Alternative Mutual Fund: Gabelli ABC Fund – Class AAA (GABCX) Merger Arbitrage Fund

October 21, 2019 | Fund Updates, News

Alternative mutual funds such as Mario Gabelli’s (GABCX) Fund allow retail investors access to participate in merger arbitrage strategies.

An analysis published by Josh Ortner in Seeking Alpha draws attention to Gabelli ABC AAA GABCX, a merger arbitrage fund managed by Mario J Gabelli.

Since 1994, the fund has generated steady market-neutral returns of 5.21% CAGR.

It is a suitable market strategy in the current situation when equities are hitting new highs, and bond market yields touch new lows.


This mutual fund is a good idea for investors looking for a bond fund alternative. Moreover, alternative mutual funds are a very fast-growing asset class.

The fund’s investment thesis is straightforward: Take advantage of merger arbitrage opportunities by purchasing the shares of a target company and shorting stocks of the acquiring company.

Retail investors typically do not have access to hedge funds that practice this strategy due to account minimum problems.

However, GABCX delivers consistent returns without much price volatility. It earned a compounded annual growth rate of 5.21% annually since its inception in 1994, with a standard deviation of only 3.22%.

Merger arbitrage strategies generally aim for a minimum return of two-percent premium over short-term Treasury bill rates. GACBX has successfully achieved this, both in the short and long term.

Tough to pick bonds over stocks and vice versa

Further, investors are finding it difficult and risky to invest in traditional assets like stocks and bonds, which are running at record highs.

Therefore, in the current market environment, investors can safely add GABCX as a diversification flavor. The alternative in the mix generates non-correlated returns along with the preservation of capital.

The merger arbitrage fund has an expense ratio of 0.55%.

Risk factors

Profiting from the merger spread is impossible if the deal falls through. Hostile bids have a higher chance of failing compared to a friendly bid. Long-drawn-out deals also have a higher chance of failure.

However, GABCX relies on multiple quality deals to offset these risks.

[Related Story:  The 30-Year Bond Yield Falls Below the S&P 500 Dividend Yield ]

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Latest Alternative Investment News
FinTech: Klarna’s Valuation Plunges To $6.5B In Talks To Raise $650M (WSJ)
July 1, 2022     FinTech, Latest News, News

Klarna, the Swedish fintech known for its buy-now-pay-later (BNPL) financial product, is negotiating to raise $650 million at a valuation of $6.5 billion, which is a very sharp comedown from…
Venture Capital: OppZo, Which Funds Small Businesses Having Government Contracts, Raises $260M
July 1, 2022     News, Venture Capital

Fintech OppZo brings together investors and small businesses that need working capital loans for their government-facing businesses. Typically located in economically stressed areas of the country, these businesses represent an…
Alternative Investments/Digital: Jacobi To Launch Europe’s First Bitcoin ETF This Month

The Jacobi Bitcoin ETF, from Jacobi Asset Management, will have a number of firsts to its credit when it starts trading this month. It will be the first exchange-traded equity…
Artificial Intelligence: John Deere’s Advances in AI Powered Agriculture Machinery
July 1, 2022     Artificial Intelligence, News

John Deere (NYSE: DE) has achieved leadership in automated machinery powered by Artificial Intelligence (AI). The self-driving tractor pictured above was revealed in CES 2022 and has six pairs of…