Bob Elliott, co-founder and CIO of Unlimited, returns to Behind the Ticker to break down how his firm is bringing Vanguard-style indexing to the hedge fund world. After spending the bulk of his career at Bridgewater building proprietary investment strategies, Bob launched Unlimited on two truths the industry wouldn't say out loud—institutional hedge funds are largely no better than their peers over time, and managers take nearly all the alpha in fees. His solution: diversify across managers, cut fees to a fraction, and deliver it all through liquid ETFs.
About Bob Elliott and Unlimited Funds
Bob Elliott spent the majority of his career at Bridgewater Associates, where he developed proprietary investment strategies across a wide range of asset classes. Together with his co-founder, they bring over 50 years of combined experience building and managing hedge fund strategies. That deep practitioner background is central to how Unlimited approaches its replication technology—it's built by people who have actually run money, not just modeled it.
Unlimited now manages a growing suite of hedge fund replication ETFs, including HFND (their flagship broad hedge fund index), HFEQ (equity long-short), HFMF (managed futures), and HFGM (global macro). The firm has crossed $100 million in their global macro strategy alone within nine months of launch, a testament to the resonance of their approach with advisors.
Investment Strategy and Approach
Unlimited's core thesis rests on two observations: first, that institutional-quality hedge funds are largely indistinguishable from their peers over time, and second, that managers capture nearly all the alpha they generate through fees. The logical solution is to diversify across managers—reducing idiosyncratic risk—and slash fees dramatically. Unlimited's 2X target return products charge roughly one-tenth of traditional hedge fund fees.
The firm's proprietary third-generation replication technology uses Bayesian machine learning to infer how hedge fund managers are positioned in near-real-time. Unlike older rolling regression approaches that average months or years of data, Unlimited's model solves for today's portfolio in the context of previous portfolios, capturing adaptive alpha that simpler methods miss. The key insight: managers cannot flip positions instantaneously, so positioning is path-dependent—constraining the universe of plausible portfolios at any given moment.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Bob Elliott covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
Bob shared a critical distinction between how practitioners and academics approach systematic investing: "Any of these systematic approaches, there's an art and a science to it. Part of what you have to do in the process is to say, how do I create something that will, in the moment, may not look as good as it could, but will in the future look better than how it could look in the moment." He emphasized that robustness beats optimization every time—95% of their explorations to improve the process fail, which he views as a positive signal that the original approach wasn't over-fit.
On the difference between real money managers and technologists building strategies: "No academic would solve a problem as comprehensive and parsimonious, because it inevitably will look worse relative to all the traditional academic outputs, even though it's a much better way to manage money." The willingness to accept a solution that looks slightly worse on paper but performs better in live markets is, in Bob's view, the hallmark of experienced asset managers.
Market Context and Positioning
Bob made a compelling case for moving from 60-40 to 50-30-20, arguing that the biggest indictment of liquid alternatives has been low volatility and high fees—but it doesn't have to be that way. By targeting equity-index-level volatility in their 2X products and cutting fees dramatically, Unlimited delivers a fundamentally different return profile: high diversification potential without the drag on long-term expected returns that plagued previous generations of liquid alts.
On growing a boutique ETF business: "The biggest risk you have as a startup ETF issuer is that you blow yourself up spending too much money on sales and distribution. We have seen one company after another blow through tens of millions of dollars without much to show for it." Unlimited's approach is guerrilla marketing—leveraging live data on every RIA's holdings to target advisors with the highest probability of interest, rather than competing on billboard spend with BlackRock and Vanguard.
Notable Insights
"The key strategy to be the best hedge fund manager you can is to diversify across managers to reduce idiosyncrasy and reduce fees. That's what Unlimited is all about—taking that core set of concepts of diversified low-cost indexing, which has totally changed the way people think about investing, and bringing it to the world of hedge funds."
"If you build something that's robust at the outset, it's actually pretty hard to do something better. 95% of your explorations fail in terms of improving the process. That can be demoralizing, but actually it means you haven't over-optimized your thing."
"We are guerrilla marketers. We basically know the contact information for every single advisor in the country. We have live data about what basically every RIA holds in their portfolios. And we channel information to those folks who have the highest probability of being interested."
Key Takeaways
- Unlimited's third-generation replication technology uses Bayesian machine learning to infer hedge fund positioning in near-real-time, capturing adaptive alpha that older rolling regression approaches miss.
- The 2X target return products (HFEQ, HFMF, HFGM) deliver hedge fund exposure at equity-index-level volatility and roughly one-tenth of traditional hedge fund fees.
- HFGM (global macro) is the firm's recommended entry point for most advisors—offering all-weather alpha potential with diversification and moderate defensiveness.
- HFEQ (equity long-short) can serve as an active equity replacement, with hedge fund managers outperforming the vast majority of the top 100 actively managed equity ETFs on a matched timeframe.
- Bob advocates for a 50-30-20 portfolio framework (equities, fixed income, alternatives) over traditional 60-40, arguing the time to allocate to alternatives is when you don't think you need them.
- For startup ETF issuers, the biggest risk is overspending on sales and distribution before product-market fit is established.
What This Means for Advisors
For financial advisors evaluating hedge fund exposure for client portfolios, this conversation with Bob Elliott highlights a critical shift in how alternatives can be accessed. Unlimited's approach—diversifying across managers, slashing fees, and delivering through liquid ETFs—addresses the two biggest historical complaints about hedge fund allocations: high costs and manager-specific risk. The 2X target return products are particularly relevant for advisors who want meaningful alternative exposure without dedicating oversized portfolio allocations to strategies with historically low volatility.
The themes of alternative strategies, systematic replication, and portfolio construction discussed in this episode are especially relevant as advisors reconsider the role of fixed income as a diversifier and explore more efficient paths to genuine portfolio diversification.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Bob Elliott, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.