FULL TRANSCRIPT
Slava Rubin (00:00)
In this episode of Smart Humans, we talk with Bob Elliott, founder and CEO of Unlimited. From his background as a classically trained botanist to eventually becoming a macro economist and now an entrepreneur wrapping hedge fund strategies into a public wrapper ETF. He gives us his point of view on the market, where are we headed with recession, the tariffs, and of course his strong point of view on gold and how it could diversify your portfolio.
Slava Rubin (01:44)
Hello and welcome to the latest episode of Smart Humans. I'm super excited for today's guest. We have Bob Elliott, who's founder and CEO of Unlimited. Bob, welcome.
Bob Elliott @BobEUnlimited (01:56)
Thank you so much for having me. I appreciate at least making a run at being called a smart human. I'll let folks determine whether that's true by the end of this.
Slava Rubin (02:05)
Exactly, you have 30 minutes plus minus to let the jury decide. But we were super excited to have you here. mean, you're innovating in fintech, obviously a great investor, and we'll explore all of that in just a minute. But we always like to get started with the beginning, which is tell us the background. What was it in your youth, in your college days, in your work days? How did you navigate to get where you are today?
Bob Elliott @BobEUnlimited (02:31)
Yeah, I mean, I've been a systematic investor, particularly from a macro perspective for a couple of decades, but the route to get there was a bit unusual relative to many folks. I don't think if you had told me at 15 or something like that, that I was going to be doing this, I would have believed you. For most of my younger days, I was really into the hard sciences, botany in particular.
which is, you know, you don't find too many, what I like to describe as classically trained botanists out there in the world. but that's, where I, where my academic training was. I also spent a fair amount of time in, in working on issues related to public health, back in the early two thousands, particularly related to the HIV and AIDS epidemic. And particularly with it was with that work that I sort of increasingly realized that.
you know, the big drivers of health outcomes and frankly, you know, human experience outcomes has comes down to what happens with the economy and with the macro economy. and so that started to get me interested in thinking about, exploring, you know, macro economics as a, as a career. And, I ended up starting at Bridgewater associates, which is, I think still the world's largest hedge fund, but certainly, at the time that
I left about seven years ago it was. And, um, and my basic idea, you know, they, they are sort of well known for hiring people who don't have pure economics or business, uh, or finance experience. And so, um, I thought it was going to be a great place to kind of go, you know, get paid decently work for a couple of years and learn a little something about macro. And the reality is I sort of fell in love with macro economic investing and systematic investing as being really, um,
I think in a lot of ways like an incredibly challenging puzzle to understand every single day. So, you you don't, you don't just become great at it. You constantly get new learning and new and new experiences. And then also because I think it, you know, it informs how the world works. You you see everything around you is essentially driven by macroeconomic dynamics. And so in the same way, a physicist must love seeing the
the movement of matter in the world and understanding that, so too do I see the sort of movement of everyone in an economic reality.
Slava Rubin (04:57)
Nice, you are right. It's not always that I hear botany as part of my conversation on Smart Humans So we need to explore that further. How did you fall in love with that? And what does it mean that you're a classically trained botanist? And then obviously the next thing is what do you do with that today? Anything?
Bob Elliott @BobEUnlimited (05:14)
Yeah, well, so my botany career, you know, back many years ago, well, my father grew up in a farming town and so we were very active gardeners and this was in Michigan. ⁓ And so I sort of fell in love with gardening and growing things and things like that as a small kid.
Slava Rubin (05:24)
Where was this? Where was this? Okay, great.
Bob Elliott @BobEUnlimited (05:39)
And when it came to, while all the kids were looking at camps to, I don't know, go play dodge ball and stuff like that, I was interested in nerd camps that let you learn more about sciences. And it's hard to believe, in the world, you always wanna have some edge, right? You wanna explore the thing that few people are interested in exploring.
I know it's hard to believe, but botany was really not a hot topic in the nineties for kids to go to summer camp to explore. But I did a couple of different national science foundation things and, and, and things like that research at various institutions, that, that I was able to do because there were few other people who were interested, but it was great. It was great. It was, mean, I the, the, I find botany to be very fascinating. It is kind of, it's like a kind of an incredible.
Slava Rubin (06:03)
Ha
Bob Elliott @BobEUnlimited (06:26)
field where it is so central, you know, plant sciences is central to our day to day lives, but there is so much that is not understood from a micro perspective in terms of plant biology, but also from a macro perspective. And so that's when I say a classically trained botanist. A lot of my work was in what's called systematics, which is how did the various elements of plants
develop and interact together and how are they stressed in certain environmental conditions and so You know, it's you your listeners probably remember xylem and phloem and things like that. I spent a lot of time Exploring that looking at that and imaging it with some of the original imaging software and technology related to that to understand how it all went together and
I like to sort of joke like the conclusion was after many, many years of research as an undergraduate, my conclusion was the plants like water, which is good. You know, it's a good thing to know. So that's poking fun at me, but I love the plant sciences. And honestly, in a lot of ways, the sciences in order to be great at markets, you have to have non-consensus views. And in order to have non-consensus views, you can't have the same perspective as the thousands of finance.
professionals, undergraduates that come out. And so I've often found amongst all sorts of people involved in markets that people who come from the pure sciences are uniquely positioned because the sort of systematic, rigorous, quantitative sort of way of thinking is so elemental to how you might approach, you know, thinking about trading markets.
