Unlimited Funds is actively working toward a potential exchange-traded fund that would mimic private equity, an area of the market that ordinary investors haven’t been able to access traditionally, according to co-founder Bob Elliott.
Elliott, the former Bridgewater Associates executive who in October launched the Unlimited HFND Multi-Strategy Return Tracker ETF HFND to replicate hedge-fund returns gross of fees, told MarketWatch in an Feb. 6 interview on the sidelines of the Exchange conference at the Fontainebleau hotel in Miami Beach, Florida that his research is making “good progress” toward potentially creating an ETF “mimicking” private equity.
But the ETF would be cheaper than private equity, which tends to involve around 600 basis points to 800 basis points in fees, including for management and performance, he estimated. And unlike private equity funds, investor capital would not be locked up for years, Elliott said.Vanguard Group’s chief executive officer Tim Buckley said Feb. 7 while on stage at the Exchange conference that private equity returns are often below the S&P 500 on average.
Private-equity firms raise private funds to buy companies, financing their deals partly with debt in so-called leveraged buyouts. They aim to exit those deals at a profit, by taking the acquired companies public or selling them down the road.