Replicating Hedge Fund Returns at ETF Prices | Bob Elliott, HFND

In a recent episode of Behind the Ticker, Bob Elliott, co-founder and Chief Investment Officer of Unlimited, discussed the firm’s mission to democratize hedge fund strategies through innovative ETF structures. Drawing on his experience managing strategies at Bridgewater Associates and running a $125 million venture capital fund, Elliott launched Unlimited to address what he sees as fundamental inefficiencies in traditional hedge funds—high fees, limited access, and tax-inefficient vehicles. Unlimited’s approach uses proprietary technology to replicate hedge fund strategies at lower costs, inside liquid, tax-efficient ETFs.The firm’s latest offering, the Unlimited HFGM ETF (ticker: HFGM), seeks to replicate the returns of global macro hedge funds, offering a 2x exposure to the strategy at just 95 basis points. Elliott explained that global macro is one of the most attractive and diversifying hedge fund styles due to its flexibility across asset classes—currencies, commodities, rates, equities—and its historically low correlation to traditional 60/40 portfolios. By leveraging a machine learning-driven process, HFGM infers the positioning of roughly 500 macro hedge fund managers in near real-time, using public market data and return streams to replicate their exposures.Elliott emphasized that HFGM is fully systematic, with daily updates to inferred manager positioning and weekly average rebalancing. The ETF primarily uses futures contracts for efficiency, allowing both long and short exposure across global macro markets while benefiting from tax-friendly ETF structuring. Elliott stressed that the firm avoids “black box” opacity by grounding its machine learning in intuitive, transparent modeling—essentially scaling the same logic any investor might use to reverse-engineer a manager’s trades, but with far greater accuracy and breadth.He positioned HFGM and Unlimited’s broader ETF suite as part of a shift in portfolio construction—from the old 60/40 model to a more modern 50/30/20 framework, where 20% is allocated to alternatives, including both liquid and illiquid strategies. HFGM, with its manager-diversified exposure, ease of execution, and lack of paperwork or K-1s, offers a compelling way for advisors and institutions to gain hedge fund-like exposure without the drawbacks of traditional LP structures.Get Brad's daily market research: Subscribe to The Signal at thorft.com/newsletterMore episodes: thorft.com/podcast