The Merger Fund Replaces the Arbitrage Fund in the Kiplinger 25

Arbitrage Fund has closed to new investors, but Merger Fund is a worthy replacement.

We decided to add Arbitrage Fund (symbol ARBFX) to the Kiplinger 25 in May 2010 (see Our 25 Favorite Funds) because we thought many investors might benefit from adding merger arbitrage to their portfolios. Merger arbitrage has historically been a good way to earn modest, bondlike returns with little volatility, and the strategy tends to hold up remarkably well in falling markets.

But after receiving an influx of new cash, Arbitrage Fund has closed its doors. The fund will continue to accept new money from existing customers. And new investors can still invest in the fund with certain discount brokers, including Vanguard, Scottrade and E*Trade.

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.