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A Measured Approach to Merger-Arbitrage

Arbitrage Fund's well-managed strategy and low fees make it a standout among merger-focused peers.


Josh Charlson: Bronze-rated Arbitrage Fund is in Morningstar's market neutral category, and it pursues a merger-arbitrage strategy. Merger-arb funds take advantage of what's known as the spread, where the difference in an announced merger deal between the price announced at acquisition and the price at the close. And usually, merger-arb managers will invest long in the acquiree and at times short the acquirer to hedge the risk.

One of the things we really like about Arbitrage Fund is the expertise and tenure of the management team. Manager John Orrico founded Water Island Capital in 2000 and his two co-portfolio managers joined the firm in 2003, so they have a lot of experience.

Josh Charlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.