(Bloomberg) -- A former Bridgewater Associates LP executive is offering hedge fund-like strategies to everyday investors.
Bob Elliott, who spent 13 years developing portfolio strategy at the world’s largest hedge fund, will launch Tuesday his inaugural exchange-traded fund, known as the Unlimited HFND Multi-Strategy Return Tracker ETF (ticker HFND).
Issued by his alternatives-focused firm Unlimited Funds, it joins a pool of hedge-fund replica ETFs and will use machine learning to track strategies beloved by the fast money, including global macro and equity long-short, according to a statement.
It’s the latest attempt to make hedge-fund strategies more accessible as the Federal Reserve tightens its monetary policy to combat inflation and volatility grips financial markets, sending a traditional balanced portfolio that allocates 60% to equities and 40% to bonds toward its worst year in over a decade.
The S&P 500 Index has tumbled more than 20% this year, while 10-year Treasury yields hover near 3.9%.
At the same time, the $953 million iM DBi Managed Futures Strategy ETF (DBMF), which also deploys machine-learning methods, has seen its shares jump 33% this year, making it the fastest-growing ETF above $50 million in assets in 2022, according to Bloomberg Intelligence. The Global X Guru Index ETF (GURU), which tracks 13F filings, is down about 31%.
The new fund “should give you uncorrelated or at least less-correlated returns assuming the strategy does what it says,” said James Seyffart, ETF analyst at Bloomberg Intelligence. “We know this has worked. DBMF has almost $1 billion in assets and provided meaningfully different and uncorrelated returns particularly over the last year.”
Elliott and Bridgewater parted ways in 2019 after his relationship with a colleague was not properly disclosed, Bloomberg reported at the time. He founded Unlimited Funds with economist Bruce McNevin this year.
HFND will boast an expense ratio of 0.95% -- higher than the average fee for all US-based ETFs, but lower than the typical cost of putting money in a traditional hedge fund, Elliott said.
“The vast majority of traditional hedge funds are a bad deal for investors,” said Elliott, citing the industry’s capital requirements and high fees. “But hedge funds returns -- the returns of the most sophisticated asset managers in the world -- are actually quite good if you don’t have to pay those fees and those taxes.”
Unlimited also plans to launch a suite of ETFs tracking private equity, venture capital and private credit.