Overview
The GMO Event-Driven Strategy seeks to generate absolute return by investing in opportunities that arise from significant corporate events where there is generally some uncertainty about the outcome of the event in question and where the outcome will be known relatively soon. In practice, the Strategy’s portfolio generally includes a heavy focus on merger arbitrage transactions, supplemented by other opportunities that exhibit similar risk, return, and time horizon characteristics.
GMO’s Event-Driven team approaches this opportunity set with a strong emphasis on expected value, assessing the likelihood and returns of each outcome and focusing on situations where the team’s assessment of the expected value is greater than that implied by the market. The governing philosophy behind this value-based approach is that the event-driven space, like many other investment markets more broadly, often exhibits excesses of greed and fear that can lead to compelling value opportunities for investors who combine thoughtful research with a philosophical willingness to deviate from the crowd.
GMO's Event Driven Strategy
Facts
Performance
Documents
Literature
Commentary & Attribution
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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. (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.For a more complete discussion of these risks and others, please consult the Fund's offering documents. This is not a complete list of risks associated with investing in the Strategy. Please contact GMO for more information.