An alternative mutual fund shop in New York City is entering the ETF business.

Christina Chew Water Island Capital Chief Operating Officer, Senior Managing Partner

On May 7, the Water Island Capital [profile] team launched the AltShares Merger Arbitrage ETF (ARB), their first ever ETF and their first-ever passive product. Watch for them to roll out more ETFs down the line under their new AltShares unit, led by PMs Eric Becker and Chris Plunkett.

"We are pleased to bring Water Island's time-tested approach to merger arbitrage investing to those interested in accessing this strategy through a passively managed ETF," states John Orrico, founder and chief investment officer of Water Island Capital. "We have leveraged the insights we derived over the course of our firm's 20-year history to build a passive ETF for investors looking to merger arbitrage investing as a way to enhance portfolio diversification."

"This is the first in what we believe will be a suite of ETFs," Christina Chew, senior managing partner and chief operating officer at Water Island Capital, tells MFWire. "It is the only true merger arbitrage ETF in the space."

Water Island Capital's team first started looking into this landscape several years ago, Plunkett says. Becker notes that clients "expressed interest in a passive merger arbitrage strategy." He describes the move as "a natural evolution" of Water Island Capital.

"We wanted to craft a new index," Plunkett tells MFWire. "We built the resources internally to expand our team and expand our skillset."

"We've really tried to embed as much knowledge as we possibly could from our active management team into the rules set," Plunkett adds.

ARB tracks the Water Island Merger Arbitrage USD Hedged Index. State Street is the new ETF's servicing agent, handling custody, fund accounting, transfer agency, and more.

Water Island Capital now has about $2.5 billion in AUM across mutual funds, separate accounts, and hedge funds. 

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