The Arbitrage Funds

The Arbitrage Funds are a series of diversified, open-ended mutual funds offering alternative investment strategies in a format providing transparency, liquidity, and low investment minimums. Water Island Capital, the advisor, specializes in event-driven strategies that seek return profiles with low volatility and low correlation versus the broader capital markets. We believe capital preservation in difficult markets serves as the most important litmus test for any strategy or product seeking such a return profile, and therefore strive to protect investor capital at all times.

The Arbitrage Fund

The Arbitrage Fund, launched September 17, 2000, seeks to achieve capital growth by engaging in merger arbitrage. Merger arbitrage is a highly specialized investment approach designed to profit from the successful completion of corporate reorganizations. Water Island Capital’s approach focuses on the equity securities of publicly announced transactions, and utilizes hedging strategies that are designed to minimize market exposure and volatility. Our goal is to provide investors with consistent, positive returns that are not necessarily correlated to the general equity markets. Merger arbitrage, as an investment discipline, can play an important role in portfolio diversification. For years, large institutional investors and wealthy individuals have had access to merger arbitrage investing through private hedge funds. The Arbitrage Fund brings similar opportunities to individual investors.

The Arbitrage Event-Driven Fund

The Arbitrage Event-Driven Fund, launched October 1, 2010, seeks to achieve capital growth through event-driven investing. Event-Driven investing is a highly specialized strategy designed to profit from the behavior of both equity and fixed-income securities trading within the timelines of specific corporate events, such as mergers, acquisitions, recapitalizations, restructuring, refinancing, corporate distress, and bankruptcy. The Arbitrage Event-Driven Fund takes an opportunistic and flexible multi-strategy approach to event-driven opportunities through the use of various investment strategies including, but not limited to, merger arbitrage, convertible arbitrage, and capital structure arbitrage. Water Island Capital utilizes active hedging methodologies and fundamental research in an attempt to provide low volatility, low correlation, capital growth, and absolute returns. Institutional investors have relied on event-driven investing for decades. Most often, the strategy is pursued in private accounts or hedge fund vehicles; however, the strategy is readily deployed in a mutual fund format.

The Arbitrage Credit Opportunities Fund

The Arbitrage Credit Opportunities Fund, launched October 1, 2012, pursues an alternative credit-based strategy that seeks to generate returns from specific catalysts or company-specific events that are not correlated to overall market direction or interest rates. This non-traditional bond fund’s goal is to provide current income and capital growth by holding both outright long and short positions and by utilizing capital structure arbitrage, merger arbitrage, and convertible arbitrage techniques to exploit security mispricings or inefficiencies. Water Island Capital maintains a flexible approach toward credit quality, duration, and instrument type within this portfolio. The types of special situations, catalysts, and events we follow include: mergers and acquisitions, refinancings, debt maturities, regulatory changes, reorganizations, and restructurings. The investment team utilizes rigorous, bottom-up fundamental research and implements active hedging methodologies and risk controls, with a keen focus on downside risk. Our goal is to provide current income and capital growth with low volatility and low correlation. This portfolio offers a pure-play credit implementation of Water Island Capital’s broader event-driven style.


Please note that The Arbitrage Fund, The Arbitrage Event-Driven Fund, and The Arbitrage Credit Opportunities Fund (“The Funds”) referred to in this website are offered and sold only to United States residents, and the information on this website is intended only for such people. The Funds are not offered for sale in countries other than the U.S. and its territories. This website should not be considered a solicitation to buy or an offer to sell shares of the Funds in any jurisdiction where it would be unlawful under the securities laws of that jurisdiction.

The Arbitrage Funds are offered only by prospectus. The prospectus contains more complete information about the Funds, including objectives, strategies, fees, expenses and risk factors and should be read carefully before investing or sending money. To obtain a prospectus, click on the Fund Info pages of this website or call (800) 295-4485.

The Funds use investment techniques with risks that are different from the risks ordinarily associated with debt and equity investments. Such techniques and strategies include merger arbitrage risks, high portfolio turnover risks, options risks, borrowing risks, short sale risks, non-diversification risks, and foreign investment risks. The Arbitrage Event-Driven Fund and The Arbitrage Credit Opportunities Fund also include credit risks, interest rate risks, interest rate swap risks, credit default swap risks, and convertible security risks. Risks may increase volatility and may increase costs and lower performance.

The Arbitrage Funds are distributed by ALPS Distributors Inc., which is not affiliated with the advisor or any of its affiliates.