ARB vs MRGR

ARBBAltShares Merger Arbitrage ETF

MRGRBProShares Merger ETF

In short

ARB Merger arb, the hedge fund classic, rendered as index rules: go long announced takeover targets, short the acquirer in stock-for-stock deals, hedge the currency. Run by Water Island Capital, which has been doing this since 2000.

MRGR Merger arbitrage in an ETF wrapper: MRGR tracks a rules-based index of announced global deals instead of leaning on one manager's deal picks, and it has been running that playbook since 2012.

Stated mandate

ARB The Fund seeks to track the performance of the Water Island Merger Arbitrage USD Hedged Index, which reflects a global merger-arbitrage strategy involving announced mergers, takeovers, tender offers, and leveraged buyouts.

MRGR MRGR seeks to track the S&P Merger Arbitrage Index before fees and expenses. The fund is designed to provide exposure to a global merger-arbitrage strategy.

Why people hold it

• ARB No side project: Water Island Capital has run a merger arbitrage fund since September 2000, and ARB tracks an index built by its affiliate on the same deal-spread playbook.sec.govsec.gov 2
• When a deal pays in acquirer stock, the index shorts that stock at the deal's exchange ratio, aiming to lock in the spread instead of riding the acquirer's share price.sec.gov
• Foreign targets bring foreign currency. The index is hedged back to the US dollar, so a euro or pound swing is dampened rather than passed straight into returns.sec.gov
• Rules, not hunches: the index reconstitutes and rebalances twice a month and generally expects 30-50 targets, so new deals enter and completed ones exit on a set schedule.sec.gov

• MRGR Rules-based, not discretionary: it tracks the S&P Merger Arbitrage Index, so the roughly 40-deal basket follows published index rules rather than a manager's hunches.proshares.com
• Live since 2012, making it one of the longer-running merger-arb ETFs, with a record spanning more than one deal cycle.
• At 0.75% it sits at the cheaper end of a pricey niche, under First Trust's NTRL (0.95%) and AltShares' EVNT (1.33%). Distributions are quarterly.

Worth knowing

• ARB Fee is 0.82%, near the category median and above MNA's 0.78% and MRGR's 0.75% (net of a waiver through September 30, 2027; 2.03% gross).
• Thinly traded next to mainstream ETFs, so bid-ask spreads can run wider. Distributions come annually or semiannually, not monthly.
• Deal spreads are narrow by design and a collapsed merger stings. The hedges address acquirer stock and currency, not the chance a deal falls apart.sec.gov

• MRGR One of the smaller, thinner-traded funds in the category, so spreads and fill quality are worth a look at the moment of the trade.
• 0.75% is mid-pack for merger arb (MNA charges the same) but many times the cost of a plain broad-market index fund.
• The core risk is announced takeovers falling apart, and an index-tracking basket adjusts on the index's rules rather than a manager's judgment call.

Full ARB profile⁠

Full MRGR profile⁠