Recent merger deals such as Procter & Gamble's acquisition of Gillette and SBC Communication's purchase of AT&T, among others, are providing "the kind of deal flow we have waited three years to see. It bodes very well for our investment style," said John S. Orrico, Arbitrage Fund founder and portfolio manager.
The Fund, which is one of the few funds to employ hedge fund-like strategies in the mutual fund industry, has seen an 8.03% annualized return since its inception in late 2000 through the end of last year, compared with the S&P's loss of 2.75% for the same four-year period. It has also outperformed its hedge fund competitors by more than double.
"In addition to diversifying the Ffnd into larger overseas markets such as the United Kingdom and Australia, the pickup in deals, both large and small, increases the Fund's ability to deploy significantly greater capital. With cash balances at both operating companies and private equity shops reaching record levels, we anticipate a robust merger market in 2005," said Orrico.