In the spring of 1987, Bill Cornelius, Mark England-Markun, and Randy Lert, who were working at Russell Investments in Tacoma, Washington, decided to break out on their own to found a company that would devote itself to a then-new investing discipline: one centered around the principles of market efficiency, transparency, attention to cost and risk, and a healthy skepticism of traditional active management.
With seed money from Pacific Mutual Life Insurance (PIMCO’s initial parent company), they called their new firm Parametric, naming it after a mathematical equation commonly used to describe the relationship among points on a curve—that is to say, its parameters. To some it may have sounded nerdy, but to a fledgling company focused on using technology to execute its mathematical strategies, it fit.
And speaking of technology, computing power—the lifeblood of any firm attempting to deliver on its quantitative strategies—was relatively primitive in the late 1980s. What today we can produce in a few moments took those early systems hours (sometimes even overnight) to churn out. So while we worked hard to test the limits of what technology could do at the time, the firm remained small in its early days.
But small didn’t necessarily mean under the radar. Parametric had already attracted the attention of a number of investors intrigued by quant strategies and their potential to deliver transparent, repeatable outcomes.