Slava Rubin (08:00)
You have such a diverse background, the botany, the farming, the public health, macros. Is that you just always trying to be curious or where does that come from?
Bob Elliott @BobEUnlimited (08:12)
Yeah, I think I've never been all that good at just doing one thing. I've always kept a curious mind and sort of, you know, think I was never I was never the person who was like, I am going to be X and I will do whatever it takes in my whole life to do that one thing. And instead, you know, sort of let let my curiosity and interest, you know,
guide me in terms of what was going on, in terms of where I was exploring it and also recognize that at some point, you know, I like with the plant sciences, I realized I didn't want to be like in the basement of the biological laboratories for 40 years, you know, so I was like, Nope, that that's not going to be a long term career, but it was great while it lasted and a key element of, of how things developed. And I think, you know, I don't know, why do people operate this this sort of way? I think in some ways, in some ways, it's probably genetic. I mean, my, my,
My father was an entrepreneur and sold essentially had businesses, everything from copy and fax machines to golfing equipment, you know, like all sorts of different stuff. And probably that's my, my exploration or my, my interest in a bunch of different fields is kind of similar to that.
Slava Rubin (09:20)
All right, great. Well, you were at Bridgewater before now you're an entrepreneur and obviously a strong investor and you were a strong investor back at Bridgewater. We'd love to know how you invest your own money. So obviously a big slug of your net worth is gonna be your own company and your equity in that. But let's just put that aside. So how do you like to invest your own personal net worth in terms of, the audience knows there's the classic 60-40-0, which is 60 public equities, 40 bonds and zero into private.
Alternative investments, i.e. crypto, real estate, private credit, art collectibles, pre-IPO. How do you think about that 60-40-0? Are you 60-40-0 or are you some other percentage?
Bob Elliott @BobEUnlimited (10:01)
Yeah, from my perspective, having not only been in the public markets for a few decades and then also having deeply studied market and investment outcomes, you know, over courses of, you know, across many countries over hundreds of years. For me, it's sort of the key, the key thing in creating what I call a strategic portfolio, right? Your savings portfolio. This isn't your speculation portfolio. could take.
you know, take some, some of your capital and go speculate as you want that. That's kind of the fun money right there. But when you're talking about your core savings portfolio, the key thing you want to, you want to hold is you want to be diversified and, that diversification is critical because you don't know when you actually need the money. And I think a lot of people, you know, people who have sort of started investing in the last 15 years who have basically seen like
12 weeks of drawdowns in their portfolios in the last 15 years don't understand that you could be in a situation like 2009 where your equity portfolio is down two thirds or back in 2002 where your equity portfolio was down similarly or through that period where you essentially had zero equity returns for 15 years. so I think that, you
I think there really is a distinction between those people who started investing and saving after the financial crisis and those people who did, because the people who did have the scars of how things can turn out and how the world operated before the financial crisis and those scars are much more indicative of the wide range of plausible outcomes. so I have something I call the simple game plan, which is just essentially a balanced portfolio, about 80 % of it passive, meaning, you know,
investing in a diverse set of long-term, diverse set of securities like stocks and bonds and commodities, gold, et cetera. And then about 20 % of my allocation in that simple game plan portfolio is to diversified alpha strategies, meaning public market strategies where you can take advantage of long and short positions to generate alpha that's on top of just normal market returns.
Slava Rubin (12:13)
So do you have no alternatives like crypto, pre IPO venture, real estate, private credit, art collectibles?
Bob Elliott @BobEUnlimited (12:22)
I, in general, a sort of my, my, my experience is much more in the public markets. And so in general for strategic savings portfolio, I don't hold a lot of illiquid, assets or, or investments. I've very, very small portion of, of capital supporting some former colleagues, who, work on, boring businesses with good cash flows. but that's about, that's a, you know, that's more support for what they're up to and, and the great thing that they're.
Slava Rubin (12:49)
That's like sub
5 % of the net worth sort of thing.
Bob Elliott @BobEUnlimited (12:51)
Yeah,
yeah, yeah, that's that's more very little illiquids. And and and part of the reason why that is is because I think while illiquids, I think, are very are often look look to be very attractive and often have very good stories. I think there's a lot of challenges with them. mean, first of all, the illiquidity is a real challenge, which is you never know when you need your money. And so, you know, if you invest in a venture fund like, you know,
Slava Rubin (12:54)
How about...
