NexPoint Merger Arbitrage Fund Celebrates 10-Year Track Record
DALLAS, Jan. 29, 2025 /PRNewswire/ -- NexPoint, a multibillion-dollar alternative investment firm, today announced the 10-year anniversary of the NexPoint Merger Arbitrage Fund Class Z (HMEZX) (the "Fund"). The Fund is an actively managed open-end mutual fund focused on generating performance through strategic investments in the equity and debt securities of companies that have entered into definitive merger agreements.
The Fund stands out for its consistent performance, strong risk-adjusted returns, resiliency in down markets, and low market correlation—all evident in its 10-year track record. NexPoint Merger Arbitrage (HMEZX) is a top-quartile fund in its category over the one-, three-and five-year periods.1 Since its inception, it has outperformed all Merger Arbitrage fund peers within the broader Morningstar Event Driven Category and has never had a down year. 2,3 With these characteristics, the Fund serves as a practical investment solution that can offer a favorable risk/return profile relative to other asset classes, while enhancing portfolio diversification.
"It is a privilege to lead the Fund through this major milestone," said Scott Johnson, NexPoint Managing Director and Portfolio Manager of the Fund. "As we look back over the wide-ranging market environments we've encountered in the last 10 years—a prolonged low-rate environment, the COVID-19 pandemic, shifting geopolitical dynamics, major changes in regulatory regimes, to name just a few—we are especially proud of the Fund's track record. The past decade is a powerful illustration of the Fund's ability to perform regardless of market conditions."
In addition to delivering strong risk-adjusted returns, the Fund has provided reduced downside participation and low correlation to markets throughout the last 10 years.4
Annualized |
Standard |
Sharpe Ratio5 |
Maximum |
Correl. to S&P 500 |
Correl. to Bonds |
|
NexPoint |
6.07 % |
3.16 % |
1.27 % |
-3.41 % |
0.20 |
0.10 |
Bloomberg Agg |
1.22 % |
5.01 % |
-0.12 % |
-17.18 % |
0.39 |
1.00 |
Since inception (1/20/2015) through 12/31/2024. |
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The Fund launched on January 20, 2015, bringing a differentiated merger arbitrage strategy to investors in a liquid alternative fund structure. The Fund employs a rigorous investment process with extensive fundamental due diligence on both the target company and the acquirer, along with comprehensive regulatory and legal review. This approach can balance risk mitigation with return generation and has led to the Fund's consistent performance over the past decade.
"This milestone reaffirms the strength of our investment process and the capabilities of our team in executing it with consistency across research, trading, portfolio construction, risk management, and other functions for the last 10 years," Johnson said. "With this strong momentum, we look forward to navigating new market dynamics and continuing to provide value for investors in 2025 and beyond."
NexPoint also manages an event driven fund with a complementary investment strategy that emphasizes total return. The NexPoint Event Driven Fund (HHCZX) has a broader investment universe that includes a range of event-driven catalysts beyond publicly announced mergers. The NexPoint Event Driven Fund marks its three-year track record alongside the NexPoint Merger Arbitrage Fund's 10-year anniversary.
About the NexPoint Merger Arbitrage Fund
The NexPoint Merger Arbitrage Fund is an open-end mutual fund that invests in securities of companies involved in publicly announced mergers to capture the spread between the current price of a target company and the announced offer price for that company. The Fund is managed by NexPoint Asset Management, L.P., an investment adviser on the NexPoint platform. For more information, visit nexpoint.com/funds/merger-arbitrage.
Standardized Performance (as of 12/31/2024, inception 01/20/2015)
Share Class |
1Y |
3Y |
5Y |
Since Incept. |
Class A |
5.65 % |
3.89 % |
4.99 % |
5.78 % |
Class A (w/load) |
-0.17 % |
1.95 % |
3.81 % |
5.19 % |
Class C |
4.97 % |
3.23 % |
4.31 % |
5.16 % |
Class C (w/load) |
3.97 % |
3.23 % |
4.31 % |
5.16 % |
Class Z |
6.06 % |
4.28 % |
5.36 % |
6.07 % |
Bloomberg Agg Bond Index |
1.25 % |
-2.41 % |
-0.33 % |
1.22 % |
About NexPoint
NexPoint is a multibillion-dollar alternative investment firm based in Dallas, Texas. The firm is structured around three major business areas: real estate, corporate credit and equities, and insurance solutions. NexPoint's businesses span asset classes, industries, and strategies, providing the flexibility to invest across capital structures and market environments. Serving a diverse client base, NexPoint's investment strategies are offered in a range of vehicles and fund structures, including mutual funds, public and private REITs, tax-advantaged vehicles, private funds, and separate accounts. For more information, visit nexpoint.com.
