AltShares Merger Arbitrage ETF (ARB)

Overview

The fund is an investment vehicle that seeks to capitalize on global merger arbitrage opportunities. Its primary objective is to track the performance of an index specifically designed to reflect a strategy focused on merger arbitrage, which involves exploiting the price differences of companies involved in mergers and acquisitions. To achieve its investment goal, the fund commits at least 80% of its net assets—including funds borrowed for investment purposes—to securities or other financial instruments that are either components of the index or possess similar economic characteristics, such as swaps based on these components. It is important to note that the fund operates as a non-diversified fund, meaning it may invest more heavily in fewer securities, which could lead to greater volatility in its value.

Products and Services

• Global Merger Arbitrage Strategy

This strategy involves investing in companies around the world that are currently going through mergers and acquisitions. The fund aims to exploit the price discrepancies that emerge during these corporate events, attempting to generate profits regardless of the market conditions. By aligning its portfolio to closely follow an index tailored for this strategy, the fund positions itself to capture potential gains from these unique market opportunities.

• Index-Constituent Investments

The backbone of the fund’s investment approach is its commitment to allocate at least 80% of its net assets to securities that are part of the merger arbitrage index or akin in economic characteristics. This includes direct investments in the stocks of companies undergoing mergers and acquisitions as well as financial derivatives like swaps that mimic the performance of such companies. This method allows the fund to engage closely with the merger arbitrage market while aiming to replicate the index's performance.

• Use of Swaps and Derivatives

In addition to investing directly in index constituents, the fund employs financial derivatives, particularly swaps, to achieve its investment goals. Swaps and other similar instruments are used to gain exposure to the index constituents without the need to directly own the underlining securities. This can provide the fund with flexibility in its investment approach, potentially enhancing its ability to match or exceed the performance of the merger arbitrage index.

• Non-Diversified Investment Approach

As a non-diversified fund, this investment vehicle may allocate its assets more concentratedly across a smaller number of investments compared to diversified funds. This approach can lead to higher volatility and increased risk but also offers the potential for significant returns if the concentrated investments perform well. This strategy is best suited for investors who are comfortable with high risk and are looking for potentially higher rewards from their investment in global merger arbitrage opportunities.