There's no shortage of conservative funds that claim they can smooth the ride. Choose your poison. Many of us like to play around for fun.
Here are some "diversifiers" from my watchlist, some of which I would buy, and some I would not.
-Balanced/Allocation Funds (VWINX, VWELX, PRCFX)
-Multi-Asset (MAFIX, REMIX, PRPFX, QDSNX)
-L/S and Market Neutral Funds (QLENX, VMNFX)
-Option strategies (JHQAX, HELO)
-Merger Arb (HMEZX, ARBFX)
-Funds that are willing to hold Cash (PVCMX, LCORX)
-Low volatility (MLVAX, SPLV)

The bond sleeve of my portfolio was reorganized as the ballast sleeve in early 2022 as the bond world ran into serious trouble. SVARX survived the transition and CBLDX and HMEZX were added (a small residual holding of RCTIX also remains). Those holdings held up relatively well through 2022. The goal of the sleeve for 2023 remains ballast (with upside potential). SVARX has the potential to do well once conditions in the bond market improve. CBLDX is more defensive but has upside potential in a more favorable bond market. HMEZX continues to chug along. Maintaining the ballast and cash sleeves at 20% of the portfolio makes sense to this 70 something investor as 2023 begins (cash = RPHIX and FZFXX). No changes are currently on the horizon.

To evaluate HMEZX it may be useful to look at other funds managed by Dondero, such as HHCZX, HSZAX. I looked, and I did not like them. It does not necessarily mean that HMZEX is bad, but it just made me less interested in this fund.

Thank you for the comments, my appeal to both funds because although they may have different investment approaches can be used as "cash" when the funds are not invested, like right now. I am about 95% in RPHIX. Why wait when the markets break moving averages as even smart people like Meb Faber in Tactical Asset Allocation use tools to reduce the drawdowns and stomach ulcers, Ulcer Index. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=962461.
This is my personal view, in contrast to a view by the bogleheads crowd to hold the allocation no matter what. Yes, I am using various tools to gauge the risk levels and premiums. Let's just say that even if you hold equities, it is a very smart idea to add put options as well in today's environment. I don't "play" too much with options, but the tools are handy. Why sit in the 17%-20% drawdowns, especially knowing that the Fed will continue to reduce liquidity from the market?
And as @TheShadow mentioned Fed just raised the CDs and you are locking yourself for several years and risking paying early withdrawal penalties. I do have 3% CDs with Andrews. I locked right when Covid hit. It doesn't make sense to have all my money in CDs.
The appeal of HMEZX is that although it has a bit higher st deviation, the return is higher with this vs RPHIX. I use portfoliovisualiser extensively, and although, it is a backward-looking tool, it provides clues about the stability of funds and how they fared in various environments.
So, I goal is to ask if you have valid reasons to avoid HMEZX, but also looking forward to your thoughts/ideas. Thank you

I was interested in HMEZX, but then I was concerned by the unimpressive performance of other funds managed by the same manager (Dondero), and by general comments that can be found here: https://www.institutionalinvestor.com/article/b1l0wrph2lc0j6/Nothing-Can-Stop-This-Hedge-Fund-Soap-Opera

The OP discussed HMEZX, a merger type fund, which is quite different from that of RPHIX. I selected a comparable fund, MERFX, which by coincidence, I have owned for numerous years.
You can see the returns here for MERFX since its inception:
https://finance.yahoo.com/quote/MERFX/performance/
MERFX was closed to new investors as of June 1, 1996 and resumed sales in 1998.
(closed)
https://www.sec.gov/Archives/edgar/data/701804/0000950123-96-002625.txt
(re-opened)
https://www.sec.gov/Archives/edgar/data/701804/0000950123-98-008974.txt
MERFX's YTD return is (1.61%) according to Google which is better than many of my other mutual funds.
Concerning one year cd rates, the rates have only increased due to the FED increasing interest rates in the last several meetings. Before those meetings. short term CD rates were abysmal in comparison to RPHIX.

I agree with @LewisBraham. Two very distinct funds. RPHIX does not have many comps except either Crossingbridge's Low Duration High Yield Fund or Ultra Short Duration Fund, both of which have the same manager with different fund families. HMEZX would most likely compare to something similar to Virtus' Merger Fund (MERFX).
The type of fund you seek depends on what your objectives are and your time horizon.

Good evening MFO members,
Like many (most) of you, I am periodically assessing and reassessing funds. A great thank you to David and many of you who favorably talked about one of the good-stable funds, RPHIX. I greatly appreciate the fund manager for navigating the fund with great care and stability.
Recently, I came across another promising fund, HMEZX. I saw a talk on this site about potential bankruptcy/lawsuits involving the fund and its manager, but it has been a year ago. When I plugged RPHIX and HMEZX into the portfolio visualizer, it seemed the Merger fund had better potential.
What are your thoughts?

