Some of Wall Street’s biggest investors are outrunning markets for the first time in years, riding gains from bets on instability in Europe and a wave of mergers.

Markets the world over have been muddled in recent months by political tensions surrounding Greece and reservations about the Federal Reserve's expected interest-rate increase. The uncertainty has crimped results for investors large and small who piled en masse in recent years into exchange-traded funds that hug closely to now-languishing stock and bond indexes.