Hedge funds winning in M&A arbitrage
They are benefiting from record deals and lack of competition from banks to score best returns among peers
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HEDGE funds betting on the success or failure of mergers and acquisitions (M&As) are taking advantage of a record volume of deals and a lack of competition from banks to score the best returns among peers looking to profit from corporate actions.
Banks have shrunk or shuttered trading desks under pressure from regulators to take fewer risks, and some event-driven funds have closed. That helped merger-arbitrage money pools return 3.4 per cent in the 13 months to January, compared with a 5 per cent loss for other hedge funds focused on equities, according to data compiled by Hedge Fund Research Inc.
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