Markets entered the second half decidedly more optimistic about growth, tariff impacts, and inflation than in the second quarter. With so many vectors priced for near-perfection, the potential to get any individual component wrong rises. Bob Elliott, CEO and CIO of Unlimited, recently appeared on CNBC’s Closing Bell Overtime to discuss these possibilities and how investors can position for sub-optimal outcomes.
Elliott broke down the strong growth bias currently built into market expectations. Earnings estimates for equities over the next 12–18 months and bond yields reflect strong growth and rate cuts. It results in “a combination…which is challenging to see when you see the hard data showing, in many ways, the opposite of those two trends.”
Tariffs remain the biggest uncertainty, with markets still not feeling the full brunt of their impact, according to Elliott. Tariff revenue percentages still fell significantly short of the 20% rates, as of end of May data. Elliott attributed this primarily to inherent structural reasons. Notably, those include the delay between goods shipped and received, as well as the time to collect tariff revenues.
“We’re talking about an actual tariff delay impact that could be three or six months from the time of actual announcement before it gets onto store shelves,” said Elliott. “We’ve got a ways to go before we can really say the U.S. economy is feeling the full effect of the tariff policy being announced.”
Elliott Talks Investing for Uncertainty
In such a complex environment, portfolio diversification matters. The benefits extend beyond reducing stock and bond correlations in the event of drawdowns. It also means potentially capturing emerging opportunities as market narratives shift. Investors need look no further than the performance of gold this year to understand the potential benefits.
“What investors really need is…diversifying strategies, things that can go long and short if markets start to turn, or diversifying assets like gold in their portfolios,” Elliot shared.
Unlimited offers a suite of actively managed hedge fund replication ETFs that includes the broader Unlimited HFND Multi-Strategy Return Tracker ETF (HFND ). The fund seeks to provide returns similar to the hedge fund industry by replicating returns of the major sectors. Strategies covered are global macro, long/short equity, emerging markets, managed futures, and more.
The firm also offers three targeted ETFs that pull out a singular hedge fund sector and seek to replicate returns. They consist of the Unlimited HFGM Global Macro ETF (HFGM) and the recently launched +Unlimited HFMF Managed Futures ETF+ (HFMF ) and Unlimited HFEQ Equity Long/Short ETF (HFEQ ).
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