Bob Elliott @BobEUnlimited (13:16)
Who knows when you get your money back, right? It could be 10 years, it could be never, you know, like it's actually, it's quite challenging and that's hard for any, I mean, even an institutional timeframe, that's painful, but for an individual timeframe, that's not really reasonable. And I think the other element of it, another element is in almost all cases, those illiquids, the fees are way too high to justify the returns over time, particularly relative to the types of things that you can get in the public markets. And so,
If you can get better liquidity terms, lower fees and similar diversification and returns in the public markets, then why shouldn't you invest in the public markets rather than concentrate yourself in the public markets rather than go out and try and pick specific illiquids?
Slava Rubin (14:00)
What about Bitcoin?
Bob Elliott @BobEUnlimited (14:03)
I don't hold any Bitcoin and never have. I was actually responsible for Bridgewater's look at Bitcoin because I headed up the foreign exchange business there. And the core reason behind that is that as a macro investor, first thing I'd say is you don't have to invest in everything. And when you look at something like Bitcoin, it's not really driven by the traditional macroeconomic dynamics that
you know, asset classes like bonds or gold or stocks or industrial commodities are driven by. so therefore, it's a super, you know, it's a very highly idiosyncratic asset that may or may not have a positive expected return. Obviously, it's done well. Doesn't mean, you know, from a forward looking perspective, who knows. But without really having a good understanding of its macroeconomic drivers, it's difficult to.
position it in the context of a portfolio. And I think even what we've seen in the last year or two, five years, like you're still not getting traditional macroeconomic drives. is not digital gold. It is not a short position in the U.S. dollar. It is not a inflation hedge. It's none of those things. It is an idiosyncratic asset. And it's much more akin to, I'd say, the type of return profile that would exist with like a venture style investment.
than it is a single company venture style investment than it is in sort of a macro economic, a macro diversified portfolio. And what I also say is a lot of people look at it say, well, the returns have been high, you can't get high returns. You can always target your return profile to be whatever you want. You could dial that up or dial it down. There's not a lot of people who are good with 85 % drawdowns and
75 % annualized volatility. Basically no one does that. so presuming that you're looking for, know, volatility in your portfolio that's something like akin to stocks, there's no reason why you can't just invest in a diversified set of macro assets and get equity like returns.
Slava Rubin (16:01)
Which equities would you invest into to try to get Bitcoin like returns?
Bob Elliott @BobEUnlimited (16:04)
Well, I'm saying like, you're not gonna get, no, the challenge with investing in something like Bitcoin is the volatility is too high for people to be able to stomach as an investment alone, right? And so what I'm saying is in general, people's risk tolerances, and I'm saying having talked to hundreds, thousands of advisors, know, lots of people, in general, have equity like return, equity like risk,
Slava Rubin (16:11)
course.
Bob Elliott @BobEUnlimited (16:28)
is about the extreme of what people are able to handle and still stick with their game plan, right? And so as a result, if you invest for instance in equities, gold, long-term bonds and diversified commodities, along with let's say some diversified alpha strategies, you can get equity like return profile that's a lot more consistent and with fewer drawdowns than what you get just investing directly in equities or essentially investing in
you know, having some of your portfolio and in that.
Slava Rubin (16:57)
So just to pull this right a little bit further. So you still today have zero Bitcoin, is that right? So are you like a naysayer 100 % never gonna have it or are you open-minded to having it?
Bob Elliott @BobEUnlimited (17:01)
That's correct.
I'm not, I'm, you know, what I'd say is when you trade markets for a living, you recognize that there are certain instances where you have edge in understanding a thing, you know, an asset and particular, and there's times when you don't and you don't have to trade every market. You don't have to invest in every market. You don't have to trade every market. And so if I felt like I either A, could,
Slava Rubin (17:23)
Got it, very Buffett style.
Bob Elliott @BobEUnlimited (17:31)
effectively contextualize the expected return of the asset in the context of macroeconomic dynamics. So in part, in order to think about how to put it into a diversified portfolio, then I might consider it from a strategic perspective. Or if I felt like I had an edge in determining its tactical price movements, which I think there's many, many people out there that have way more edge, way more understanding of everything that's going on.
in Bitcoin or other cryptocurrencies, then I would be interested in trading it from an alpha perspective. But at this point, not, you know, it doesn't check either box and it's not particularly important in terms of creating a long term strategic diversified portfolio. I mean, just as an example, like people talk about Bitcoin going up by 2X in recently, gold's gone up by 2X recently, right? Like there's no, you know, don't, you don't need, they're both fine. Like you can, you don't have to do everything.
