Activity in the merger and acquisition space is getting hot and heavy. That makes a new exchange traded note (ETN) from Credit Suisse especially timely.
The Credit Suisse Merger Arbitrage Liquid Index (NYSEArca: CSMA) seeks to capture the spread between two prices: the price of a stock of the target company after an acquisition is announced and the price the acquiring company has proposed to pay to buy the target. [Another ETF for the M&A Pickup.]
Potential gains in the fund are realized after deals are completed. If a deal doesn’t go through, it could potentially mean losses in the fund.
The fund’s underlying index uses a quantitative methodology to track a basket of securities that are held as either long or short positions. The expense ratio is 0.55%.
Corporations are sitting on trillions of dollars right now, which is doing nothing in this low-interest rate environment. Eventually that cash will need to be deployed, and part of it may lead to a continued uptick in mergers and acquisitions. [ETF Solution to the Corporate Cash Problem.]
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.