One would think that with $2.7 trillion in deals last year, merger mutual funds would be booming. Alas, most of them are recording returns that range from slightly in negative territory to 5% gains, making them not a popular choice for the mutual fund investor. Part of the problem, according to The Wall Street Journal, is that despite the hundreds of deals out there, merger funds are competing with their higher-heeled hedge funds for the same deals. This pushes the share price up well before the completion of a deal, so when the deal is done, the funds won't see the big returns they might have otherwise from a depressed pre-deal price. 

Mario Gabelli, who manages the Merger Gabelli ABC Fund, told The WSJ, "Investors should think about this as an enhanced money market return."