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

Host: Barry Ritholtz (Bloomberg) | Guest: Jeff Chang, Co-Founder & President of Vest
Date: February 27, 2026
Main Theme:
A deep dive into defined outcome investing and buffered ETFs, exploring the origin and growth of Vest, the mechanics of hedged products, and lessons from the intersection of Silicon Valley startup culture and Wall Street rigor.

Episode Overview

Barry Ritholtz interviews Jeff Chang, co-founder and president of Vest, a pioneer in outcome-oriented investment strategies, notably buffered ETFs. The conversation ranges from Chang’s unorthodox career path (Naval Academy, CPA, Wall Street, Y Combinator) to the technical, developmental, and philosophical underpinnings of building financial products that aim to take the uncertainty out of investing by using options for downside protection and income generation.

Guest Background & Early Career

• Diverse Origins: Chang’s journey goes from a failed flat-screen TV business to becoming a CPA for security and skills, highlighting the importance of foundational business knowledge.
  • "One of my mentors once told me...there's FU money and FU skills." (03:58, Jeff Chang)
• Lessons from Failure & Grit:
  • Learned the necessity of hard skills and resilience after his initial venture was outcompeted in the commoditized TV market.
  • "I realized…I needed actual hard skills that created value add. And…you always have to have…a safety net." (03:58–05:06, Jeff Chang)
• Developing Grit, Influence, Creativity, and Intelligence (he ranks grit as most important):
  • "The optimization…when I have kids...I would optimize for actually, number one, grit...Second is influence...Third is creativity...And then the last…is intelligence." (06:33–08:40, Jeff Chang)
• Military & Early Finance:
  • Grew up in Annapolis, briefly attended the Naval Academy, and credits military discipline for his strong work ethic.
  • Gained experience at the World Bank, Freddie Mac, FBR, and ProShares, developing expertise in accounting, mortgage trading, and risk management.
  • “Trading repo during the '08 September…that’s the month I lost all my chest hair.” (12:02, Jeff Chang)
  • Saw firsthand the dangers of leverage and the importance of risk management.
  • "If you're highly leveraged, it's usually pretty fatal." (13:07, Barry Ritholtz)

Founding Vest & Product Philosophy

• Inspiration:

  • Inspired by the shortcomings of structured notes (notably counterparty risk in the 2008 crisis) and the need for better client risk management tools.
  • "When the tide goes out, make sure…the money we manage…we got pants on." (13:45, Jeff Chang)

• Silicon Valley Meets Wall Street:

  • Vest’s DNA fuses Wall Street expertise with Silicon Valley’s startup culture, though Chang notes that “move fast and break things” is not suitable for regulated asset management.
  • “Move fast and break things…is not the right ethos for managing other people’s money.” (22:28, Jeff Chang)
  • Y Combinator experience brought rigor, resilience, and a focus on solving painful, specific customer problems.
  • “YC always says…make something people want…start with the problem.” (21:17, Jeff Chang)

The Y Combinator Experience

[16:58–25:49]

• Accepted by Y Combinator in 2015 after three years building Vest without salary (“lived off our Wall Street bonuses…no pay for four plus years”).
• Emphasizes YC’s all-star network, partnership-building, and clear orientation to problem-focused innovation.
• "If a former trader on Wall Street ends up in Silicon Valley…you may end up in a ditch because…you have to go four years, no pay, sleep on the floor." (25:21, Jeff Chang)
• Advice from YC: Focus on pain points, be customer-centric, and iterate quickly—though always with the discipline required by market regulations.

The Buffer Fund Model – Mechanics & Value Proposition

[32:32–41:45]

• Buffer Strategy in Practice:
  • Example: S&P 500 exposure with the first 10% protected on the downside, and capped upside (e.g., cap at 15% annual gain).
  • "If S&P is down 10, you’re flat for the year…if S&P is up 15, you’re up 15…if S&P is up 16, you’re up 15.” (34:50, Jeff Chang)
• Downside Protection as Wealth Preservation:
  • Designed for clients in the “stay rich game,” not the “get rich game.”
  • “These types of strategies are in the stay rich game…if you have wealth, you just don’t want to be poor.” (36:40, Jeff Chang)
• Making Hedging Accessible:
  • Addresses compliance and scalability barriers that prevent advisors from offering option hedges by integrating options inside the fund.
  • Draws on behavioral finance: “Make it simple, people will use it.” (Richard Thaler’s “nudge” theory applied to options.)
  • "Think about options as apples…we had bagged those apples to make it easier for the user…" (38:52, Jeff Chang)
• Target Audience:
  • Primarily financial advisors and professionals, not direct-to-consumer.
  • “100% of our focus is in financial professionals…those are the people we're solving problems for…” (40:06, Jeff Chang)

Hedged Income Strategies & Other Products

[44:49–50:41]

