Unlimited continues to grow its ETF suite of hedge fund replication strategies with the launch of two new funds. The Unlimited HFMF Managed Futures ETF (HFMF) and the Unlimited HFEQ Equity Long/Short ETF (HFEQ) offer targeted exposure to their respective hedge fund sectors. They trade on the NYSE.
“With the addition of our Managed Futures and Equity Long/Short strategies, Unlimited now offers complementary strategies to help achieve diversification in a wide range of investor portfolios,” Bob Elliott, CEO and CIO of Unlimited, said in the press release. “Deploying these strategies in the ETF wrapper, which offers intraday liquidity, affords the manager flexibility to adjust through volatile markets.”
The actively managed ETFs build on the firm’s vision to bring hedge fund strategies to a wider investing audience. The liquidity, transparency, and affordability of the ETF wrapper make historically difficult-to-access hedge fund strategies more readily available for investors. HFMF and HFEQ both offer targeted exposure to hedge fund sectors captured within the Unlimited HFND Multi-Strategy Return Tracker ETF (HFND).
“Bob Elliot is a legendary investor who has made gaining exposure to hedge-fund-style strategies easier for advisors. It is great to see what the Unlimited team has been building,” Todd Rosenbluth, head of research at VettaFi, said of the fund launches.
Elliott co-manages the ETFs alongside Bruce McNevin, co-founder and chief data scientist at Unlimited.
Democratizing Hedge Fund Sector Access
HFMF seeks to generate a similar return profile as the managed futures sector within the hedge fund industry. Managed futures use trend-following to capture alpha potential in the dislocations between how assets actually trade versus market expectations. It’s an investment strategy with low to negative correlations to stocks and bonds, as it invests in futures.
The fund also seeks to maintain twice the volatility of the managed futures sector, creating potential outperformance. Unlimited uses a proprietary algorithm to create a portfolio of long and short positions in ETFs and futures. These positions replicate the managed futures sectors’ most recent returns, and doubles the volatility.
HFEQ seeks to generate a similar return profile as the equity long/short sector within the hedge fund industry. Equity long/short strategies seek to capitalize on stock gains as well as declines. The strategy works to generate alpha compared to investing in the stock market broadly. It also aims for twice the volatility of the sector to generate potential outperformance.
By capturing the return potential of these hedge fund sectors through an ETF, investors can potentially retain more of their returns. High management fees (2 and 20 fee models) often eroded returns while inaccessibility of many hedge fund strategies proved a barrier for most investors. The ETF wrapper helps to democratize these strategies while replication works to ensure accurate capture of the return profile.
HFMF and HFEQ join the Unlimited HFGM Global Macro ETF (HFGM), launched in April of this year. HFMF carries an expense ratio of 0.95%, while HFEQ maintains an expense ratio of 1.00%.
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