Keystone Positive Change, an investment trust managed by Baillie Gifford, has urged its shareholders to oppose a bid by US hedge fund Saba Capital Management to oust several of its board directors and install their own nominees, according to a report by Reuters.

Saba, led by prominent investor Boaz Weinstein, announced plans last month to push for board changes across seven UK investment trusts, citing what it described as performance issues ranging from "underwhelming" to "disastrous."

In a statement issued on Monday, Keystone Positive Change warned that Saba’s proposals, if approved, would grant the activist hedge fund effective control of the trust.

"We are appalled by Saba's actions and conduct. We believe its proposed resolutions would be highly detrimental to the interests of all other shareholders," the trust said.

Keystone also revealed it had engaged with investors to explore alternative options, including allowing shareholders an uncapped cash exit or transferring to a more liquid fund.

Saba, which has made similar attempts to overhaul the boards of other funds, including some managed by BlackRock, in the United States, on Tuesday issued a statement of its own in response to KPC's claims, saying: "It is appalling that KPC Chair Karen Brade has overseen cumulative underperformance of nearly 130% since assuming her role in 2018 – a staggering loss and destruction of wealth for retail holders and retirees. Contrary to KPC’s fearmongering tactics, Saba has an award-winning track record in closed-end activism that has provided liquidity, low fees and better management to deliver long-term value for all shareholders."