Slava Rubin (18:26)
So just to be a bit provocative and then we'll move on. So in terms of macro, I think Bitcoin is interesting because I do think it is kind of like digital gold. And if you think about it as gold, typically when analog to digital, whether it's movies or a lot of different industries, usually the digital market gets to about 2X the size of the analog market over time. And if you think about it very round numbers, gold being like 20,
trillion, you could really look at like a $40 trillion market. If you look at it as like a $40 trillion market with 21 million Bitcoin, you're looking at potentially at its market like equilibrium, like potentially $2 million Bitcoin. Right now, obviously it's at 100,000 today, it was all less before and it could go up and down a lot. I like to get people to think about, maybe put in 2%.
of your net worth into it because if you're walking down the street and you lost two cents out of your dollar, you probably wouldn't really notice it and really not impact how much water or soda you're gonna buy that day or how many cookies you're gonna buy. But there's a decent chance that it's gonna 10x in the next 20 years, if not many more x, which can obviously have a huge impact on the net portfolio. Anyway, you don't need to debate with that, but it's just a perspective where I do think at a macro, it fits and it can diversify quite interesting.
Go ahead.
Bob Elliott @BobEUnlimited (19:47)
was gonna say, I don't have a particularly strong view on what you just said. That may be the case, it may not. I think the two points that I'd emphasize on it are, one, it is not trading like digital gold. In fact, there are two are trading at essentially a zero correlation. That's an important thing to consider.
Slava Rubin (20:08)
You mean in terms of the volatility, you mean?
Bob Elliott @BobEUnlimited (20:10)
In terms of the price movements of gold versus Bitcoin, they're trading as a zero correlate, you know, they're zero correlated to each other. And so, and instead it looks like, you know, Bitcoin has a lot of idiosyncrasies, but if anything, it looks more like a risk asset, meaning like more like a equity like asset than it certainly then it does like gold. And the reality is like, there's plenty of equity assets out there, meaning like you can.
Slava Rubin (20:12)
You're right, right, Sure.
Bob Elliott @BobEUnlimited (20:38)
You get the whole gamut of all the equity assets in the world. that, that, know, that, so it's not clear that it's necessarily diversifying if it actually is trading, if it is actually a risk asset, even there, it's a little bit of a question. And then on the gold side, like I, I hear you in terms of the one or 2%, what I'd emphasize is that, the vast majority of investors also aren't considering gold. In fact, if you look something like 98 % of investors have literally zero gold in their
Slava Rubin (21:02)
Totally agreed.
Bob Elliott @BobEUnlimited (21:06)
which is kind of crazy for an asset that has beaten the S &P 500 with a similar risk profile over the last 25 years and has a 5,000 year track record of maintaining its storehold of wealth in a macro environment where monetary demacement is sort of the government policy du jour and will be for many decades to come given the over indebtedness.
For me, at least, the case for gold is, the case for gold is certainly independently compelling and has sort of the similar vibe of, you know, how could you not invest in something with that sort of diversification and return profile, you know, and that creates a lot of possible upside for gold as well.
Slava Rubin (21:52)
Awesome. Well, you were talking about the macro and that's actually our next question, which is you're the perfect person to discuss. You know, where are we in the current market situation? Everything from inflation to rates, to stock market, to job market, to the economy, to obviously, you know, administration tariffs. There's so many things going on. We love to hear from our guests and you of all people are the perfect guest to give us an opinion as to
where we are today, where we're headed in the next six to 12 months. Obviously, this is not financial advice. We'd love to hear your opinion.
Bob Elliott @BobEUnlimited (22:26)
Yeah, you know, I think this is one of the more interesting times from a macro perspective, both because macro and policy is both is driving most asset returns significantly. And at the same time, there's more uncertainty that has existed in in particularly the policy environment than we've had in a long time. And so from my perspective, we're the real the sort of big outstanding question.
I should say, absent the administration, we're basically actually in a pretty good economic environment. Growth's pretty strong. Central banks are easing. They're actually easing in global. Global central banks have eased and are expected to continue to ease in an environment where growth is okay. And part of the reason why that is is because inflation globally has receded, which has been given those central banks the ability to ease in response. And so if we didn't have an administration
you know, a policy question in front of us, we'd be looking at a late cycle environment with a easing impulse, a global coordinated easing impulse on both the fiscal and the monetary, which would typically be good for stocks and gold. And so that's kind of like the that's the baseline backdrop. Now, on that backdrop is and I should say up until really the beginning of this year, a lot of what we saw for the previous couple of years was sort of consistent with that general dynamic.
Growth's pretty good. If anything, markets were too worried relative to those sets of conditions and that continued easing was supportive to asset prices, stocks and gold, et cetera. The administration really throws a wrench into this whole thing because what is going on is basically an exogenous set of negative growth policies that are likely being pursued by the administration. The real question is,
There's a big question about the magnitude of those, but the direction is pretty clear, which is that is that restricting immigration is a meaningful drag on economic conditions as much as 1 % of real growth and pursuing the tariff policy can, you know, hard to know. And, you know, if we recorded this tomorrow, we might have a different story in terms of exactly what the tariff policy in place is. But.
