Bob Elliott

Bob Elliott spent almost 15 years at Bridgewater Associates, the world's largest hedge fund, creating investment strategies across a wide range of asset classes. He also ran a $125 million venture capital fund. The experience led to a realization: hedge fund managers generate plenty of good returns, but the fees are too high, access is too limited, and the structures are tax-inefficient. "The 2-and-20 business is pretty good for the manager and not that great for the investor," he said. That got him thinking about whether there was a way to bring diversified, low-cost indexing to the 2-and-20 world. He started Unlimited Funds to do exactly that.

On this episode of Behind the Ticker, Bob walks Brad through HFGM, the Unlimited HFGM Global Macro ETF. It uses proprietary machine learning to replicate global macro hedge fund positioning at 2x leverage, delivered in an ETF wrapper at 95 basis points instead of 2-and-20.

Replicating Hedge Funds With Technology

Unlimited's approach doesn't invest in hedge fund managers directly. Instead, they've built proprietary technology that looks over the shoulder of roughly 500 global macro managers, both systematic and discretionary, to see how they're positioned in real time. They're inferring positioning from market data and manager performance, then packaging that understanding into ETF products. Think of it as aggregating the wisdom of the crowd from 500 different investment processes.

Their first product, HFND, was designed as "SPY for hedge funds," intended to track the broad hedge fund index. More importantly, it proved the technology works. With that validation, they moved to individual sub-strategies. HFGM targets global macro specifically, offering 2x the return of the global macro hedge fund sector.

What Global Macro Managers Actually Do

Elliott explained the distinction between global macro and managed futures, which sounds similar but differs in important ways. Both trade global currencies, commodities, fixed income, credit, and equity indices. But global macro managers use a broader set of indicators beyond just price trends. They consider macro economic dynamics, policy dynamics, and value-oriented factors alongside price movements. It's a comprehensive set of lenses applied to global assets. The fund can go long Japanese equities if that's the most compelling trade, or short commodities if the macro picture supports it.

Brad pointed out that the current environment, where policy changes seemingly every few days via social media posts, must be a wild ride for global macro positioning. Elliott agreed but noted that this is exactly the kind of environment where global macro managers tend to earn their keep. The fund expresses positions through futures contracts and a few index ETFs. No individual stock selection goes into this portfolio.

Daily Updates, Weekly Trading

The technology ingests daily information on both market movements and manager performance to incrementally update its inference on positioning. They're functionally running the model every single day, but they don't necessarily trade daily. They balance how far desired positions have drifted from held positions against transaction costs. In practice, they trade roughly four times a month, roughly weekly on average. During large market moves, that can accelerate. During calmer periods, it slows down.

Why Advisors Care

Elliott framed the opportunity from the advisor's perspective. Most advisors have a few big anchor clients who are accredited and can invest in individual hedge fund managers. But they have dozens of smaller clients who aren't qualified, don't want to deal with K-1s, medallion signatures, and subscription documents. "You're getting emails in April wondering where K-1s are," Brad joked. Elliott's pitch: HFGM delivers institutional-quality macro returns in an ETF that any client can own, with daily liquidity, no K-1, and a 95-basis-point fee.

The 2x leverage component is key. At 1x, the returns from macro hedge funds might not be compelling enough versus their cost. At 2x, you're getting equity-like return potential from a strategy that's anti-correlated to traditional assets, at less than half the all-in cost of a direct hedge fund investment. More sub-strategy ETFs covering equity long-short and managed futures are planned for later in the year, building out a full suite of accessible alternative exposure.

Key Takeaways

• HFGM uses machine learning to infer positioning from roughly 500 global macro managers (both systematic and discretionary) and replicates it at 2x leverage using futures and index ETFs.
• The technology updates daily but trades roughly weekly, balancing position drift against transaction costs. Large market moves can trigger faster rebalancing.
• Bob Elliott spent almost 15 years at Bridgewater Associates and ran a $125 million venture fund before founding Unlimited.
• The fund charges 95 basis points versus the industry standard 2-and-20, with no K-1, no lockup, and daily liquidity in an ETF wrapper.
• Additional sub-strategy ETFs (equity long-short, managed futures) are planned for launch later in the year, building a full suite of accessible hedge fund exposure.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.