By Magazine Editors December 31, 2010 It's time for a fund switch. Arbitrage Fund, which returned 3.1% over the past year through November 5, has closed to new investors through most channels. We're replacing it with Merger Fund (symbol MERFX), co-managed by Roy Behren and Mike Shannon. Like Arbitrage, Merger invests in takeover targets after a bid is announced. The strategy tends to generate positive returns in any market with 75% less volatility than that of the overall stock market. The pace of merger activity has picked up recently, both at home and abroad. At last report, Merger's largest holding was Potash Corp. of Saskatchewan, the subject of a $40-billion takeover bid from BHP Billiton, the world's largest miner.Reach your goals. See portfolios using these funds.