You know, we were looking at a drag on growth somewhere between sort of 0.5 % in the best case scenario and almost as high as 2 % in the max impact scenario. Those are pretty big drags on economic conditions. And so if they are the immigration one, it almost certainly seems like it's going to happen. I mean, it's happening and seems like it will persist. The tariff one is the big question. And there's a lot of ambiguity there, but sort of every day that the tariff dynamic
continues to be in place. at least right now, it looks like something like 15 % tariffs are gonna be in place for the period of time in which they deal with the AIPA judicial ruling. And then possibly for longer than that, if the administration gets ruled against and then implements Section 122 tariffs, which allows them to have 15 % tariffs for up to 150 days.
So looks like roughly that 15 % levels in place right now. That is big enough to create a sufficient drag on economic conditions and investment that could start to meaningfully slow the economy and create real weakness. And that's coming at a time when asset prices, particularly stocks and equity indices are not really pricing that in. You look at stocks, you look at bonds, the current yields are all pricing a very, very strong growth scenario. And so it's not certain that we'll go
through a weaker growth scenario, but the policy mix looks like a weaker impulse, weakening impulse, and the asset pricing in the market right now looks like it's pricing in quite strong growth. And that sort of, you know, it looks basically like the skew of the possible outcomes are skewed more negative than the pricing, which is, you know, gives you a moderate confidence trade in, you know, from a macroeconomic perspective.
Slava Rubin (26:21)
So hearing you on the other side here, are you short the market today?
Like do you think it'll go down?
Bob Elliott @BobEUnlimited (26:26)
Sorry, say that one more time.
Slava Rubin (26:27)
Just listening to you here, sounds like you think the potentials are leaning negative as opposed to positive for like the stock market. Like, are you mentally short, thinking it's gonna go down?
Bob Elliott @BobEUnlimited (26:38)
Yeah, so I think the way I describe this is I think the two trades that seem two or three trades that seem most compelling are our bonds are looking attractive relative to stocks, which is a weakening growth. know, bond yields, particularly long end bond yields are basically at cyclical highs at 25 year highs and equity prices are at 25 year are at highs essentially. Right. And so bonds look attractive relative to stocks in that environment.
Gold looks attractive given the uncertainty environment that continues to persist, particularly relative to stocks. And international assets look compelling relative to US assets from a combination of the fact that those jurisdictions have more room to ease because they are dealing with less strong economies. Their valuations are lower.
And they've been a big source of capital flowing into the US economy and into US assets. And as these conflicts have emerged, we've started to see signs in which those foreign investors, which are super overweight US assets, have started to repatriate capital and support their own domestic asset markets. And so a view that is bullish on those foreign equity markets, say relative to the US markets, would also be appropriate in this sort of circumstance.
Slava Rubin (27:57)
more opinions from you. So recession or no recession coming up?
Bob Elliott @BobEUnlimited (28:00)
Well, it's one of these things where what is going to be the tariff dynamic that's in place, right? If you have 15 % tariffs, we'll probably have a meaningful slowdown. If you have 25 % tariffs, we'll have a recession. If you have 0 % tariffs, things will be good. I think that's one of the challenges is having to navigate such a policy uncertainty, right? That's very unusual, I would say, having been doing this for a couple of decades where you would have that wide a range of policy outcomes.
The thing I'd emphasize, a macro investor by sort of trade is always thinking about a wide range of different possibilities, is that what is priced into markets currently, particularly how stocks are priced relative to bonds, is essentially near certainty that there will be a strong economic environment. And so any disappointment relative to that strong economic environment should favor bonds relative to stocks.
Do we get into a recession or not? Not to be sort of antagonistic, but it's not really an interesting question. The question is more, will economic outcomes be weaker than what is currently priced in? That is something that you can sort of say with more confidence than recession or not, which is a little bit a magnitudes question, let's say.
Slava Rubin (29:11)
What do you think is gonna happen with the Fed in terms of the rates? Were you predicting that? Obviously these are all moving targets and hard to predict, but that's why we have guests like you on the show.
Bob Elliott @BobEUnlimited (29:19)
Yeah, yeah, I mean, that's
right. That's right. You know, the Fed is the Fed is in a difficult position in some ways and in an easy position in other ways. The easy part of it is the Fed responds to the data that they see. And when they're looking at the data right now, they see unemployment slow and stable and inflation is too high relative to their man.
And having cut 100 basis points over the course of the previous year, give or take, typically in that scenario, the Fed would do nothing. And adding on top of it is some uncertainties around the tariff element of things, which could weaken growth, but also put more pressure on their inflation mandate. And that sort of is freezing them in place because they don't actually know exactly how the policy is going to play out. I mean,
Honestly, I wish I had a job where I could literally do nothing for a year and that would be like job well done pat on the back. But that's basically what the Fed's position is right now is to essentially do nothing until there is more clarity that things are going to move in one direction or another. One of the interesting things is if you look at the market pricing, they are priced to cut between two and three times between now and the end of the year. That seems like an optimistic set of cuts in an environment where there is all this policy uncertainty.
