Episode 26: Merger Momentum - The Bull Case Continues
In this episode, Co-CIO and Portfolio Manager Matt Osowiecki explores the drivers behind the Arbitrage Fund’s strong performance in 2025, the tailwinds fueling today’s deal environment, and why the bull case is poised to continue in 2026.
[Transcript]
The discussion of market trends and companies throughout this podcast are not intended as advice to any person regarding the advisability of investing in any particular security or strategy. Certain securities which were not, or are no longer, held in the Fund’s portfolio may be discussed for informational purposes only. Our views, opinions, and estimates – including any forward-looking statements – are a reflection of our best judgment at the time of recording and are subject to change based on market and other conditions. Water Island is under no obligation to update or revise any such views or statements, except as required by law. Past performance is no guarantee of future results. Additional information about Water Island can be obtained from our Form ADV, which is available at adviserinfo.sec.gov. Visit the glossary for definitions of terms.
An investor should consider the investment objectives, risks, charges, and expenses of the funds carefully before investing. The current prospectus contains this and other information about the funds. To obtain a prospectus or summary prospectus, please visit https://arbitragefunds.com/ or call (800) 295-4485. Please read the prospectus carefully before investing. Investing involves risk, including potential loss of principal.
ARBNX has limited availability and may not be accessible to all investors. The fund is also available in other share classes. Please see the fund’s prospectus for more details.
Performance through 12/31/25: ARBNX (I class), 8.29% (one year), 3.48% (five year), 3.57% (ten year). Performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month end, visit http://arbitragefunds.com or call (800) 295-4485. Returns shown above include the reinvestment of all dividends and capital gains. Returns greater than one year are annualized. Performance varies by share class. Total Annual Fund Operating Expense for ARBNX is 1.46%. Total Annual Fund Operating Expense excluding the effect of interest, dividends on short positions, and acquired fund fees and expenses for ARBNX is 1.33%.
RISKS: Investments are subject to risk, including possible loss of principal. There can be no assurance that the fund will achieve its investment objectives. The fund uses investment techniques and strategies with risks that are different from the risks ordinarily associated with equity investments. Such risks include merger arbitrage risk (in that the proposed reorganizations in which the fund invests may be renegotiated or terminated, in which case the fund may realize losses); short sale risk; active management risk; concentration risk; high portfolio turnover risk (which may increase the fund’s brokerage costs, which would reduce performance); foreign securities risk; market risk; sector risk; derivatives risk; hedging transaction risk; counterparty risk; temporary investment/cash management risk; swap risk; options risk; liquidity risk; investment company and ETF risk; leverage risk; small and medium capitalization securities risk; and currency risk. Risks may increase volatility, increase costs, and lower performance.
Arbitrage Fund top ten holdings as of December 31, 2025: Chart Industries Inc; Cidara Therapeutics Inc; CyberArk Software Ltd; Electronic Arts Inc; Endeavor Group Holdings Inc; Exact Sciences Corp; Hologic Inc; Janus Henderson Group PLC; Norfolk Southern Corp; TXNM Energy Inc. Top ten holdings represent 36.6% of the portfolio. Holdings are subject to change. Current and future holdings are subject to risk.
The Arbitrage Funds are distributed by ALPS Distributors Inc., which is not affiliated with Water Island Capital, LLC or any of its affiliates.