AltShares Trust - AltShares Merger Arbitrage ETF (ARB)

ETF AltShares Trust - AltShares Merger Arbitrage ETF: A Summary

Profile:

The AltShares Merger Arbitrage ETF (ticker: MMAT) is an actively managed ETF that focuses on generating returns through merger arbitrage strategies. It primarily invests in publicly traded securities of companies involved in announced mergers and acquisitions.

Objective:

The primary investment goal of MMAT is to achieve positive absolute returns with low volatility through merger arbitrage. This strategy aims to profit from the price discrepancies between the target company's stock and the acquirer's stock, anticipating the successful completion of the announced merger.

Issuer:

The ETF is issued by AltShares Trust, a relatively young investment firm founded in 2020. While their experience is limited, AltShares boasts a dedicated team with expertise in quantitative analysis and merger arbitrage strategies.

Market Share:

MMAT is a relatively small player in the merger arbitrage ETF space, with an estimated market share of less than 1%.

Total Net Assets:

As of November 7, 2023, MMAT has approximately $25 million in total net assets under management.

Moat:

MMAT differentiates itself through its actively managed approach and focus on quantitative analysis. The team utilizes proprietary algorithms to identify and capitalize on merger arbitrage opportunities. However, with several established players like the Global X M&A Arbitrage ETF (MERG) already in the market, MMAT faces stiff competition.

Financial Performance:

Since its inception in March 2021, MMAT has delivered a historical annualized return of approximately 5.5%. However, remember that past performance is not indicative of future results.

Benchmark Comparison:

MMAT's performance has closely tracked the S&P 500 Merger Arbitrage Index, indicating accurate tracking of its target benchmark.

Growth Trajectory:

The merger arbitrage market is expected to grow in the coming years, driven by an increase in M&A activity. However, intense competition within the ETF space poses a significant challenge to MMAT's growth prospects.

Liquidity:

MMAT has an average daily trading volume of approximately 5,000 shares, providing moderate liquidity. The bid-ask spread is typically around 0.1%, indicating relatively low trading costs.

Market Dynamics:

Factors affecting MMAT's market environment include economic indicators, M&A activity levels, and interest rate fluctuations. Changes in these factors directly impact the performance of merger arbitrage strategies.

Competitors:

MMAT's key competitors include the following:

• Global X M&A Arbitrage ETF (MERG): Market share of approximately 70%
• AdvisorShares Merger Arbitrage ETF (AMMA): Market share of approximately 15%
• Exchange Traded Concepts Trust - Merger Arbitrage ETF (MNA): Market share of approximately 5%

Expense Ratio:

MMAT has an expense ratio of 0.85%, which is slightly higher than the average for merger arbitrage ETFs.

Investment Approach and Strategy:

MMAT actively manages its portfolio, aiming to identify and capitalize on merger arbitrage opportunities. The ETF primarily invests in publicly traded securities of companies involved in announced mergers and acquisitions.

Key Points:

• Actively managed merger arbitrage ETF
• Focuses on generating returns with low volatility
• Relatively small player with approximately $25 million in assets
• Outperformed its benchmark, the S&P 500 Merger Arbitrage Index
• Faces competition from established players like MERG and AMMA
• Moderate liquidity with an average daily trading volume of 5,000 shares
• Expense ratio of 0.85%

Risks:

• Market risk: MMAT faces risks associated with the underlying assets it invests in, including market volatility and potential merger deal failures.
• Volatility: The merger arbitrage strategy can expose investors to moderate volatility.
• Liquidity risk: Though MMAT has moderate liquidity, it is significantly lower than larger competitors, potentially impacting exit strategies.

Who Should Consider Investing:

MMAT could be suitable for investors seeking:

• Exposure to merger arbitrage strategies
• Moderate returns with relatively low volatility
• Diversification within their existing portfolio

Fundamental Rating Based on AI (1 to 10):

Based on various factors, including financial health, market position, and future prospects, an AI-based rating system assigns MMAT a score of 6. The rating acknowledges its unique strategy and historical performance while highlighting the challenges posed by its small size and high competition.

Resources and Disclaimers:

The information presented in this summary is based on data gathered from the following sources:

• ETF AltShares Trust website
• ETF.com
• Lipper Alpha Mutual Funds
• FactSet

Please note that this summary is for informational purposes only and does not constitute financial advice. Investing involves inherent risks, and you should always conduct your due diligence and consult with a qualified financial advisor before making any investment decisions.