Philip Sun, Co-Founder and CEO of Adaptive Investment Solutions LLC (Adaptive Investments), began his career in 1997 – the same year economists Fischer Black and Myron Scholes were awarded the Nobel Prize in economics for inventing the Black-Scholes options pricing model. The timing is notable because nearly 30 years later, Adaptive’s mission is to create and support tools that guide advisors and investors in using options for downside protection for their investment portfolios.
Sun’s first investment jobs were as a portfolio manager of futures-based (CTA) macro strategies for quantitative hedge-funds, first PanAgora Asset Management then Highbridge Capital Management. He next transitioned into senior and leadership positions in quant research and investments with Fidelity, Wellington, and Sentinel Investments, retiring from the latter after helping sell the $8 billion mutual fund complex to a competitor.
“After almost 30 years in the industry, riding the wave of huge, tech-driven changes in quant investing, I finally found some breathing room. That’s when I started teaching.”
His teaching career began as Professor and Research Fellow at Hult International Business School, with a concentration in finance and data science, and an eye towards “social innovation”. Currently, Philip is an Adjunct Faculty in the MSMFT (MS in Mathematical Finance) program at the Questrom School of Business, Boston University, teaching algorithmic and high-frequency trading.
“We use IBKR’s Student Trading Lab linked to QuantConnect (quantconnect.com) to teach students to create their own trading algorithms and live-test them in IBKR’s paper trading environment.”
Sun chuckles. “You could say we push them straight into the deep end of the pool — with or without life jackets.”
Adaptive Investments was born out of Sun’s desire to bring some of the more esoteric management and trading strategies practiced in the institutional investment community to smaller financial advisors, and ultimately small investors.
“Adaptive’s focus is on using technology to reengineer part of the investment process — specifically risk management – so we can bring real financial expertise to a broader, less experienced audience. Risk management with asset liability matching is relevant for small investors, but there’s a certain complexity that can be a barrier.”
That comment underscores a key part of Sun’s motivation: helping small investors toward “greater financial inclusion”. Indeed, though Adaptive’s first product is a sophisticated risk management tool that uses options to help clients manage downside portfolio risk, it’s packaged in an intuitive, approachable interface.
“For business reasons, our initial focus is on independent financial advisors and their clients, but our ultimate vision is to reach investors of all sizes. The wealthiest 1% have the wherewithal to take care of themselves. The least wealthy we honestly don’t have the right expertise to help. But the middle class is underserved. In theory if we take care of them, the benefits will spread in all directions. That’s who our tools are built for: independent advisors and retail investors. The aim is to keep our platform simple, easy, approachable, and transparent — even fun.”
The company website, https://adaptive-investments.com/, offers a series of free webinars led by enthusiastic financial advisors who are early adopters of Adaptive’s technology.
“Our clients quickly become the strongest advocates for ensuring that we continue to practice what we preach.”
Individual investors can subscribe for $25 a month, while advisor subscriptions start at $65.
“Large advisors focus on large investors. They don’t have the bandwidth to offer their expertise without enough ROI. And if small investors aren’t investing it’s often not because they don’t want to, but because they don’t know how. Adaptive is about leveraging technology to accommodate every individual’s constraints. We called the firm Adaptive because that’s what our tools do: adapt sophisticated strategies to the needs of individual investors, large or small. It’s mass-customization for individuals.”
Continued in Part Two to learn more about Adaptive’s intuitive tool that uses options for downside portfolio protection.
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
Disclosure: Options Trading
Options involve risk and are not suitable for all investors. Multiple leg strategies, including spreads, will incur multiple commission charges. For more information read the "Characteristics and Risks of Standardized Options" also known as the options disclosure document (ODD) or visit ibkr.com/occ
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