shown at the outset of 2025 ends up being maintained.

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