Fund Evaluator:
Water Island Credit Opportunities R (ARCFX)
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Best Performing in Nontraditional Bond Over the Last Year
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Fund Details
Water Island Credit Opportunities R Overview
Water Island Credit Opportunities R (ARCFX) is an actively managed Taxable Bond Nontraditional Bond fund. Arbitrage Fund launched the fund in 2012.
The investment seeks to provide current income and capital growth. The fund invests primarily in a portfolio of debt securities including corporate bonds and debentures (including high yield bonds commonly known as "junk bonds"), bank loans, convertible and preferred securities, credit default swaps and other debt instruments and derivatives that the fund's investment adviser believes have debt-like characteristics. It invests in both U.S. and foreign debt securities. The principal types of derivatives in which the fund may invest are credit default swaps, interest rate swaps, total return swaps, futures and options.
About Water Island Credit Opportunities R (ARCFX)
There are 3 members of the management team with an average tenure of 7.73 years: Matthew Osowiecki (2025), Gregory Loprete (2012), John Orrico (2018). Management tenure is more important for actively managed funds than passive index funds.
The fund has 2 primary benchmarks: Bloomberg US Agg Bond TR USD index with a weighting of 100% and ICE BofA US 3M Trsy Bill TR USD index with a weighting of 100%. Water Island Credit Opportunities R has 64 securities in its portfolio. The top 10 holdings constitute 33.8% of the fund’s assets. The fund meets the SEC requirement of being classified as a diversified fund. The fund is not considered to have an ESG focus with its investment selection and management.
Water Island Credit Opportunities R is part of the Fixed Income global asset class and is within the Taxable Bond fund group. Water Island Credit Opportunities R has 1.9% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is -6.9%. There is 0.0% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 50.5% (48.6% domestic bond, 1.9% foreign bond and 24.1% convertible bond). Water Island Credit Opportunities R has 32.4% of the portfolio in cash.
Assets Under Management
The fund has $3 million in total assets, which is below the $663 million average for the Nontraditional Bond category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.
ARCFX Performance and Fees
The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Water Island Credit Opportunities R expense ratio is high compared to funds in the Nontraditional Bond category. Water Island Credit Opportunities R has an expense ratio of 1.27%, which is 10% lower than its category average, making the fund expense ratio grade a C. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.
High portfolio turnover can translate to higher expenses and lower aftertax returns. Water Island Credit Opportunities R has a portfolio turnover rate of 132%, indicating that holds its assets around 0.0 years. By way of comparison, the average portfolio turnover is 304% for the Nontraditional Bond category.
Recently, in the month of July 2026, Water Island Credit Opportunities R returned -0.1%, which earned it a grade of B, as the Nontraditional Bond category had an average return of -0.2%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all funds in that category.
Water Island Credit Opportunities R has a trailing yield of 3.63%, which is below the 4.94% category average. The fund normally distributes its income monthly.
It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.
Water Island Credit Opportunities R Grades
Year to date, the fund has returned 2.1%, 0.9 percentage points better than the category, which translates into a grade of B. The fund has returned 3.8% over the past year (grade of C), 5.1% over the past three years (grade of D) and 3.4% per year over the past five years (grade of B) and 3.5% per year over the past 10 years (grade of C).
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ARCFX Trailing NAV Total Returns Data as of 7/31/26
| Last Month |
Last Quarter |
Ann'l. 1Yr |
Ann'l. 3Yr |
Ann'l. 5Yr |
Ann'l. 10Yr |
|
| ARCFX Return (NAV) | -0.1% | 0.7% | 3.8% | 5.1% | 3.4% | 3.5% |
| ARCFX Grade | B | B | C | D | B | C |
| +/- Category | 0.2% | 0.3% | -0.6% | -0.5% | 0.9% | 0.4% |
| Nontraditional Bond Avg | -0.2% | 0.4% | 4.4% | 5.6% | 2.5% | 3.1% |
| ARCFX Tax Cost Ratio | na | na | 1.5% | 1.7% | 1.6% | 1.3% |
ARCFX Annual NAV Total ReturnsData as of 7/31/26
| 2026 | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | |
| ARCFX Return (NAV) | 2.1% | 4.6% | 5.2% | 7.0% | -2.9% | 3.1% | 6.4% | 5.3% | 1.7% | 1.1% | 4.7% |
| ARCFX Grade | B | D | D | C | B | B | B | D | A | F | C |
| +/- Category | 0.9% | -2.2% | -0.2% | 0.5% | 3.1% | 1.7% | 1.0% | -1.3% | 2.5% | -3.0% | -1.7% |
| Nontraditional Bond Avg | 1.2% | 6.8% | 5.4% | 6.5% | -6.1% | 1.3% | 5.4% | 6.5% | -0.8% | 4.1% | 6.4% |
| Risk Measures | |
| Standard Deviation: | 1.0% |
| Total Risk Index: | 0.08 - Low |
| Category Risk Index: | 0.28 - Low |
| Category Risk Grade: | A (5% Rank) |
| Beta: | 0.09 |
| R-Squared: | 27% |
| Leveraged Fund: | No |
| Inverse Fund: | No |
| Portfolio Characteristics | |
| Equity Investment Style: | na |
| Bond Investment Style: | na |
| Yield: | 3.6% |
| Dividend Distribution: | Monthly |
| Cap Gains Distribution: | |
| Total Assets: | $171 Mil |
| Fund Total Assets: | $ 4 Mil |
| Share Class Type: | Retirement |
| Portfolio Turnover: | 132% |
Management Team
| Number of Managers: 3 | |||
| Longest Tenure: 13.8 years | |||
| Average Tenure: 7.7 years | |||
| Managers (Year): Loprete Gregory (2012), Orrico John (2018), Osowiecki Matthew (2025) | |||
Portfolio Composition (as of 5/31/26)
| # of Holdings: | 64 |
| % in Top 10 Holdings: | 33.8% |
| Fund is Non-Diversified: | No |
| % in Foreign Issues: | 1.9% |
Portfolio Allocation |
|
| Domestic Stock: | -6.9% |
| Foreign Stock: | 0.0% |
| Preferred Stock: | 0.0% |
| Domestic Bond: | 48.6% |
| Foreign Bond: | 1.9% |
| Convertible Bond: | 24.1% |
| Other: | -0.1% |
| Cash: | 32.4% |
Purchase Information
| Fund Family: | Arbitrage Fund |
| Phone Number: | 800-295-4485 |
| Website: | www.thearbfund.com |
| Status: | Open |
| Inception Date: | October 1, 2012 |
| Min. Initial Purchase: | $2,000 |
| Min. Initial IRA Purchase: | $2,000 |
| True No-Load: | Yes |
| Front Load Maximum: | 0.00% |
| Deferred Charge Maximum: | 0.00% |
| Redemption Charge Maximum: | 0.00% |
| 12b-1 Fee: | 0.25% |
Expenses and Fees | |
| Expense Ratio (%): | 1.27% ( Rating : High ) |
| Category Average Expense Ratio (%): | 1.42% |
| Share Class: | Water Island Credit Opportunities I |
| Min. Subsequent Purchase: | $ 0 |
| Min. Subsequent IRA Purchase: | $ 0 |
