Bet Like A Billionaire: New ETFs Mimic Hedge Fund Moves, But For Less

New York-based Unlimited Funds just launched two new actively managed ETFs on Tuesday: the Unlimited HFMF Managed Futures ETF (NYSE:HFMF) and the Unlimited HFEQ Equity Long/Short ETF (NYSE:HFEQ).

Both funds aim to replicate the returns of their respective hedge fund segments.

With these launches, Unlimited continues its effort to democratize sophisticated investment strategies that were once only accessible to deep-pocketed institutions. The new funds join the firm's growing lineup, including the HFND Multi-Strategy ETF and the recently launched HFGM Global Macro ETF.

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• HFMF (Managed Futures): This ETF desires to replicate the performance of the managed futures hedge fund universe. This strategy relies on trend-following and profits from market dislocations by establishing long and short positions in futures. It tries to sustain 2x the volatility of the underlying universe to enhance potential returns.

• HFEQ (Equity Long/Short): This fund is structured to track the equity long/short space, where hedge funds wager on both winners and losers in the stock market. This ETF also seeks 2x sector volatility for increased alpha potential.

Both ETFs employ a proprietary algorithm to construct an evolving portfolio of long and short positions in ETFs and futures, based on the most current hedge fund sector positioning.

No 2 And 20, Only Transparency

Historically, access to these kinds of strategies involved astronomical fees (the “2 and 20”) and little liquidity. But with ETFs such as HFMF and HFEQ, investors receive:

• Intraday liquidity
• Reduced fees (HFMF at 0.95%, HFEQ at 1.00%)
• Complete transparency
• No accreditation necessary

Takeaway

Unlimited’s new launches address an increasing demand from advisors and retail investors for alternative strategies with the convenience of ETFs. By capturing hedge fund returns with greater liquidity and fewer fee layers, HFMF and HFEQ aim to bring institutional alpha-chasing to the mass investor, requiring no secret handshake.

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