Episode summary
Unlimited’s Bob Elliott on Making Hedge Fund Strategies More Accessible
ETF Prime
· · Hosts: Nate Geraci, Simeon Hyman · Guests: Bob Elliott, Todd Rosenbluth
Summary
The host first walks through several ETF market developments, starting with Invesco’s proposal to convert QQQ from a unit investment trust into an open-ended fund. The change would enable dividend reinvestment, securities lending, and more disclosure, while cutting the fee from 20 basis points to 18 basis points. He also argues that QQQ and QQQM could continue to coexist because they serve different investor bases, with QQQ used more for liquidity and short-term trading and QQQM appealing more to buy-and-hold investors.
The discussion then turns to Global X’s new PureCap sector ETFs, which are designed to capture true market-cap weightings even when a single stock dominates a sector. The host and guest explain that the structure uses ETF holdings to work around diversification limits and give investors a more concentrated sector expression. State Street’s planned covered call sector ETFs are presented as another sign that derivative-income strategies continue to attract assets.
The second half of the episode focuses on Unlimited’s hedge fund replication ETFs. The guest says the firm is trying to make hedge fund-style returns more accessible through low-cost, liquid ETFs that “index the alpha” of manager behavior. He highlights HFMF for managed futures and HFQ for equity long short, arguing both can provide diversification, defensive characteristics, and a more efficient way to access alternatives than traditional 2 and 20 funds.
Key takeaways
- The host says Invesco’s proposed QQQ conversion could lower costs to 18 basis points and add features like dividend reinvestment and securities lending.
- The guest argues QQQ and QQQM can both succeed because they appeal to different trading and ownership styles despite holding the same stocks.
- Global X’s PureCap sector ETFs are designed to reflect true sector concentration, even when one stock exceeds standard diversification thresholds.
- The guest says Unlimited’s ETF strategy is to “index the alpha” of hedge fund managers and deliver it in a lower-fee, more liquid wrapper.
- The guest expects managed futures and equity long short ETFs to help investors replace part of a bond allocation with more defensive, diversifying return streams.
Notable quotes
“the ETF industry is trying its best in all the different ways that it can to try to innovate”
“you'll be able to do dividend reinvestment. The ETF will do securities lending. Uh there'll be more frequent disclosure. All good things”
“instead of targeting bond-l like risk, we're targeting equity index like risk”
“managed future strategies often demonstrate defensive characteristics because those managers can go short assets at a time when you know long positions are losing money”
How the episode opens
I I have been super impressed by how collaborative, supportive, um you know, helpful to be frank. Uh basically everyone I've interacted with in the ETF business. All right.
Joining me will be Bob Elliot, co-founder and CEO of Unlimited, who continues to build out an interesting suite of hedge fund replication ETFs. That includes two ETFs that launched a few weeks ago, the Unlimited HFMF managed futures ETF and the Unlimited HFQ equity long short ETF. They also offer a global macro ETF which launched earlier this year and a multistrategy return tracker ETF.
But in a nutshell, Unlimited is really attempting to disrupt the traditional hedge fund space. And there's certainly more to it than this, but they're using machine learning to create lowcost replications of traditional 2 and 20 hedge fund style investments. And I'll tell you if you're not familiar with Bob, this is someone with deep expertise in this area.
So he was previously at Bridgewater where he served on the investment committee there. He actually built and read and led uh Ray Dalio's personal uh investment research team. So we're talking about somebody who deeply understands the hedge fund space.
And so Bob and I are going to have a full conversation around the various ETF strategies. unlimited now offers and why investors might want to consider these in a portfolio. Now to start this week, I'll be joined by Todd Rosenbleuth, head of research at Vatify.
And as we like to do from time to time, we have a number of topics to get into. So I like to call this around the world of ETFs with Todd Rosenlue. Todd is always on top of all the latest news and happenings in ETFs.
And so we're going to discuss everything from Invesco attempting to change QQQ structure to some new concentrated ETFs from Global X.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- hedge fund replication etfs
- etf headlines
- qqq restructure
- covered call sector etfs
- momentum etfs
Companies and tickers mentioned
- IVZ
- STT
- Unlimited
- VettaFi
- Invesco
- Global X
- State Street
Watch the episode
Watch “Unlimited’s Bob Elliott on Making Hedge Fund Strategies More Accessible” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
