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Corey Hoffstein: Merger Arbitrage Isn’t Just for Institutions Anymore — Here’s How You Can Use It
Forget what you thought about merger arbitrage — it’s no longer out of reach for individual investors and advisors.
In this episode, Corey Hoffstein, CIO at Newfound Research and co-creator of Return Stacked ETFs, joins us for a deep dive into merger arbitrage — a long-used institutional strategy that’s now accessible to retail and advisor portfolios via the RSBA ETF (Return Stacked Bonds & Arbitrage ETF)
Corey explains that merger arbitrage isn’t just about betting on deals; it’s about systematically capturing a risk premium tied to time and deal closure uncertainty. With low correlation to stocks, bonds, and credit spreads, merger arb serves as a powerful diversifier — especially in today’s tight credit environment. The discussion covers how RSBA overlays this risk premium on top of core U.S. Treasuries, allowing investors to enhance returns without sacrificing their bond sleeve. Corey unpacks the return stacking framework, behavioral benefits, and why this method reduces "line item risk" while expanding portfolio breadth. This isn’t just theory — it’s a practical way for advisors and investors to get exposure to uncorrelated return streams, preserve core holdings, and finally access what institutions have done for decades.
Chapters
00:00 – Introduction: Why Merger Arb is Timely
01:00 – What is Merger Arbitrage? Mechanics of the Strategy
03:00 – Risk Premium vs Arbitrage: What You’re Really Capturing
04:00 – How Merger Arb Correlates (or Doesn’t) with Stocks, Bonds, and Credit
05:30 – Why Tight Credit Spreads Make Merger Arb a Strong Alternative
07:00 – What RSBA Is and How It’s Constructed
08:30 – Bonds + Merger Arb = Corporate Bond Alternative?
10:00 – Return Stacking Explained: Keep Your Core Beta, Add a Layer
12:00 – Why Merger Arb Is Historically Undervalued by Advisors
13:30 – Behavioral Obstacles and Reducing Line Item Risk
15:00 – Breadth vs Depth in Diversification: Expanding Risk Premiums
16:30 – From T-Bills + Arb to Treasuries + Arb: A Better Structural Design
17:00 – Building a “Hyper Diversified” Portfolio with Return Stacking
18:30 – How Stacking Reduces Tracking Error and Behavioral Risk
19:30 – Democratizing Portable Alpha for Every Investor
20:00 – Closing Remarks: The Future of Diversification Is Here
💡 Key Takeaways
- Merger arbitrage is a true, durable risk premium, not a speculative bet — it compensates investors for time and deal break risk post-announcement.
- RSBA combines Treasuries and merger arb into a single ETF, offering a compelling alternative to corporate credit without the same economic exposure.
- Return stacking allows investors to “add without subtracting”, enhancing portfolios with diversifiers while retaining core holdings.
- Behavioral issues like tracking error and client discomfort are reduced by maintaining traditional exposures while quietly layering on return streams.
- You no longer need to give up your bonds to get alpha. With ETFs like RSBA, you can have both — and do it with institutional-grade tools.
Return Stacked ETFs
RSBA
#ReturnStacking #MergerArbitrage #CoreyHoffstein #InvestmentStrategies #alternativeinvesting
Copyright © AdvisorAnalyst
View all episodes
By AdvisorAnalyst.com
5
22 ratings
Forget what you thought about merger arbitrage — it’s no longer out of reach for individual investors and advisors.
In this episode, Corey Hoffstein, CIO at Newfound Research and co-creator of Return Stacked ETFs, joins us for a deep dive into merger arbitrage — a long-used institutional strategy that’s now accessible to retail and advisor portfolios via the RSBA ETF (Return Stacked Bonds & Arbitrage ETF)
Corey explains that merger arbitrage isn’t just about betting on deals; it’s about systematically capturing a risk premium tied to time and deal closure uncertainty. With low correlation to stocks, bonds, and credit spreads, merger arb serves as a powerful diversifier — especially in today’s tight credit environment. The discussion covers how RSBA overlays this risk premium on top of core U.S. Treasuries, allowing investors to enhance returns without sacrificing their bond sleeve. Corey unpacks the return stacking framework, behavioral benefits, and why this method reduces "line item risk" while expanding portfolio breadth. This isn’t just theory — it’s a practical way for advisors and investors to get exposure to uncorrelated return streams, preserve core holdings, and finally access what institutions have done for decades.
Chapters
00:00 – Introduction: Why Merger Arb is Timely
01:00 – What is Merger Arbitrage? Mechanics of the Strategy
03:00 – Risk Premium vs Arbitrage: What You’re Really Capturing
04:00 – How Merger Arb Correlates (or Doesn’t) with Stocks, Bonds, and Credit
05:30 – Why Tight Credit Spreads Make Merger Arb a Strong Alternative
07:00 – What RSBA Is and How It’s Constructed
08:30 – Bonds + Merger Arb = Corporate Bond Alternative?
10:00 – Return Stacking Explained: Keep Your Core Beta, Add a Layer
12:00 – Why Merger Arb Is Historically Undervalued by Advisors
13:30 – Behavioral Obstacles and Reducing Line Item Risk
15:00 – Breadth vs Depth in Diversification: Expanding Risk Premiums
16:30 – From T-Bills + Arb to Treasuries + Arb: A Better Structural Design
17:00 – Building a “Hyper Diversified” Portfolio with Return Stacking
18:30 – How Stacking Reduces Tracking Error and Behavioral Risk
19:30 – Democratizing Portable Alpha for Every Investor
20:00 – Closing Remarks: The Future of Diversification Is Here
💡 Key Takeaways
- Merger arbitrage is a true, durable risk premium, not a speculative bet — it compensates investors for time and deal break risk post-announcement.
- RSBA combines Treasuries and merger arb into a single ETF, offering a compelling alternative to corporate credit without the same economic exposure.
- Return stacking allows investors to “add without subtracting”, enhancing portfolios with diversifiers while retaining core holdings.
- Behavioral issues like tracking error and client discomfort are reduced by maintaining traditional exposures while quietly layering on return streams.
- You no longer need to give up your bonds to get alpha. With ETFs like RSBA, you can have both — and do it with institutional-grade tools.
Return Stacked ETFs
RSBA
#ReturnStacking #MergerArbitrage #CoreyHoffstein #InvestmentStrategies #alternativeinvesting
Copyright © AdvisorAnalyst
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