Looking to generate low risk income?

Consider the Merger-Arbitrage strategy

from Constantia Capital.

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Merger-Arb is an excellent strategy to diversify your fixed-income portfolio away from intermediate and long-term bond funds which are very susceptible to rising interest rates, and shorter-term money market funds which earn negligible returns. And with stock markets close to record highs, most investors could benefit from taking profits.

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The current environment, with an above average number of deals, has enabled us to generate returns of approximately 5% in the past 12 months. That is in-line with our target of 5% annualized as of April 2022 (4% above short-term interest rates which are currently close to 1%) after a flat fee of only 70 basis points by investing in this conservatively managed, post-announcement, liquid alternative strategy. This is the same time-tested strategy employed by hedge funds, now available at a fraction of their fees and with no lockups. Simply open your own SIPC-insured account at your favorite discount broker ($110,000 minimum), assign trading authority to Constantia Capital, and get the benefit of your broker's low rates and our portfolio management expertise. Click here to request a detailed presentation.

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The Constantia Capital "Merger-Arb" strategy is a short duration, low volatility strategy that is designed as an high yielding alternative to cash in the bank or short-term debt. Volatility is similar to that of a U.S. Government 10-year Treasury Note.

This strategy invests in definitively announced mergers. We follow a highly disciplined process to keep risk low.

Performance

Since its inception in November 2011, the Constantia Capital Merger-Arbitrage strategy has earned 5.07% annualized (net of fees) with a 0.91 Sharpe Ratio.  See More Details About Merger-Arbitrage Performance

Advantage of Separately Managed Accounts

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• No drag on performance due to trading to meet cash flows of other investors. This is especially important for Merger-Arb where the bid-ask spread can make the difference between an attractive trading opportunity.

• Lower overhead since no fund accounting fees. As a result, our fees are the lowest in the category, lower than either ETF’s, Mutual Funds or Hedge Funds.

• We estimate the above two points provide an advantage over a fund structure of at least 50 bps annualized, more when comparing to higher fee competitors.

• Choice of fee structure: either a flat rate (70 bps) or performance based (“0 and 20”). 

*Please note that Expected Excess Returns (a) are not a guarantee of performance and (b) will include reinvestment of dividends and other earnings.

Risk Controls

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• Highly diversified portfolio with well over 100 positions (as of December 2021). Positions size may not exceed 5% of the portfolio, but we seldom come close to that limit with the average position being less than 1% of the portfolio.

• Leverage may be used (for traditional accounts) but will not exceed 2.0.