The Credit Suisse Merger Arbitrage Liquid Index (NYSEArca: CSMA) seeks to capture the spread between two prices: the price of a stock of the target company after an acquisition is announced and the price the acquiring company has proposed to pay to buy the target. [ Another ETF for the M&A Pickup. ]
Potential gains in the fund are realized after deals are completed. If a deal doesn't go through, it could potentially mean losses in the fund.
The fund's underlying index uses a quantitative methodology to track a basket of securities that are held as either long or short positions. The expense ratio is 0.55%.
Corporations are sitting on trillions of dollars right now, which is doing nothing in this low-interest rate environment. Eventually that cash will need to be deployed, and part of it may lead to a continued uptick in mergers and acquisitions. [ ETF Solution to the Corporate Cash Problem. ]