And therefore they might deliver a policy that is tighter than market expectations, which could be a drag on growth and equity prices ahead.
Slava Rubin (30:52)
Is that your personal prediction? Is that they will cut less than is priced into the market?
Bob Elliott @BobEUnlimited (30:56)
Yeah, I think zero, again, a lot of range of plausible outcomes, but no action by the Fed in 2025 seems like a perfectly, seems like it would be my modal outcome in terms of what's going on. And you'd have to, and what I'd say is in order to meet the two to three cuts, you're gonna have to get a sharp slowing of economic conditions, which is definitely not priced into the equity.
Slava Rubin (31:22)
Right. So we obviously know so much about the markets. You were doing great work at Bridgewater and now you have your own shop. So can you tell us what is Unlimited? Why did you start it? What should our listeners know about it?
Bob Elliott @BobEUnlimited (31:34)
Yeah, mean, it Unlimited in many ways is the outcome of various things that we talked about in this conversation, which is having been a two and 20 manager, both in the hedge fund space, as well as running a hundred and twenty five million dollar venture fund that was sort of a systematic venture fund. I sort of increasingly recognize that a lot of two and 20 businesses are pretty good for the manager and not that great for the investor. And the reason why that is is the fees are too high.
for any taxable investor, almost all of them are structured and taxed in efficient ways. And for a lot of investors, they're locked out of being able to access these sorts of returns because they're not accredited or qualified, et cetera. I mean, not to mention it's a hassle to do this, Anyone who's ever filled out fund docs or whatever, it's just a total pain, right? So even those people who are qualified to be able to do it, it's still a pain for them. And so that got me to thinking about whether there was a way to sort of...
create diversified low cost indexing, which obviously totally changed stock and bond investing, but bring it to the world of two and 20. And I think, you know, there's a lot of different strategies that are sort of access to alternatives. Most of those add to the feed load rather than, you know, less than the feed load and investors need more access and lower fees, right? That's what they need. And so our idea was instead of investing directly in the managers, what we do is we draw on our experience having, you know, run.
hedge fund or venture, cetera, money and build financial products, leveraging technology that allows us to look over the shoulder of what those managers are doing. And with that understanding, take it and translate it into long and short positions, for instance, in liquid securities that can back hedge fund strategy ETFs that can be made available for every investor. And the nice thing about having used technology instead of hiring, you know, a bunch of star
portfolio managers is we do it at a much lower cost. And by putting in the ETF wrapper, it's liquid, it's transparent, it's easy to transact and it's tax efficient. And so that's the core of what we are, which is developing these two and 20 strategies that are available for all investors at a low cost with daily liquidity and full transparency into what's going on.
We started a few years ago and have a couple of products in market. Our latest actually is a global macro strategy that is targeting equity like returns, but with that global macro set of positioning, positioning based upon the 500 or so largest global macro managers in the world and how they're positioned in real time, put into an ETF wrapper. And that's HFGM for those who are interested.
Slava Rubin (34:13)
What was it again? HF.
Bob Elliott @BobEUnlimited (34:15)
HFGM like hedge fund global macro.
Slava Rubin (34:18)
Great, and what's your other product?
Bob Elliott @BobEUnlimited (34:20)
It's HFND, which is a diversified hedge fund strategy, kind of like the spy for hedge funds.
Slava Rubin (34:26)
Great, so kind of like QQQ or like you said, when you say for hedge funds or you said earlier looking over these hedge fund managers shoulder, can you give some perspective as to what does that mean and then how do you put that into your HFMD for example?
Bob Elliott @BobEUnlimited (34:43)
Yeah, so what we're able to do with our proprietary technology is to look at managers returns in real time and from that understanding actually infer how they must be positioned. And for instance, for global macro managers, see how, we see their returns in, we see daily returns and weekly and quite timely returns. We infer how they're positioned across the 30 largest liquid markets that they're typically exposed to.
So things like currencies, credit, commodities, fixed income, equity indices, et cetera, and then express those views in terms of how they're positioned in real time in that ETF wrapper using futures. And so if you're an investor, what you see is an ETF that basically is the wisdom of the global macro hedge fund community. All you have to do is buy a single ticker and you get all of that tactical trading under the hood, which we're managing, which we're
understanding how they're positioned and we're shifting the assets in the ETF to reflect that positioning as those macro managers shift their views over time.
Slava Rubin (35:46)
Nice, so HFND is your original product. How long has that been around?
Bob Elliott @BobEUnlimited (35:50)
It's been around for about three years and it's a multi-strategy product. So it was meant to track all the different hedge fund styles just combined together. it's useful, it's a useful product for those looking for a very diversified hedge fund ETF basically, right? If you have an ETF model portfolio, we're just looking for a diversified set of hedge fund strategies. It meets that bill.
