ASA's Discount to NAV

ASA’s discount had been narrowing after years of weak performance before Merk started managing ASA in 2019. Merk delivered strong returns and helped restore investor confidence. That trend reversed sharply early this year after Saba disclosed plans to repurpose ASA away from its precious metals strategy.

Rather than narrowing the discount, Saba’s restructuring campaign has increased uncertainty around ASA’s future, creates substantial and unnecessary tax consequences for shareholders, and may significantly delay any eventual tender offer or liquidity event.

The discount narrowed despite significant uncertainty, including elevated expenses, turnover among corporate officers, and changes in key service providers in recent years.

An institutional shareholder holding approximately 12% of the Fund’s outstanding shares exited its position during the summer of 2025 amid developments at the Board level. Additional shareholders reduced or exited positions during this period of corporate uncertainty. This occurred during a period of governance disruption, not investment underperformance.

The sustained narrowing of the discount over this period indicates that Merk’s initiatives had a measurable and consistent impact.

Most recently, the ASA's Board received a proposal from Saba that proposes a liquidation of the portfolio and a restructuring of the Fund. Following the January 23, 2026, Schedule 13D filing, which outlined a potential shift away from ASA’s investment strategy, the discount widened to an average of 13.12% through May 31, 2026:

How the Discount Works—and Why It Matters

To assess recent developments, it is important to understand how ASA’s discount arises and how it has behaved over time.

 ASA’s strategy justifies its closed-end structure—one that typically trades at a discount—by delivering strong long-term returns and access to investments not well suited for open-end funds.

• Only open-end vehicles can consistently trade at NAV. 
• As open-end exchange traded products have a mechanism that fosters trading at or near NAV, the question becomes what the purpose of a closed-end fund is. Not only do closed-end funds not trade at NAV, they tend to have larger overhead than open-end funds because there are no multi-series umbrella type structures that provide cost efficiencies. In my assessment, a closed-end fund makes sense if it provides something that is not suitable for an open-end product, yet for which there is value to have it exchange traded for potential liquidity.
• This spirit is incorporated in ASA's current investment process, providing investors access to an investment process that is well suited for a closed-end structure. This includes investing in smaller companies that are ill-suited for an exchange traded open-end product, yet may provide compelling sources of potential performance or a specific type of diversification and exposure. A side effect of investing in less liquid companies is that economic considerations suggest that a discount may arise when less liquid companies are accessible in a liquid wrapper. Such discount can be mitigated through a variety of measures; achieving long-term superior returns with this approach more than compensates investors for the discount, as evidenced by Merk’s performance in the Fund’s management. If coupled with carefully designed, periodic tender offers, these considerations may be balanced, providing the best of both worlds.
• Moving to more liquid securities may be appropriate during certain market environments based on the investment process but introduces the risk that the Fund looks more like an open-end product. If ASA’s strategy were shifted to fixed income, it raises the question whether the same strategy could be implemented in a lower-cost open-end structure.
• Unique to ASA is its status as a passive foreign investment company; amongst others, it adds additional overhead. The additional overhead is minor, as evidenced by the low expense ratio when excluding extraordinary expenses. In a fixed income strategy, however, every basis point counts, and having overhead, even if only legacy overhead, may not be in the best interest of shareholders.

Saba’s Undisclosed Conflict

Neither Saba nor Paul Kazarian, a Saba partner and ASA director, has disclosed in Saba’s Schedule 13D or proxy filings that Saba hedges its precious metals exposure in ASA, even though Saba’s 13F filings reflect hedging activity. That omission is material. Saba is seeking to dismantle ASA’s precious metals mandate while failing to disclose that it does not share the same economic interest as shareholders who invested in ASA for that mandate.

Path Forward

ASA’s discount narrowed through disciplined management and shareholder-focused initiatives—and widened after Saba disclosed its intentions.

Once governance is restored, ASA can re-emphasize the approach that has already delivered results:

• Reaffirm ASA’s precious metals strategy that has driven strong performance
  
• Provide a structured exit for shareholders seeking liquidity
• Strengthen ASA’s investor base through renewed outreach and market engagement

Charts on this page as of May 31, 2026. Source: Bloomberg