Mergers and Acquisitions ETF Crosses $1B in Assets

Software dominated mergers and acquisitions activity during the first quarter of 2019, according to a Jegi-Clarity Q1 2019 M&A report. This could be translating into strength for the IQ Merger Arbitrage ETF (NYSEArca: MNA), which recently surpassed $1 billion in assets under management (AUM).

Last year, mergers and acquisitions were abound in various sectors as the historic bull market saw a rise in such activity, particularly from the technology sector that fueled much of the growth. Notable activity came from the likes of tech giants, such as Hewlett-Packard Enterprise, Cisco Systems, Accenture, Cisco Systems, AT&T, and Sprint.

However, mergers and acquisitions have been seen across a variety of sectors like biotech and big pharma, which has helped MNA. MNA seeks investment results that correspond generally to the price and yield performance of its underlying index, the IQ Merger Arbitrage Index, which seeks to employ a systematic investment process designed to identify opportunities in companies whose equity securities trade in developed markets, including the U.S., and which are involved in announced mergers, acquisitions and other buyout-related transactions.

It’s a strategy that has helped MNA stand the test of time since its inception 10 years ago.

“When we launched MNA nearly a decade ago, we knew we were breaking new ground for ETF investors. To that point, there were no low cost, liquid, transparent means through which to add merger arbitrage exposure to a portfolio. That meant investors were missing the opportunity to add the risk mitigation and volatility dampening aspects that merger arb can provide,” said Sal Bruno, chief investment officer of IndexIQ.

“Merger arbitrage strategies have historically generated relatively stable returns, and global M&A activity remains robust. With global growth, Brexit and trade driving volatility into the markets, and in an uncertain interest rate environment, investors are looking for solutions to help them maintain market exposure while still managing downside participation.”

MNA joins IQ Hedge Multi-Strategy Tracker ETF (NYSEArca: QAI), another IndexIQ ETF, as only the second liquid alternative ETF in the industry to have passed the $1 billion threshold.

“IndexIQ was founded with the belief that investment management needed to be democratized, allowing investors and advisors of all types to access institutional-quality strategies,” added Jon Zimmerman, chief operating officer of IndexIQ. “It was a radical idea at the time, but we’re proud of the response that our family of ETFs has generated over the past 10 years, and we’re just as excited to continue to bring innovative new approaches to the marketplace.”

MNA has recently been awarded the 2019 Mutual Fund and ETF Industry Award for the “Best Alternative ETF of the Year.”

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