Risks & Disclosures
The performance data quoted here represents past performance and is no guarantee of future results. Investment returns and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance data current to the most recent month-end, please call (833) 697-7253.
Before investing in the Fund, you should carefully consider the Fund's investment objectives, risks, charges and expense. For a copy of a prospectus or summary prospectus, which contains this and other information, please visit our website at nexpoint.com or call (833) 697-7253. Please read the fund prospectus carefully before investing.
Fees & Expenses
Gross Expense Ratio: Class A 2.74%, Class C 3.39% and Class Z6 2.39% Net Expense Ratio: Class A 2.49%, Class C 3.14% and Class Z6 2.14%
SALES CHARGES: Class A Max Sales Charge: 5.50%. Class C Contingent Deferred Sales Charge ("CDSC") is 1% within the first year from each purchase. Performance results reflect the contractual waivers and/or reimbursements of fund expenses by the Advisor. Absent this limitation, performance results would have been lower.
The Net Expense Ratio excluding Investment Related Expenses is 1.54%. Investment Related expenses include acquired fund fees of 0.05% and dividend expense on short sales and other excluded expenses of 0.53%. Expenses stated as of the fund's most recent prospectus. The difference between gross and net expense ratios are due to contractual and/or voluntary waivers, if applicable. The Expense Cap will continue through at least October 31, 2025, and may not be terminated prior to this date without the action or consent of the Fund's Board of Trustees. Total net operating expenses above were applicable to investors.
On May 12, 2016, the Predecessor Fund transferred its assets to the Fund in exchange for the Fund's Class Z shares. The investment policies, objectives, guidelines and restrictions of the Fund are in all material respects equivalent to those of the Predecessor Fund. In addition, the Predecessor Fund's portfolio manager is the current portfolio manager of the Fund. As a mutual fund registered under the Investment Company Act of 1940 (the "1940 Act"), the Fund is subject to certain restrictions under the 1940 Act and the Internal Revenue Code of 1986, as amended (the "Code") to which the Predecessor Fund was not subject. Had the Predecessor Fund been registered under the 1940 Act and been subject to the provisions of the 1940 Act and the Code, its investment performance could have been adversely affected, but these restrictions are not expected to have a material effect on the Fund's investment program.
Technical Terms:
Annualized Return: The annualized return is the geometric mean of the returns with respect to one-year. Correlation: A statistical measure of how two securities move in relation to each other. Maximum Drawdown: The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted as the percentage between the peak and the trough. Drawdowns help determine an investment's financial risk. Sharpe Ratio: A measure of risk-adjusted performance. The Sharpe ratio is calculated for by dividing a fund's annualized excess returns over the risk-free rate by its annualized standard deviation. Standard Deviation: Standard deviation of returns measures the average a return series deviates from its mean. It is often used as a measure of risk. Higher standard deviation represents higher volatility. Bonds: Bonds are represented by The Bloomberg US Aggregate Bond.
CONTACTS
Investor Relations
Kristen (Thomas) Griffith
[email protected]
Media Relations
[email protected]
1 As of 12/31/2024, Morningstar ranked the NexPoint Merger Arbitrage Fund Class Z shares percentile rankings in the 19th percentile, based on Total Return for the 1-year period among 40 funds in the Morningstar Event Driven Category. The Class Z shares percentile rankings for the 3-year period were in the 2nd percentile, among 37 funds. The Class Z shares percentile rankings for the 5-year period were in the 18th percentile, among 37 funds. The Morningstar Ranking Percentile compares a Fund's Morningstar risk and return scores with all the Funds in the same Category, where a percentile ranking of 1% represents the top of the category while higher numbers represent a lower rank, 100% = worst. Past performance does not guarantee future results. |
SOURCE NexPoint
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