Bob Elliott, Co-Founder, CEO, and CIO of Unlimited Funds, and former long-time Bridgewater exec, discusses the company's pioneering use of machine learning to create low-cost index replications of alternative investments. The HFND ETF as the fastest growing independent active ETF launch in the US in 2022 and Bob shares his extensive experience in investment strategy development. Bob emphasizes the inspiration behind founding Unlimited, which was to democratize access to alternative investments by bringing concepts of diversified low-cost indexing to the world of two and twenty strategies. He explains the technology development process, the importance of building the technology based on an expert understanding of the types of strategies pursued by managers, and the company's focus on returns to gain a better understanding of how managers are positioned. Bob also discusses the impact of fees on investors, the role of public funds in leading the shift towards alternatives due to fee sensitivity, and the democratization of investments to make them more widely available.
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00:00 At Bridgewater, he built a career around macroeconomic understanding, remains passionate.
06:55 Successful investors continually learn and trade their edge.
09:43 Lower fees, greater access through technology replication.
11:42 Machine learning approach for hedge fund strategies.
17:15 Factors and returns drive portfolio construction strategies.
19:00 Importance of expert-designed systematic approach for hedge funds.
24:33 Hedge fund managers balance risk and return.
26:32 Hedge fund objective: preserve wealth, reduce drawdowns.
30:51 Investors face fees and uncertain returns. Durable fee alpha.
35:06 Importance of low-cost diversified investment strategies explained.
38:26 Asset managers earn $700 billion in fees.
39:53 Industry fees need radical rethink for wealth.
43:39 Creating low-cost index products for everyday investors.
46:33 Investors need to diversify portfolio for inflation.
49:29 Grateful for the conversation and your insight.