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Merger




Merger Fund company is a mutual fund company and it manages to do so well because it does the work differently. It captures small premiums in corporate takeovers. There is no market index that tracks such things, so the fund has nothing to compare itself with except its own modest goals. Deals can take months to close, and they can unravel. Those risks are reflected in the target company’s share price, and Merger Fund deals only in those risks.
 
The fund typically holds positions in about 40 pending deals, to achieve broad diversification across sectors and to minimize the risk of any one deal going south. The average takeover slogs along for three months to four months. 
 
Merger Fund seeks capital growth by engaging in merger arbitrage. The fund normally invests at least 65 percent of assets in the equities of companies that are the object of a publicly announced acquisition or other reorganization proposals. Depending on the level of merger activity and other economic and market conditions, it may temporarily invest a portion of assets in cash or cash equivalents. This fund is non-diversified.
 
Historically, the fund has delivered on its promises. Over the three years ended Dec. 31, its annualized returns were 12.1 percent. Over the last 10 years, they were 10.7 percent.But while Merger Fund avoids stock-market risk, it is vulnerable on two scores. Deals can blow up, and the merger market can dry up. Both things happened in 2001, and the fund delivered its worst performance in a decade, rising only 2 percent.
 
Merger Fund’s mission is to have more knowledge and use knowledge better than any investment firm in the world, to use and share knowledge to help its clients achieve investment success and peace of mind, to place their clients’ interests first and foremost.

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