In this episode of Masters of Risk, host Stewart Webster sits down with Karan Sood, Co-Founder and CEO of Vest, to challenge one of the most widely accepted principles in investing: diversification.

Karan introduces the concept of "outcomes-based investing" and explains how Vest is leveraging derivatives to engineer defined outcome ETFs—investment strategies that explicitly shape risk and return profiles. By capping upside, buffering downside, and stabilizing income, these products aim to give investors something markets rarely offer: predictability.

Drawing on his deep experience in structured products and options-based strategies, Karan breaks down how derivatives can function as a form of "insurance" within portfolios—transferring risk rather than simply spreading it. He also explores the hidden fragility beneath modern portfolios, arguing that traditional diversification may create a false sense of security in a world where correlations spike precisely when protection is needed most.

Together, Stewart and Karan unpack the structural risks embedded in today's markets—from concentration within major indices to the growing illusion of diversification—and discuss why investors may be overcrowding the very strategies they believe mitigate risk.

A thought-provoking conversation for asset managers, risk professionals, and financial advisors seeking to rethink portfolio construction, challenge long-held assumptions, and build more resilient investment strategies in an increasingly interconnected market.

Credits:

• Host: Stewart Webster • Guest: Karan Sood, Co-Founder and CEO of Vest • Editor: Carl Schmidt • Producer: Caitlin Bray • Published with Assistance From: Sophie Carr and Feranmi Adeoshun