From Comcast's (NASDAQ:
) $16.7 billion deal to acquire the portion of NBCUniversal it
did not already own to US Airways (NYSE:
) purchasing rival AMR (OTC:
) to Berkshire Hathaway (NYSE: BRK-A) and a Brazilian partner
moving on H.J. Heinz (NYSE:
), this week has been a busy one on the mergers and acquisitions
The brisk deal-making pace has been good news for one ETF
perceived to be a play on increased mergers and acquisitions
activity. That being the IndexIQ Merger Arbitrage ETF (NYSE:
), which gained more than 1.3 percent this week amid the flurry
of M&A headlines.
What is important to note with MNA, and it is overlooked by
those not familiar with the ETF, is that the fund is not
comprised rumored takeover candidates. Rather, MNA is true to its
name and is home to "global companies for which there has been a
public announcement of a takeover by an acquirer," according to
Rather, MNA is an arbitrage play, or a way to profit from the
way professional investors buy and sell the stocks of the
acquiring and target companies. In other words, Heinz is
currently not one of MNA's constituents, but it could be in the
Some of MNA's top equity holdings currently include NYSE
), Nexen Energy (NYSE:
), Best Buy (NYSE:
) and Sprint (NYSE:
At the sector level, MNA is diverse. Consumer staples lead the
way with a 21 percent weight, but financial services, energy,
health care and consumer discretionary also receive double-digit
allocations. As of the end of 2012, MNA was heavily focused on
U.S. stocks, but almost 39 percent of its weight was spread among
Canada, the Netherlands and Australia
Speaking of global exposure, another overlooked feature of MNA
is that the ETF features short positions on some international
stocks a partial market hedge. MNA's equity market hedge was -14
percent of the total portfolio at the end of 2012.
MNA does have some rivals in the arbitrage in ETF niche,
notably the Credit Suisse Merger Arbitrage Liquid Index ETN
) and the ProShares Merger ETF (BATS: MRGR), but the IndexIQ has
been the top performer of the group over the past year.
For more on
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.