The Future Fund Long/Short ETF (FFLS)

“The fund buys companies that can best exploit the wave of disruptive innovation and shorts companies most likely to lose value as their businesses are disrupted.”

FFLS is a remarkable outlier among retail-accessible ETFs. Rather than owning a diversified basket of stocks, it pairs concentrated long positions—bets that certain companies will outperform—with short positions—wagers that other companies will underperform. This long/short structure gives FFLS the potential to profit in rising, falling, or sideways markets, depending on which of its shorts decline faster than its longs. It is an unusual fund because truly active long/short strategies have been rare in the ETF space; most ETFs are either long-only or simple leveraged/inverse products tracking an index.

The megatrends framework

FFLS was launched on the New York Stock Exchange in June 2023 by The Future Fund LLC, an investment firm founded by Gary Black and David Kalis. The fund’s philosophy centres on ten megatrends: social networking, mobility, e-commerce, artificial intelligence and automation, big data and security, human longevity, fintech, lifestyle betterment, 24/7 information and entertainment, and climate sustainability. The managers use this megatrends lens to identify which companies will thrive as technology reshapes industries and which will be rendered obsolete. Companies building the AI infrastructure, electric vehicles, genomics tools, or climate-solutions technologies are candidates for the long book; entrenched incumbents in print media, internal-combustion vehicles, or fossil fuels appear in the short book.

How long/short mechanics work in FFLS

FFLS buys stocks it expects to outperform (longs) and shorts stocks it expects to underperform (shorts), both using fundamental research and the megatrends thesis. The short positions act as a hedge: when a market-wide selloff occurs, the short positions theoretically gain value (as shorted companies fall), offsetting losses in the long positions. In theory, a well-constructed long/short fund can deliver positive returns even in bear markets. In practice, this works only if the manager’s shorts are right about which companies will decline—a difficult bet to win consistently. The fund does not employ leverage (it is not a 2x or 3x inverse fund); it simply allocates capital between longs and shorts based on conviction.

Concentration and conviction

FFLS is a concentrated bet, not a diversified portfolio. With concentrated positions in favourite mega-trends and counters to declining industries, the fund’s returns depend heavily on a few core convictions. If the managers are right that artificial intelligence will reshape the economy and their AI longs soar while their legacy-tech shorts tank, FFLS can deliver exceptional returns. If the managers are wrong—if traditional industries prove more resilient, or if AI adoption is slower and costlier than expected—FFLS can significantly underperform. This is not a “closet indexer” fund that tracks a benchmark with a few tweaks. It is a genuine directional bet on how the economy will evolve.

The short squeeze risk

One distinctive risk in any long/short fund is short squeeze dynamics. If a shorted stock rallies sharply (perhaps on unexpected good news or short-covering), the short position loses money fast. In an extreme short squeeze, forced buying by short-sellers can amplify the rally, multiplying losses. FFLS’s managers must continuously monitor the short book and be prepared to cover positions if the thesis breaks down. Conversely, the long positions can suffer if they fall out of favour, as happened to many high-growth technology names in 2022 when interest rates spiked and growth multiples compressed.

Expense ratio and fee impact

FFLS’s expense ratio is not yet widely disclosed in early maturity, but the fund positions itself as competitively priced relative to traditional long/short hedge funds, which can charge 1.5% to 2% or more. The active management required to run a long/short strategy—the research, the short-borrow costs, the monitoring—costs money. However, the fund’s stated positioning as “priced within the least expensive fee quintile” suggests an expense ratio in the 0.5% to 0.8% range. The fee structure matters because the fund must outperform a typical long-only stock fund by enough to justify both the active management overhead and the structural drag of short positions (which have borrow costs and potential squeeze risk).

Researching FFLS as an investment

Prospective investors should read the fund’s prospectus carefully to understand the long/short strategy, the megatrends framework, and the specific selection criteria for longs and shorts. Examine the fund’s top ten long and short positions to assess whether the bets align with your own views on technology disruption and future economic trends. Track FFLS’s performance not only in absolute terms but also relative to a broad stock index and relative to a simple long-only growth fund—this context reveals whether the short positions are genuinely adding hedging value or simply dragging returns. Look at the portfolio turnover, which can be high in a long/short fund due to the need to constantly adjust the short book as thesis evolve. Finally, assess FFLS within the context of your risk tolerance: this is a concentrated, directional bet suitable for investors who accept significant volatility in pursuit of outsized returns if the megatrends thesis proves correct.