A merger arbitrage investment strategy may help investors garner more consistent returns and possibly deliver a smoother ride, serving as an important capital preservation tool and providing drawdown protection in times of volatile market conditions.
Along with its drawdown protection potential, a merger arbitrage strategy can also improve the risk-to-return profile of a traditional investment portfolio since the drivers of return for this type of strategy are isolated from broad market moves.
Consequently, since the strategy is not expected to be highly correlated to other asset classes over time, investors may find a stable platform in stormy weathers if U.S. markets suddenly correct, which is more likely to happen in an extended bull market condition.
For more information on alternative strategies, visit our alternatives category.