A lot of the feedback we got from advisors was a lot of them were interested in breaking out the individual strategies that sit under the HFND product. So like global macro or equity long short or managed futures, et cetera. And so that's what we're launching now. And we're doing that at a 2x target return, which in a lot of ways you can think about like to match the expected return of equities or do better than that.
And the nice thing about that is it's a much more cash efficient product with a higher target return. so advisors really like those products because, if you have some equity long short managers that you like, you can keep those. But for instance, a lot of folks don't have access to global macro strategies. And so this is sort of a one-stop manager diversified solution for global macro strategies.
Slava Rubin (36:58)
So I would have had to invest into Bridgewater or into Steve Cohen's fund or some of these other funds to try to get this really interesting stuff. I would be paying two and 20, but instead you're diversifying this and packaging it inside a public asset that I can just trade on like Robinhood or Schwab or whatever and it's HFND or HFGM. Is that right?
Bob Elliott @BobEUnlimited (37:17)
Yep.
That's right, that's right. It's available on all the discount platforms. If you'd like to just go ahead and open your Robinhood and buy some HFGM right here, we'd be more than happy to do it. ⁓
Slava Rubin (37:32)
Nice,
and is there a minimum or there's not a minimum because it, go ahead.
Bob Elliott @BobEUnlimited (37:35)
That is
the beautiful thing about an ETF. And I see this every day because I see the order flow. There are some people who come in, people follow me on Twitter and various social media platforms, and they'll buy one share, $25. Great. That's a great outcome. You can have a $1,000 account. You can have a $500 account and get access to institutional quality hedge fund strategies. Or we have people who cut checks for $20 million.
And that's okay too.
Slava Rubin (38:06)
And so they're charging the two and 20. What are you charging as part of your process inside of that $25 fee or the $25 price?
Bob Elliott @BobEUnlimited (38:14)
Yeah, so the management fee on the product is 95 basis points. And for our 2X target, so that's under 1%. And for our 2X target return ETFs like the global macro strategy, that is essentially one eighth of the fee load that you'd have in a typical hedge fund strategy. And because it's in the ETF wrapper, it's about half of the tax burden that you typically have investing.
in a hedge fund directly. so an eighth of the fees and half the taxes is, we think it's like a very compelling proposition for a wide variety of investors from the small investor to even institutional quality investors.
Slava Rubin (39:00)
mean, eighth of the fees and half the taxes sounds good for anybody is what I think. ⁓
Bob Elliott @BobEUnlimited (39:04)
That's right, mean,
investors, all investors care about, and I think people lose sight of this, investors just care about the net of fees, net of taxes outcome, right? Because the net of fees, net of taxes outcome is what you earn and what you keep. And so if you can be cheaper in terms of the fees and you can have less taxes, that puts you ahead of the game in terms of what's going on.
Slava Rubin (39:17)
Absurd.
And the first product's been around for three years, so can you share how it's performed versus the public markets?
Bob Elliott @BobEUnlimited (39:36)
Yeah, so hedge fund strategies in aggregate are generally more conservative than what you'd see in sort of, let's say, that equity risk. It's much more closer akin to the returns of bonds. they're intended to be diversifying to stocks in the same way bonds are intended to be diversifying to stocks for most allocators. And so it's returned, you know,
about 100 or 200 basis points above cash over the course of the last couple of years, which is basically what the strategy is intended to do. And it's tracked overall industry returns through that timeframe. I think what we're really excited about is these sort of 2x target return strategies, particularly the individual ones, which I think give investors, you know, a much more compelling return profile than sort of how hedge funds, how hedge fund returns come out of the box.
Slava Rubin (40:26)
When are you thinking to have the 2X strategies available? Meaning you're gonna add more ticker symbols, meaning number three, four, five.
Bob Elliott @BobEUnlimited (40:29)
So
HFGM is the first of those tickers, the global macro strategy. In six weeks or so, we'll be launching an equity long short, as well as a managed futures, which is like a trend following strategy that's become very popular. Also at that 2x target return and through the end of the year, we'll be launching other strategies like fixed income, which is quite a compelling.
quite a compelling strategy from a risk return perspective, as well as event driven or event oriented strategies and hedge fund strategies in the emerging markets as well. So I think a whole suite of different tools that you can bring to the table to think about what is to add to your diversified alpha portfolio.
Slava Rubin (41:15)
Yeah, it's super interesting when we were talking about your own at worth, you were saying how you don't really like to get into alternative investments, any liquids and how you're really focused on public, but here you are getting into alternative assets, which are hedge funds. But the key here is you're figuring out how to jam it into a public vehicle to make it more liquid, hence making it more attractive. So I think you're straddling here and trying to innovate the world. So it's super, super interesting for sure.
