“We actually think of ourselves as more passive than using stop-loss or stop-limit orders,” Sood says. “If you put a stop-loss order on an investment, you would get out of the market entirely when it executes and then you’re faced with the dilemma of when you want to get back in. You end up trying to time the market anyway.”
Vest structures a protective strategy using options to match an investor’s personal goals and risk tolerance.
The platform offers three pre-packaged strategies for advisors to build protection for an existing portfolio or a new one. Alternatively, advisors can request that Vest customize a hedging strategy for a portfolio, or create their own.
“Even if an advisor doesn’t want Vest, we think that options have significant benefits for investors,” Sood says. “For example, if you can combine the benefits of downside protection and use options to generate yield, you can use equity instruments like fixed-income instruments. I would encourage every advisor to learn about options and to offer them to their clients.”
In the future, Vest will partner with an index provider to offer unit investment trusts, mutual funds and ETFs, eventually evolving into a full-service asset management firm, Sood says.