• Income Generation:
  • Focus on covered call strategies across asset classes—equities, fixed income, gold, even bitcoin—to monetize volatility and boost yield.
  • Notable ETFs:
    • KNG: Dividend Aristocrats with covered calls; yields over 8% in recent years.
      • "For a company to grow their dividend 25 consecutive years…that’s a stable business…filters for good corporate governance." (46:28–47:11, Jeff Chang)
    • HYTI: Covered calls on high yield (HYG), double-digit yields.
    • IGLD: Covered call gold ETF.
  • Partnership with CBOE enabled innovations like extended trading hours for GLD options to match ETF close, facilitating these products.
    • “Today, GLD options stop trading at 4:15. That's because of us.” (50:41, Jeff Chang)
• Defined Outcome in Crypto (DeFi ETF):
  • Strategies targeting high yield by writing covered calls on crypto assets (e.g., DFII; yields quoted around 18–19%).
  • Rolls weekly, to maximize premium decay (“like selling football tickets as kickoff approaches”).
  • "Every week…you have the potential to generate more yield because you're always capturing that extra decay." (54:52–55:03, Jeff Chang)

Investment Philosophy: 3D Risk Management

[41:45–44:42; 59:27–60:42]

• Advocates for portfolio risk management beyond the traditional stocks/bonds split, recommending a “3-dimensional” approach via hedged funds.
  • “Still diversify, but think about other ways to shape your return…think about income generation…think about risk management beyond diversification.” (59:27, Jeff Chang)
• Stresses the limitations of relying on historical negative correlation between stocks and bonds, especially if inflation returns.
  • “What in your portfolio is going to save you if 2022 repeats itself?…Commodities, great, but it’s a timing trade…I’m not smart enough to time that trade.” (43:39–44:13, Jeff Chang)
• Important for “stay rich” clients to diversify sources of risk management.

Failure, Iteration, and Cultural Lessons

[30:41–32:06; 58:36–60:42]

• The difference between East Coast (Wall Street) and West Coast (Silicon Valley) views on failure:
  • "On Wall Street…it’s called a blow up. But on the West Coast…it’s expected …failure is just the mother of success." (30:41–32:00, Jeff Chang)
• Emphasizes learning from failure and the importance of pivoting, not giving up.

Memorable Quotes & Moments

• On Option Use & Market Psychology:
  • "Old option traders don't die, they just expire worthless." (57:40, Barry Ritholtz)
  • “If you're writing calls…think about this: if I collect a $2 premium and the stock goes up $1…I just buy the stock back...It gives you a buffer to repurchase stock not at a loss.” (56:07–56:42, Jeff Chang)
• Navigating Market Downturns:
  • "When the tide goes out, make sure…you got pants on." (13:45, Jeff Chang)
• On Audience:
  • “We stand side by side with the financial professionals that manage…wealth.” (40:39, Jeff Chang)
• Cultural Crossover:
  • “Our background…is Wall Street…There is no move fast and break things…” (22:28, Jeff Chang)

Other Notable Segments

• Timestamps for Key Topics:
  • [02:28–08:40]: Chang’s early career, grit/intelligence matrix
  • [13:07–14:25]: Lessons from financial crises & risk management
  • [16:58–25:49]: Y Combinator & Silicon Valley ethos
  • [32:32–41:45]: Buffer funds, ETFs, mechanics
  • [44:49–50:41]: Covered-call and income products
  • [53:43–54:30]: Crypto/DeFi income ETF
  • [59:27–60:42]: Portfolio construction and risk management

Closing Advice & Reflections

• Career Guidance:
  • Develop portable, durable skills; don’t fear failure; look for “pain points” you can solve.
  • “Develop the skills so you’re not beholden to anybody…keep your eyes out for painful problems you…can solve.” (70:50, Jeff Chang)
• Industry Wisdom:
  • The biggest advantages often come from not realizing how steep the climb will be when starting out.
  • "If you saw how big the mountain is, it would be…nobody would do it." (73:11, Jeff Chang)
• AI and the Future:
  • Forecasts that the next wave of transformative companies in AI may still be in startup mode today.
  • "Who's going to dethrone Nvidia? The founder…hasn't graduated high school yet." (61:52, Barry Ritholtz)

Recommended Reading (from Jeff Chang)

• Liar’s Poker, Michael Lewis
• Influence: The Psychology of Persuasion, Robert Cialdini
• How to Win Friends and Influence People, Dale Carnegie
• The Intelligent Investor, Benjamin Graham

Final Takeaways

This episode offers a rare window into the convergence of Wall Street discipline and Silicon Valley entrepreneurship in today’s investment-product innovation. Jeff Chang’s journey illustrates the value of grit, adaptability, and second-order risk thinking—both for entrepreneurs and investors seeking to preserve and grow wealth in unpredictable markets.