Monetary Matters with Jack Farley Bringing Long/Short Hedge Fund Strategies to ETFs | David Orr (Bonus Episode)
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Oct 16, 2025 In this engaging discussion, David Orr, a long/short equity manager and head of the Militia Long/Short Equity ETF, shares insights into his unique decision to launch an ETF while successfully running a hedge fund. He tackles challenges like liquidity management, compliance differences between hedge funds and ETFs, and investor adoption hurdles. David also emphasizes the advantages of tax efficiency and scalability with ETFs, while revealing plans for expansion and the importance of transparency in building investor trust. A must-listen for finance aficionados!
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ETFs Scale Strategy With Tax Efficiency
- ETFs offer much better tax efficiency and lower fees than hedge funds for scaling strategies.
- David Orr views ETFs as the way to deploy large-scale, tax-efficient sleeves of a strategy while keeping a small high-edge hedge fund.
Choose Durable Performance Over Maximum AUM
- Prioritize performance and durability over simply maximizing AUM and fees.
- Run a small hedge fund to preserve edge and an ETF to capture durable, lower-fee assets and sticky investors.
Tax-Driven Investor Stickiness
- ETF investors may stay long because of deferred tax liabilities, creating rational stickiness.
- Orr calls this 'golden handcuffs' that align investor retention with tax benefits.