ProShares Launches First True Merger Arbitrage ETF
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Expands Nation's Largest Lineup of Alternative ETFs
Bethesda, MD, December 13, 2012—ProShares, a premier provider of alternative exchange traded funds (ETFs), today announced the launch of the ProShares Merger ETF (Ticker: MRGR), the first ETF based on a true merger arbitrage strategy. MRGR aims to produce the risk/return characteristics of a merger arbitrage strategy by tracking the performance of the S&P Merger Arbitrage Index (before fees and expenses). The ETF lists on BATS Exchange today.
Merger arbitrage strategies, frequently used by institutions and high-net-worth investors, seek to capture the spread between a target company’s stock price after a proposed merger or acquisition is announced and the deal price that the acquiring company will pay for the target company.
"The goal of MRGR is to produce consistent, positive returns under virtually any market conditions," said Michael L. Sapir, Chairman and CEO of ProShare Advisors LLC, ProShares' investment advisor. "We are pleased to offer access to a true merger arbitrage strategy delivered for the first time with the cost efficiency, transparency and liquidity of an ETF."
Since the key drivers of merger arbitrage returns are different from the key drivers of equity market returns, the performance of a merger arbitrage strategy is not expected to be correlated to equity markets over time. This potentially makes merger arbitrage a valuable diversification tool.
About Merger Arbitrage
A true merger arbitrage strategy aims to capture the spread between a target company’s stock price after a proposed merger or acquisition is announced and the price that the acquiring company will pay for the target company. It does this by obtaining long exposure to the stock of a target firm once the merger or acquisition is announced and seeking appreciation as it nears completion. Additionally, short exposure to the stock1 of the acquiring company is required to lock in the spread in deals where the acquirer’s stock is used for all or part of the purchase.
About the Index
S&P Merger Arbitrage Index seeks to provide a merger arbitrage strategy that exploits commonly observed price changes associated with a global selection of publicly announced mergers, acquisitions and other corporate reorganizations.
The Index provides exposure to up to 40 publicly announced mergers or acquisitions ("deals") within developed market countries through a combination of long and, in certain cases, short security positions. When deals enter the Index, the weight in long positions of target companies is initiated at three percent (3%) and the initial weight in short positions of the acquiring company ranges between zero and three percent (0% and 3%), depending on terms of the deal.
For more information about MRGR’s index, visit: http://us.spindices.com/indices/strategy/sp-merger-arbitrage-index.
Offering the nation's largest lineup of alternative ETFs,2 ProShares helps investors to go beyond the limitations of conventional investing and face today’s market challenges. Each ProShares ETF provides access to an alternative investment strategy delivered with the liquidity, transparency and cost effectiveness of an ETF. ProShares' lineup of 139 ETFs includes Global Fixed Income, Hedge Strategies, Geared (leveraged and inverse), and Inflation and Volatility ETFs.
Tucker Hewes, Hewes Communications, Inc., 212.207.9451, firstname.lastname@example.org
ProShares, 866.776.5125, ProShares.comDec 13, 2012
1 Rather than shorting broad market indexes, as other merger arbitrage ETFs do.
2 Source: Financial Research Corporation, based on an analysis of all known alternative ETF providers (as defined by FRC) by their number of funds and assets (as of 3/31/2012).