I very much appreciate low volatility and limited potential for drawdowns. So with 5% to 7% per annum being my target, I've been setting up the following bond alt sleeve:
IRA:
PAPIX - Option trading
ARBIX/ARBOX - Hedged Equity
HMEZX - Merger Arb
BUYW - Option income
Taxable acct:
BALT - Wealth Defender - Defined outcome ETF (capped)
ALLW - SPDR Bridgewater All-Weather ETF (Ray Dalio)
PSFF - Buffered FOF
PRPFX
It will be interesting to see if it gets me there. Expecting a market test at some point to see how it floats.

The market can go on with blinders for quite some time. We've seen this movie before.
Meanwhile, I've been adding to lower volatility funds - CBLDX, ARBOX, HMEZX, QDSNX, BALT.

Thanks everybody for your input.
I think many of those merger-arbitrage funds (MERFX, ARBFX, CMRGX, and HMEZX) are more like absolute return funds. I’m not opposed to those type of funds, but I don’t think they are what I’m looking for in this area. However, I might consider to add HMEZX to my portfolio. It looks pretty steady while being another diversifier from stocks and bond funds. I am definitely staying away from EMAYX. It does look volatile.
I looked into LSHAX. I don’t know if I will invest in that fund, but I read the managers commentary and it lead me into some other ideas. I apologize, I’m going to go a little off-topic here, but one of the managers main themes is the demand for energy, and there will be a continued high demand. The managers mention AI and data centers will require large amounts of energy. This is likely the reason for the funds huge allocation to Texas Pacific Land Corparation, which is an oil play. I might consider looking into investing in midstream energy/energy infrastructure,
I am thinking I might move away from the mergers and acquisitions theme and look for other opportunities. Thanks again for everyone’s recommendations and advice.

In the Event Driven category, HMEZX is most steady, but then you have lower expected returns (typcially 4% to 5% annually).
EVDAX has a much higher SD, but higher overall returns expected.

I've learned to expand my definition of alternative funds. I look at PVCMX as an alt fund in that it uses cash for defense - in a manner quite different from most other funds (thus the ALT view).
Low SD of 5, with a 7.84% 5 yr return. It's worst quarter in 5 years was -(1.83%).
I had purchased QQMNX recently as well, but that's it for market neutral funds. It will sit alongside HMEZX, RSIVX, WBALX, CBUDX, CBLDX. Low SD grinders that I hope get me close to 7% annually.
Many true ALT funds are finicky.

Shooting for 7% returns over time, but with very low volatility (SD). I am considering the following allocation:
PHEFX 15%
FMSDX 15%
CBLDX 15%
SWHFX 10%
PVCMX 10%
HMEZX 10%
HELO 10%
PRPFX 5%
LCORX 5%
RSIVX 5%
Can you do better? Please share your ideas.

As my CDs mature, I am considering the following low volatility allocation for my retirement portfolio :
HELO 10%
ICMUX 25%
PRCFX 25%
QQMNX 15%
RCTIX 25%
Two of the funds are fairly new, HELO and PRCFX, but they are run by excellent and very experienced managers.
Available PV data over the past eight months is as follows:
Total Return = 9%
Std Deviation = 2.8%
Sharpe Ratio= 2.8
Sortino Ratio = 4.8
Can I do better, JD? I don't know, just sharing my ideas.
But, good luck.

...also interesting that no one has mentioned bitcoin...are we just a bunch of older dudes fighting the last war or are we going to open our minds and skate to where the puck is headed not where it is and has been?
Looking forward for this exercise, I am considering "continuity of fund managers", what are their ages and what is the bench strength and financial soundness of the fund company?

What is this "bitcoin" you speak of?
As regards fund managers, I keep looking at AQR funds. They stunk it up a few years back, and then changed out a bunch of their managers. Since then, they have been performing very well. Can they be trusted?
HMEZX - a super steady merger-arb fund, but the Fund Manager (Dondero) has a checkered past. Is there hidden risk there?

Shooting for 7% returns over time, but with very low volatility (SD). I am considering the following allocation:
PHEFX 15%
FMSDX 15%
CBLDX 15%
SWHFX 10%
PVCMX 10%
HMEZX 10%
HELO 10%
PRPFX 5%
LCORX 5%
RSIVX 5%
Can you do better? Please share your ideas.

Looking to replace MMKT funds and still try for 5% per year after rates are reduced, with low volatility. RSIVX (RSIIX)and RPHYX (RPHIX) are getting initiated, and will sit next to HMEZX and CBLDX. Boring is desirable in this bucket.
The Fed should just leave the darn rates alone.

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?