For investors seeking momentum, IQ Merger Arbitrage ETF (MNA Quick QuoteMNA - Free Report) is probably on radar. The fund just hit a 52-week high, and is up 31% from its 52-week low price of $26.21/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

MNA in Focus

This fund offers capital appreciation by investing in global companies for which there has been a public announcement of a takeover by an acquirer while providing short exposure to global equities as a partial equity market hedge. This is done by tracking the IQ Merger Arbitrage Index. The product charges 75 bps in annual fees from investors (see: all the Hedge Fund ETFs here).

Why the Move?

The M&A space has been an area to watch lately given the flurry of deal activities. The most notable mergers of this month include ConocoPhillips’ (COP Quick QuoteCOP - Free Report) buying U.S. shale oil producer Concho Resources for $9.7 billion in an all-stock deal, and Bristol Myers Squibb (BMY Quick QuoteBMY - Free Report) acquiring heart drugs developer MyoKardia for $13.1 billion or $225 per share in cash. Investors could easily take advantage of the surge in deals by employing the merger arbitrage strategy in their portfolio. This strategy looks to tap the price differential (or spread) between the stock price of the target company after the public announcement of its proposed acquisition and the price offered by the acquirer to pay for the stock of the target company.

More Gains Ahead?

It seems that MNA might remain strong given a positive weighted alpha of 7.90 and a low 20-day volatility of 6.56%. As a result, there is definitely still some promise for investors who want to ride on this surging ETF a little further.

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