M&A ETF Continues To Be Epic Disappointment

No, this piece isn't about ETFs for Thanksgiving, but the turkey picture is an appropriate illustration for the IQ ARB Merger Arbitrage ETF MNA, a fund that is, shall we say, misunderstood. In the essence of being respectful, the Professor believes everyone is entitled to their own opinion, so no skewering is necessary of the pundits that continue to recommend MNA as a trade on increased on a surge in M&A activity. That said, the Professor has roasted this ETF a couple of times this year and it's getting lonely in the corner where the people who are right hang-out. The problem with MNA is that it does what it says does: It plays arbitrage with ANNOUNCED takeover targets. Meaning, the ETFs holdings come in AFTER a deal is announced and investors miss the big pop a target gets from the acquisition announcement. More discouraging is the stocks that haven't made it in to MNA, Potash Corp. POT being a shining example. It would seem that MNA would be more appealing and perhaps better performing if it was an ETF comprised of companies that have been rumored to be takeover targets or are in sectors where investors and analysts are wondering who is next to be taken out? Regions Financial RF and NetApp NTAP are frequently the subject of takeover rumors and Joy Global JOYG makes for a compelling "who's next play," yet MNA won't get you involved with these stocks until it's too late. Look, this is much is clear: M&A activity is up this year, but look at MNA's chart. Interesting dichotomy, huh? Let's just start a Takeover Rumor ETF RUMR. Who's with the Professor?