Kelly Ye, Director of Research at IndexIQ, argued that investors can isolate equity returns from broad market influences through something like the Index IQ Merger Arbitrage ETF (NYSEArca: MNA). The underlying IQ Hedge Merger Arbitrage Index has exhibited a correlation of 0.35 to the S&P 500 and a 0.05 to the Bloomberg Barclays U.S. Aggregate Bond Index.
“IndexIQ’s MNA is a liquid solution, designed to diversify your portfolio by seeking to provide downside mitigation in volatile markets and upside potential when markets recover,” Petersen added.
Furthermore, through the ETF wrapper, investors can gain exposure to the even-driven, merger arbitrage strategy that has traditionally been associated with mutual funds or hedge funds. Something like MNA would provide the tax efficiency and low probability of capital gain distribution that many have enjoyed in an ETF.
Financial advisors who are interested in learning more about the merger and acquisition arbitrage strategy can watch the webcast here on demand.