401k ads Aggressive Allocation alternative fund american funds Artisan Fund balanced fund bank loan banking basic materials Best Bond Funds Best ETFs Best Funds Best Mutual Funds Best Stock Funds Blackrock Fund bond mutual fund brokerage canadian mutual fund china region closed end fund commodities broad basket commodities fund communications conservative allocation consumer goods convertibles covered call currency Diversified Emerging Markets diversified pacific asia Dodge & Cox fund domestic stock fund DoubleLine Fund emerging markets bond equity energy equity precious metals europe stock exchange traded fund fidelity fund financial foreign large blend foreign large growth Foreign Large Value foreign small mid growth foreign small mid value Franklin Templeton global real estate government bond health healthcare high yield bond high yield muni income preferred stock index fund industrial goods inflation protected bond Intermediate Government Intermediate term bond international stock fund Investing investing advice Janus Funds japan stock kip 25 Large blend large growth Large Value long government long term bond mid cap blend Mid cap growth Mid Cap Value moderate allocation Multisector Bond muni california intermediate muni california long muni national interm muni national long muni short Municipal bond fund mutual fund natural resources news nuveen fund Oppenheimer Funds other pacific asia ex-japan stock PIMCO fund preferred stock real estate retirement retirement income sector stock fund services short government short term bond small blend small growth small value stock stock industry Stock Mutual Fund T Rowe Price Fund Target Date taxable bond fund technology Top Performer Funds top stock ultrashort bond utilities value stock Vanguard fund world allocation World bond world stock Worst Performer Funds worst stocks

This next fund can provide an alternative investment strategy to many investors. As part of market neutral category fund, Merger Fund invests in announced merger companies. This type of fund is usually less volatile and has a set of guarantee return. This fund is also featured in Kiplinger’s 25 Best Fund. This fund is being added recently in 2010 and will replace the previous Arbitrage Fund (Ticker: ARBFX) in Kip 25. Arbitrage Fund is removed due to it is closed to new investor.

According to its website (www.mergerfund.com), Merger Fund is the first mutual fund dedicated entirely to merger arbitrage. This fund has been around since 1989. As discussed, it also has one of the lowest volatility for stock funds with beta of 0.10. This fund is also very popular to retail investors and institutional investors with $4.53 billion asset.

Altenative Mutual Fund

Merger Fund (MERFX)
Merger Fund Fund Facts (MF website)
The investment in Merger Fund is seeking for capital growth. The goal is achieved by engaging in merger arbitrage. The major net assets investment of this Merger Fund (at least 80%) is in the equity securities of merger-companies. The companies are involved in publicly announced mergers, tender offers, liquidation, spin-offs, takeovers, leveraged buyouts and other corporate reorganizations. This is a special investment approach to gain the most profit from the companies in such conditions.

Merger Fund MERFX Details
  • Fund Inception Date: January 1989
  • Ticker Symbol: MERFX
  • CUSIP: 589509108
  • Beta (3yr): 0.10
  • Rank in category YTD: 12
  • Category: Market Neutral
  • Distribution: 0%
  • Turnover Rates: 192%
  • Capital Gains: 0.06% (last distributed in 2008)
  • Number of Years Up: 19 years
  • Number of Years Down: 2 years
Updated on 5/15/2011

The Merger Fund was the first mutual fund devoted exclusively to merger arbitrage. Roy D. Behren has been the lead manager for this fund since 2007. Should you plan to invest in this fund, the minimum initial invest for either brokerage or IRA account is $2,000 and no minimum subsequent investment. This fund applies a 0.927% of management fee. MERFX is considered as a no sales load fund. The fund can be purchased from 81 brokerages, include T Rowe Price, DATALynx, JP Morgan, E Trade Financial, TD Ameritrade Inc, etc. This fund has no other class.


The annual report of expense ratio is 1.41%, which is lower than the average in the category (1.96%).  Since its inception in 1989, this fund has experienced a total of 19 years up performance with the best total return in 2000 (17.58%) and 2 years of down period with the worst total return in 2002 (-5.67%). This fund receives 4-stars rating from Morningstar. MERFX fund has returned 4.09% over the past year and 3.46% over the past ten years. The year to date (YTD) return is 2.41%.

As of December 2010, the top 10 equity holdings of this fund are Alcon Inc, Bucyrus International Inc, McAfee Inc, Qwest Communications International Inc, King Pharmaceuticals, Inc, Alberto-Culver Company, Western Coal Corp, Genzyme Corporation, Potash Corporation of Saskatchewan and Undisclosed UK Media. The top countries in this fund include United States (77.14%), Europe (12.70%) and Canada (7.63%). The top 5 sectors include health care (18.90%), industrials (17.98%), materials (16.18%), financials (11.71%) and consumer discretionary (11.55%).

Investing in this Merger Fund involves principal risks such as:
  • Reorganization risk
  • Foreign investment risk
  • Foreign currency risk
  • Hedging risk
  • High transaction cost due to high turnover rates
Disclosure: No Position

For details about this Merger Fund information, please check my Kiplinger’s 25 Best Fund page.

Other Kiplinger's Best Mutual Funds:

Contact Form


Email *

Message *

Powered by Blogger.