Vertex One Asset Management has launched a new fund for institutional and retail investors seeking absolute returns with low monthly volatility.
The Vertex Arbitrage Fund aims to provide an equity alternative to fixed income products with less interest rate risk. Focused on absolute returns, the fund strives to provide lower risk than outright exposure to the equity markets by investing primarily in merger arbitrage.
Merger arbitrage involves capturing a profit from the discount between the market price and the deal price for a target company in an announced, legally binding merger situation.
Arbitrage returns historically increase as interest rates rise, reducing the interest rate risk of the fund. Additionally, with the majority of the return in the form of capital gains, the fund will be a tax-efficient investment vehicle, according to Vertex One.