Masters in Business• Feb 28, 2026• 1:09:33Interview

Financial Products for Hedging with Vest Co-Founder Jeff Chang | Masters in Business

From Masters in Business

Jeff Chang•Co-Founder and President, Vest

Executive Summary

Jeff Chang, co-founder of Vest, details his entrepreneurial journey, emphasizing the importance of grit, influence, and developing hard skills learned from early business failures.
Vest specializes in defined outcome or "buffered" ETFs, which use options to provide downside protection against market losses in exchange for a cap on upside potential.
The firm, a Y Combinator alumnus with over $50 billion in AUM, focuses exclusively on serving financial professionals, simplifying complex options strategies into a scalable and compliant ETF wrapper.
A key catalyst for Vest's growth was a 2019 regulatory change allowing in-kind creation and redemption with options, which enabled the tax-efficient structure of their funds.

11 quotes

Concerns Raised

The extreme difficulty and personal sacrifice required for entrepreneurship, which can be a significant deterrent.
The historical complexity, compliance burdens, and scalability issues associated with implementing options strategies for advisors.
The need for vigilance against AI 'hallucinations' when using generative AI for research and information gathering.

Opportunities Identified

Growing advisor and investor demand for risk-managed solutions that provide downside protection, especially after the 60/40 portfolio's failure in 2022.
The large market of affluent investors playing the "stay rich game" who prioritize capital preservation over aggressive growth.
The ongoing trend of packaging complex institutional strategies into more accessible and liquid vehicles like ETFs.

Key Themes

Entrepreneurial Journey and Mindset

Jeff Chang recounts his path from a failed flat-screen TV venture to co-founding Vest. He stresses that success is built on a foundation of grit, influence, creativity, and intelligence, in that order, and highlights the personal sacrifices made, such as forgoing a salary for over four years.

Provides a realistic and motivational perspective on the challenges and key character traits required for building a successful company from the ground up.

Democratizing Complex Financial Strategies

Vest's core business model is to take sophisticated, institution-level options strategies and package them into accessible ETFs. Chang uses the analogy of selling pre-sliced "bagged apples" to illustrate how simplifying a complex product (options) to solve for compliance and scalability drives adoption among financial advisors.

This highlights a major trend in asset management where complex alternative strategies are being made available to a broader audience through innovative product structures like ETFs.

The Rise of Buffered ETFs

The discussion explains the mechanics of buffered ETFs, which offer a predetermined level of downside protection for a cap on upside gains. These products have gained traction as an alternative to traditional 60/40 portfolios, especially after 2022 when both stocks and bonds fell, by offering risk management through direct hedging rather than relying on asset correlation.

Investors and advisors are increasingly seeking solutions that can mitigate volatility and drawdowns, making this product category a significant and growing area of the asset management industry.

The Y Combinator Effect on FinTech

As the largest asset manager to graduate from Y Combinator, Vest's story illustrates the accelerator's influence beyond traditional tech. The conversation also touches on the current AI-centric focus of YC, with 80-90% of recent startups being AI-related, indicating a major technological shift that will impact all industries, including finance.

This theme connects the worlds of Silicon Valley venture capital and traditional asset management, showing how startup ecosystems can foster innovation in highly regulated industries.

Regulatory and Market Enablers

A 2019 regulatory change allowing in-kind redemptions with options was a critical enabler for Vest's buffered ETF products, allowing for greater tax efficiency. This, combined with strategic partnerships with firms like Cboe and First Trust, was instrumental in the company's ability to scale and launch innovative products.

Demonstrates how crucial the regulatory environment and strategic partnerships are for financial innovation, as changes can unlock entirely new product categories and market opportunities.

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Topics

Buffered ETFs Defined Outcome Investing Options Strategy Risk Management Asset Management Y Combinator Entrepreneurship Startup Culture Financial Regulation ETF Innovation Derivative Income 60/40 Portfolio Behavioral Finance AI Startups Founder Mindset

Processed Apr 6, 2026 yt-dlp + mlx-whisper + Gemini