Hewlett Packard (NYSE: HPQ) announced a multibillion dollar bid for 3-PAR (NYSE: PAR), this morning. Will the Merger & Arbitrage ETF (NYSE: MNA) jump up because of it?



Chart Courtesy of StockCharts.com

As the market flounders these days, the deal stocks seem to be the only potential money making opportunity for investors. But, it's hard to know when a deal is going to be announced. That's why, conceptually speaking, an ETF that concentrates on that kind of activity seems to make sense.

But before putting your money where your concept is, it makes sense to see if MNA, the ETF designed for mergers actually does what you want it to do, rise when deals are announced.

The history of MNA is fairly short, as the fund started trading in late 2009. That's not much to go on. And if you look at the chart for the most recent action, you can see that it's traded sideways, despite a fair number of deals having been announced, and lots of activity on the M & A front being thrown about.

The key to this fund is that it's an after the fact trading vehicle. It actually tracks shares of companies that have already announced deals. It also involves hedging and has a global reach, which introduces the potential for currency activity to skew results.

In other words, MNA is not an ETF that invests in companies that may be involved in takeovers, which means that it's hard to know what will actually make this ETF rise or fall. With less than a year of data to back its performance, we suggest that this one goes on the watch list, not the put your money into it and see what happens list.

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