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New ETNs Offer Exposure to M&A, 2x Inverse Treasuries

Van Eck files for two foreign bond ETFs, and the best- and worst-performing ETFs from last week.

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Large investment banks' interest in offering investors new exchange-traded notes continues unabated, with three new ETNs launched last week that provide exposure to merger and acquisition arbitrage and also to double inverse 10-year and long bond Treasury futures.

With M&A activity heating up, Credit Suisse's new ETN hopes to capitalize on arbitrage opportunities that exist in the markets once deals are announced. The note hopes to take advantage of the spread between the deal price for an acquisition target and that target's (usually discounted) stock price in advance of the deal's closing, which usually reflects uncertainty that the deal actually will close. The uncertainty typically is the result of investor fears that the deal may fall apart for any one of a variety of reasons, including regulator actions, shareholders rejecting the deal, or even financing drying up.

Robert Goldsborough does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.