Bob Elliott @BobEUnlimited (41:33)
That's
Yeah, that's exactly right, which is in some ways, I mean, actually, when I started this work, what I did, what I looked at was I looked at what are the assets, what are the returns that are the most diversifying returns for most investors? And while there's so much energy being expended in private credit and private equity, those things economically are not that much different than public market equity.
or public market credit exposures. The things that are truly diversifying to a portfolio are gold, diversified commodities, and alpha strategies, long and short strategies like what we're talking about, but done at a low fee, a much lower fee point. And so when I looked at that, I said the big gap in the market is the ability to access, you know, you can go buy gold, you can go buy diversified commodities, but the big,
gap in the market is people can't access diversified hedge fund strategies at a low fee. And so that is exactly what we, know, that's why we built Unlimited.
Slava Rubin (42:44)
Awesome. What's your favorite way to access gold?
Bob Elliott @BobEUnlimited (42:46)
I trade ETFs. I know there's some people who have a real focus on physicals, but there's lots of very reasonably priced ETFs in the market. The stuff's audited. It's sitting in warehouses.
Slava Rubin (42:56)
Which ones do
you like?
Bob Elliott @BobEUnlimited (42:57)
You can do trade GLDM is a good one. I you, know, they're all, they're all fine.
Slava Rubin (43:04)
Sounds good.
Perfect. And you're obviously a very smart guy, great diverse background. What is it that you like to watch, listen to, read that helps you become who you are with this, know, curious slash intellectual base making all these decisions.
Bob Elliott @BobEUnlimited (43:22)
Well, if I told you the Housewives franchise, would you laugh at me?
Slava Rubin (43:25)
You're allowed to say anything you want. It's all good. You did start by saying you're professionally trained botanist. So it's all very interesting.
Bob Elliott @BobEUnlimited (43:27)
I'm job
I mean, that is only kind of a joke. It's a it's a it's a guilty pleasure that my wife and I have that we watch those sorts of shows. But and Bravo in general. But probably the more upscale things that I enjoy, I enjoy listening to or watching is I really like storytelling, like snap judgment type podcasts.
Slava Rubin (43:45)
Nice, nice.
Bob Elliott @BobEUnlimited (43:57)
that I think are really kind of interesting, get into the mind of someone. I also still with my sort of hard science background, I recently have gotten really into science versus, takes on a lot of sort of commonly held beliefs through detailed, well-supported hard science. And it's a great, it's snappy, funny.
gets to the heart of the matter. So they have things like, you how marijuana affects you and whether there is a difference between the different strains and things like that, or, you know, all the way from that to how does coffee affect you and how much can you have a day, which is important because I drink a lot of coffee. So that's been helpful in in me knowing how much I can I can go. ⁓
Slava Rubin (44:40)
Any
specific like investing or macro oriented pubs, newsletters, podcasts, content?
Bob Elliott @BobEUnlimited (44:46)
Yeah, I mean, I, I of course do this for a living. And so a lot of, a lot of the stuff that I consume outside of this is, uh, is sort of for my own, my own interests. But when it comes to, um, sort of the, the core, uh, macro stuff, great pot, there's so many good podcasts out there for macro, um, forward guidance is a great one. Um, the compounded friends is really accessible and it's also like funny and, uh, and interesting, uh, beyond just the sort of.
part of macro, which I definitely recommend that. And so those are a couple that are sort of key to that I like to listen to on a regular basis.
Slava Rubin (45:26)
Bob, we have covered a lot of information, everything from starting in the earlier days in Michigan farming town to going into the hard sciences and obviously the botany, then going to Bridgewater and having such a diverse background. You know, we are at an alternative investment show, yet you started by saying pretty much that you're not into alternative investments, that you love the public markets, which is awesome. That's why we have a diverse set of guests.
You're 80 % into the passive, the stocks, the bonds, the gold commodities. You're 20 % into the long, short, and other alpha-oriented things. You're not into Bitcoin. There's no convincing you right now, not because you hate it, but I wasn't able to convince you. You do think that bonds are more attractive than stocks today. You do think gold is attractive. You do think international is more attractive than the US. And there is potential recession, but it is dependent on where things land with the tariffs.
You're you know if we are pricing in two to three times that the market's going to get cut for the rates. But you're thinking that potentially no action is going to happen in 2025. You started Unlimited because of all this amazing experience and trying to get the two and 20 offerings at much more accessibility for much lower prices. You started out with your HFND product and now you have your new HFGM product which is accessing global markets. You've been around for a few years. You're offering one eighth the fees and half the taxes which is a great selling point for sure.
And you're coming out with some 2X alpha strategies on top of that, where there's the equity long short, the trend following, the fixed income, the events oriented. I love the fact that you share that you like Housewives franchise and you're into the Bravo stuff. But probably my favorite pick was your science versus content. That sounds amazing. I'm gonna have to check that out.
Bob, thank you very much.
Bob Elliott @BobEUnlimited (47:11)
Wow, when you summarize it like that, we covered it all. Thank you so much for having me.
Slava Rubin (47:16)
Have a good one.
