The IQ ARB Merger Arbitrage ETF (NYSEArca: MNA) launched this week, and gives investors another way to play the anticipated increase in merger and acquisition activity in the coming year.
The latest ETF from Index IQ is another passageway for investors to take an alternative route to diversification within their portfolios. The ETF MNA is designed to give investors exposure to global corporate merger & acquisition activity, which is rapidly increasing. (More ways to play mergers and acquisitions).
Index IQ CEO Adam Patti says that, “It’s pretty well recognized that M&A activity has increased significantly this year and is expected to continue pretty rapidly.” He notes that a lot of non-financial companies have a lot of cash on their books. That, combined with a low-interest rate environment, could spark even more activity.
“Depending on what sector you’re looking at,” Patti says, “there are a lot of bargains out there.”
MNA seeks to provide capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer, a strategy generally known as “merger arbitrage.” This strategy generally seeks to take advantage of any price differential between the current trading price of a stock and the price of that stock at the time the deal is completed.
The product will rebalance monthly, and it’s a 100% rules-based ETF.
For more stories about New ETFs, visit our New ETFs category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.