@davfor, I also watch HMEZX, looks really interesting, but I am confused by mixed record of its manager James D. Dondero, e.g. at HSZAX, HHCZX, etc., see also https://www.institutionalinvestor.com/article/b1l0wrph2lc0j6/Nothing-Can-Stop-This-Hedge-Fund-Soap-Opera
Did you check it?

I was aware of the issues with Dondero and reviewed articles about them in the past as well as concerns raised by board members at this discussion site. But, NexPoint Advisors' real estate/REIT and BDC focus were a plus in my mind given the small cap focus of HMEZX. In the end, the 5 1/2 year performance record of HMEZX outweighed the concerns raised about the Highland Capital issues. So, I was comfortable to invest 3.2% of my invest portfolio in this fund.....but will remain on the watch for new developments related to Dondero's problems.

I'm also confused by the bankruptcy status of Dondero and its possible effect on the funds. I've capped my investment at $1,000 at Vanguard and Schwab in HMEZX because I have this irrational fear that my investments could be confiscated or locked up due to this bankruptcy fiasco !

@davfor, I also watch HMEZX, looks really interesting, but I am confused by mixed record of its manager James D. Dondero, e.g. at HSZAX, HHCZX, etc., see also https://www.institutionalinvestor.com/article/b1l0wrph2lc0j6/Nothing-Can-Stop-This-Hedge-Fund-Soap-Opera
Did you check it?

@Junkster That didn't happen. I have been watching the bond world shift during Q1 of 2022 (including in the mortgages area you mentioned yesterday) and expect that trend to continue for a few more months or longer. What tipped the scales on RCTIX were the circumstances surrounding the manager departure and the uncertainties created by that event. RCTIX has been a successful holding for me. But, with everything considered, it doesn't presently belong in my portfolio's OEF ballast sleeve. I also sold PEGAX in that sleeve recently. CBLDX and HMEZX are the two chosen replacements. (The ballast sleeve is the only OEF sleeve modified since the start of the year.)

HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

At one time I saw where you were a holder of RCTRX which was a good move. I had tried to purchase it awhile back but unable to do so. I wouldn’t necessarily advise buying it now though.

Funny, I just recently sold RCTRX. Decided the only way to hold bonds of any class will be via Allocation funds. I have ZERO feel for when debt will be a "good" investment again, whether that be HY, Munis, MBS, etc.

I am thinking when the fog lifts and momentum swings back to the upside that junk bonds will be the trade in Bondland. In the past they pretty much rose in tandem with equities. I am compiling a list of the junk funds for the next go around, But some people much smarter than me make a compelling case that the 10 year will normalize around 4%. If they finally get it right this time, unlike the past decade, not sure that bodes well for junk corporates. Could be a rough road for anything bond related especially if the Fed decides to actually take a stand against inflation.

HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

At one time I saw where you were a holder of RCTRX which was a good move. I had tried to purchase it awhile back but unable to do so. I wouldn’t necessarily advise buying it now though.

Funny, I just recently sold RCTRX. Decided the only way to hold bonds of any class will be via Allocation funds. I have ZERO feel for when debt will be a "good" investment again, whether that be HY, Munis, MBS, etc.

HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

Lots of funds green for the year just very few in the multi sector income category as Charles was alluding to. RCTRX is a little known income fund that has held firm through the turmoil in its sister funds ala IOFIX, SEMPX, and others. At one time I saw where you were a holder of RCTRX which was a good move. I had tried to purchase it awhile back but unable to do so. I wouldn’t necessarily advise buying it now though.

HMEZX and PVCMX are both up YTD. Its nice to see a little green in there somewhere.

+1 stay calm UDF website bullet-point dated 10/25/21 mentions the allegation that James Dondero siphoned millions from his former company Highland Capital Management. Certainly increases my confidence in HMEZX! Snarky comment well-deserved !

Wondering if the legal issues connected to HMEZX have been cleared up-specifically the Jim Dondero bankruptcy, etc ?

I'm guessing somebody like Dondero maximizes his litigation efforts and makes sure it all gets buried, a la 45. A decent (and highly paid) legal team can do that.

Wondering if the legal issues connected to HMEZX have been cleared up-specifically the Jim Dondero bankruptcy, etc ?

I love the concept of CTFAX and trying to time the markets. Equities are generally overvalued, at least by historical metrics.
Can CTFAX really get "ahead" of things? It shifted its allocation a while ago. The markets (thanks to the Fed) are resilient. CTFAX is a defensive play in an era when defense is RARELY rewarded.
Along with some other low-return grinders (CVSIX, HRSAX, HMEZX, ARBIX, etc), I expect annual returns close to 4% . Which means that now inflation is destroying my portfolio. What is the actual U.S. inflation rate at - 12%?
Tough to manage your portfolio when inflation rages and your fund returns are essentially capped. I think this is a major issue for a fund like CTFAX this year. If there is no Stock market crash in 2022, or at least a very strong correction, is it a failure?