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FARO: Function-Space Adaptive Return-to-Risk Optimization via Cross-Block Equal-Risk-Contribution Budget Allocation

Summary

FARO introduces a function-space adaptive optimizer that treats parameter partitioning into blocks as the decision unit, assigns geometry by realized counterfactual return, and reallocates per-block budgets using equal risk contribution (ERC) from portfolio theory. On a GPT-style model, FARO-Adaptive matches the best hand-designed recipe, and FARO-ERC stably lowers clean-data loss across 6 seeds by 0.0136 nats on average without added time or memory.

SourcearXiv Machine LearningAuthor: Xiaojun Wu, Cehao Yang, Xuhui Jiang, Chengjin Xu, Jia Li, Jian Guo
FARO: Function-Space Adaptive Return-to-Risk Optimization via Cross-Block Equal-Risk-Contribution Budget Allocation
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[Submitted on 29 Oct 2026]

Title:FARO: Function-Space Adaptive Return-to-Risk Optimization via Cross-Block Equal-Risk-Contribution Budget Allocation

View a PDF of the paper titled FARO: Function-Space Adaptive Return-to-Risk Optimization via Cross-Block Equal-Risk-Contribution Budget Allocation, by Xiaojun Wu and Cehao Yang and Xuhui Jiang and Chengjin Xu and Jia Li and Jian Guo

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Abstract:Training a large language model is compute-bound, and current recipes divide the work between optimizers by hand: orthogonalized momentum for attention and MLP matrices, Adam-style updates for the rest. This division rests on human priors about which layer type deserves which geometry, and it fixes a single global update budget that every parameter block shares. We introduce FARO, a function-space adaptive optimizer that makes the partition of parameters into blocks the unit of decision. FARO gives each block a geometry by its realized counterfactual return, then freezes the routes and reallocates the frozen per-block budget by cross-block equal risk contribution (ERC), the risk-parity principle from portfolio theory. On a GPT-style model trained on FineWeb, the framework gives two results. First, its FARO-Adaptive arm reaches 3.2780 nats at the full schedule, matching NorMuonAndAdam (3.2794), the best hand-designed recipe: it recovers the human prior without hand-setting per-layer geometry. Second, FARO-ERC improves on that arm: it lowers the clean-data loss at every one of 6 seeds, by 0.0136 nats on average, a modest but robust gain. Its sign test, paired test, and confidence interval all agree, and it exceeds the measured run-to-run noise at no added time or memory. It works by trimming the riskiest blocks rather than expanding the safest, and it holds up under a corrupted stream, still lowering the mean loss and winning the seed majority. The source code is available at this https URL.

Comments: 20 pages, 5 figures

Subjects:

Machine Learning (cs.LG); Computation and Language (cs.CL)

Cite as: arXiv:2610.40858 [cs.LG]

(or arXiv:2610.40858v1 [cs.LG] for this version)

https://doi.org/10.48550/arXiv.2610.40858

arXiv-issued DOI via DataCite (pending registration)

Submission history

From: Xiaojun Wu [view email] [v1] Thu, 29 Oct 2026 18:37:04 UTC (782 KB)

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Key points

  • FARO makes parameter blocks the unit of decision, assigning geometry via realized counterfactual return instead of hand-crafted layer-type priors.
  • FARO-ERC applies the risk-parity principle (equal risk contribution) to reallocate frozen per-block budgets, outperforming the adaptive baseline on every seed.
  • FARO-ERC robustly lowers loss on both clean and corrupted data streams with no extra compute or memory overhead.

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