Financial News Online reports that Bear Stearns has launched an index that it claims is the first to allow customers to passively invest in risk-arbitrage strategies. The index includes companies that have received all-cash acquisition offers. It is made up of 25 U.S. companies. The index is rebalanced weekly. Bear Stearns will likely develop some derivatives on the index and similar indexes for Europe. It obviously senses demand for passive products, even at the retail level, as do the many other top banks. Merrill Lynch and Goldman Sachs have also developed passive products, which some think will account for 40 percent of hedge fund sales in about 10 years.  

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- here's the Financial News Online article [1]