Insights
Overview
GMO’s Event-Driven Strategy seeks to generate absolute returns by investing in opportunities arising from significant corporate events, where there is generally some uncertainty around the outcome of the event, and the outcome will be known relatively soon. We believe an event-driven strategy has three primary appeals: positive expected returns, low correlation to equities, and relatively short duration.
GMO’s Event-Driven Strategy focuses primarily on merger arbitrage, and supplements that with other event-driven situations that exhibit similar risk, return, and duration characteristics, such as strategic reviews, restructurings, spins, litigation, liquidations, and other corporate events. The Event-Driven team approaches this opportunity set through an expected-value framework: the team assesses the probability and return of each potential outcome and invests in situations where their assessment of expected value is greater than what is implied by the market.
GMO's Event Driven Strategy
Facts
Performance
Documents
Literature
Commentary & Attribution
| Commentary Quarterly | Download | |
| Year-End Letter | Download | |
| Download All | Download |
Risks
Risks associated with investing in the Strategy may include: (1) Merger Arbitrage Risk: the proposed merger or acquisition might not be finalized. If the Strategy buys securities expecting an event-driven transaction (like a merger) and that transaction seems unlikely to happen, is delayed, or doesn’t occur, the market price of those securities may drop significantly, leading to losses; (2) Special Situation Investment Risk: certain Funds may make investments in “special situations,” which are often difficult to analyze. In any such investment opportunity, there exists the risk that the relevant transaction either will be unsuccessful, will take considerable time or will result in a distribution of cash or a new security the value of which will be less than the purchase price to the Fund of the security or other financial instrument in respect of which such distribution is received; and (3) Market Risk - Equities: the market price of equities may decline due to factors affecting the issuer, its industries, or the economy and equity markets generally. Declines in stock market prices generally are likely to reduce the net asset value of the Fund's shares. This is not a complete list of risks associated with investing in the Strategy. Please contact GMO for more information.