Ex-Bridgewater exec Bob Elliott’s Unlimited raises venture capital to help launch ETFs replicating hedge-fund, private-equity strategies


Unlimited Funds, an investment firm co-founded last year by former Bridgewater Associates executive Bob Elliott, has raised fresh capital to expand its offering of exchange-traded funds and market insights. 

Venture-capital firm FirstMark and Citi Ventures led $8 million of funding for Unlimited, providing equity under a so-called Series A round of financing that includes previously unannounced convertible notes from Material, said Elliott, chief executive officer and chief investment officer of Unlimited, by phone.

Unlimited was started in February 2022 with initial funding from Material in the form of the notes that now have been converted to equity under the Series A round, he said.

“This is not just about building financial products and putting them out there,” said Elliott, who previously was a member of the investment committee at Bridgewater, the world’s largest hedge-fund firm. “It’s about leveraging our decades of insight managing money at some of the most sophisticated institutions in the world and bringing that insight to the adviser community.”

Unlimited, which in October launched an ETF that uses machine learning to track aggregate hedge-fund returns gross of fees, plans to offer additional exchange-traded funds that give individual investors exposure to alternative investment strategies. The firm aims to create ETFs that provide access to returns replicated from alternative strategies within the hedge-fund world and beyond.

“Creating hedge-fund strategy ETFs is our most immediate focus,” said Elliott, pointing to individual investing strategies used by hedge funds. Those could include equity-long-short, global-macro, event-driven, emerging-markets and managed-futures strategies, he said.

The Unlimited HFND Multi-Strategy Return Tracker ETF
which began trading in October, tracks a diverse group of hedge-fund strategies to construct its portfolio and may provide exposure to a mix of equities, bonds, commodities and currencies. 

Unlimited’s vision is to bring the types of alternative strategies available to institutional investors through limited partnerships — including exposures to hedge funds, private credit and private equity — to individual investors and the financial advisers who assist them, according to Elliott. 

In February, he told MarketWatch that Unlimited was actively working toward a potential ETF that would mimic private equity, an area of the market that ordinary investors haven’t been able to access traditionally.

See: This investment firm is actively working toward a potential ETF mimicking private equity

As part of its goal of building out a broad set of ETFs replicating alternative investment strategies, Unlimited seeks to offer them at a lower cost compared with traditional fee structures seen in hedge-fund and private-equity investing, according to Elliott.

Hedge-fund and private-equity managers historically have charged fees of 2% based on assets under management and another 20% tied to performance.

ETFs, which are available to the masses, have become broadly popular among individual investors in part for their tax-efficient structures and relatively low-cost way to gain exposure to traditional asset classes such as stocks and bonds.

Elliott said by phone that his firm’s ETFs may be offered at around one-fifth of the cost of alternative investments such as hedge-fund and private-equity strategies.

Meanwhile, the fresh funding raised by Unlimited will also help the firm expand its “investment content” that many financial advisers and investors may find useful in navigating “challenging market environments,” said Elliott. “I see Unlimited as not just giving access to returns, but also access to institutional-quality insight for our clients and partners.”

While previously working at Bridgewater, Elliott says he developed investment strategies, including for the firm’s flagship Pure Alpha fund, while also authoring many of the asset manager’s research notes called Daily Observations that were widely-read in “the institutional community.”

Since co-founding Unlimited, Elliott has been sharing many of his market insights over Twitter as well as in the firm’s blog posts. He said Unlimited plans to “deepen” its relationship as “thought partners for the advisers and clients who are invested in our products,” an effort that might include newsletters, webinars and podcasts. 

Meanwhile, the Unlimited HFND Multi-Strategy Return Tracker ETF, with $66 million of assets under management, has declined 0.4% this year through Monday, according to FactSet data. 

Hedge funds aim to limit downside during difficult markets, Elliott told MarketWatch in October, around the time that Unlimited launched the ETF.

The U.S. stock market is up so far in 2023, climbing despite worries over the debt-ceiling showdown, a slowing economy, recent regional-banking troubles and uncertainty around the Federal Reserve’s future interest-rate policy in the face of still high inflation. The S&P 500

has risen 9.2% this year through Monday, FactSet data show.

Under the Series A round, FirstMark’s Adam Nelson and Citi Ventures’s Luis Valdich are joining Unlimited’s board of directors, according to a statement from the startup. The board includes Elliott and Unlimited co-founder Matt Salzberg, who serves as a managing partner at Material.

Unlimited was also co-founded by Bruce McNevin, an economics professor at New York University whose professional background includes data-science positions at hedge funds Clinton Group and Midway Group as well as roles at Bank of America and BlackRock.


Source link