Backed by decades of experience in the hedge fund industry, Unlimited Funds ETF solutions are designed to offer access to hedge fund–style returns, diversification, preservation of capital, transparency and real-time insights, and accessibility.
To discuss the innovative approach Unlimited is taking in the world of exchange-traded funds (ETFs), Wealth Advisor Managing Editor Scott Martin spoke with Cofounder, CEO, and CIO Bob Elliott in a discussion that ranged from the cofounders’ extensive background in the hedge fund industry to the firm’s cutting-edge machine learning technology. Combined, these factors enabled Unlimited to create ETF products that replicate the risk-return profiles of hedge funds, making them accessible to a wider range of investors—and how RIAs and BDs can incorporate these solutions into their clients’ portfolios.
Elliott and his cofounder, Bruce McNevin, bring nearly 50 years of combined experience in the hedge fund business to the table. Their mission is to harness this expertise and leverage modern machine learning techniques to better understand how hedge fund managers are positioned in almost real time.
This understanding is then translated into long and short positions in liquid securities that support ETF products aimed at mimicking the expected risk and return profiles of the hedge fund industry.
One of the key questions Martin raises is how machine learning plays a role in emulating hedge fund systems in real time. Elliott explains that Unlimited’s technology effectively reverse engineers the positions hedge fund managers hold at any given moment by analyzing their returns, known investments, and other relevant data. This approach allows Unlimited to generate timely insights into these positions.
Unlimited’s systematic approach to replicating hedge fund strategies offers several advantages. For one, it’s highly repeatable, ensuring that Unlimited Funds ETFs adhere to the same rules and methodologies consistently. This consistency is a hallmark of index-based investing.
Furthermore, this systematic process enables a historical analysis of how the strategy would have performed in the past. It allows for an assessment of the strategy’s efficacy, giving advisors and investors greater confidence in the approach.
One of the most significant benefits of Unlimited Funds’ innovation Martin and Elliott discuss is the democratization of hedge fund–style returns. Traditional hedge funds typically cater to high-net-worth individuals, excluding many investors from enjoying these returns. However, by replicating hedge fund strategies through ETFs, Unlimited Funds makes these returns accessible to a broader audience, including mass-affluent clients who might not otherwise have this opportunity.
Elliott emphasizes that Unlimited’s technology models all major hedge fund–style strategies, including equity, long-short, and global macro. This broad coverage ensures that these ETFs can mimic the diversity of the hedge fund universe.
Hedge funds have a reputation for delivering strong returns with lower volatility compared to stocks. Elliott highlights that, over time, hedge funds have indeed generated returns superior to those of stocks while exhibiting less than half the volatility and only one-third of the drawdowns. This combination of returns and risk management is appealing to most investors.
Notably, hedge fund managers tend to maintain a relatively conservative investment stance during challenging market conditions, focusing on preserving capital. In contrast, they become more aggressive in deploying capital during favorable market environments, capitalizing on opportunities. Mimicking this dynamic approach can help protect investors’ portfolios during market downturns while maximizing gains during upswings.
For advisors and investors looking to explore Unlimited’s offerings, the ticker symbol for the firm’s ETF products is HFND, inspired by “hedge fund.” This ticker simplifies the process of identifying and investing in these innovative ETFs.
In the world of investment innovation, Unlimited Funds is breaking new ground by making hedge fund–style returns accessible to a wider audience through ETFs. The firm’s systematic approach, backed by machine learning technology, allows Unlimited to replicate the strategies of hedge fund managers, offering investors a way to diversify their portfolios and potentially achieve more consistent returns with lower volatility.
For RIA and BD advisors, Unlimited offerings provide a unique opportunity to offer clients access to a previously exclusive realm of investment strategies. As we continue to witness advancements in technology and finance, Unlimited stands as a testament to the democratization of financial markets.
