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This merger arbitrage fund's assets are below the level they were when the fund first closed. Assets are down to $1.25 billion, from a high of $1.88 billion. Thus, the managers think that they have sufficient capacity to further grow the fund. And moreover, they expect to see deal-making expand in the year ahead as companies that have enjoyed strong earnings start to use some of their cash to make acquisitions.
In the quarterly letter, Frederick Green, president of the fund, states, "Arbitrage spreads have become more favorable, even for 'plain-vanilla' transactions. Another positive development for our business is the increasing frequency of strategic overbids, in which corporate buyers aggressively target companies that have already agreed to be acquired by other firms. Such situations can result in 'windfall' profits for arbs."
The fund is one of the few market-neutral funds that has actually delivered fairly dependable returns in the high single digits.
New American Beacon Small Value Fund
American Beacon Advisors is launching a new fund, Small Cap Value Opportunity Fund.
The only subadvisor listed at this time is PanAgora Asset Management. PanAgora's team consists of Brian Bruce, Richard Wilk, John Griffin, and George Mussalli. PanAgora (a company owned by Putnam Investments and minority owned by Nippon Life Insurance) subadvises two other funds in our database, Preferred Asset Allocation