Parametric International Equity: A Third Way of International Equity Investing
The Parametric International Equity Strategy is designed to efficiently capture the long-term growth of this asset class while avoiding both the return risks of active management and the concentration risks of mainstream international equity indexes. Parametric’s approach to asset management incorporates the ideas of equal weighting, systematic rebalancing, and diversified economic sectors within countries. In addition, to boost the diversification of the strategy at the security level, Parametric deemphasizes those securities most correlated with global markets.
Parametric’s research and experience indicate that such an approach can provide a diversified core exposure for investors and be a powerful complement to both active and passive strategies. In this paper we examine the key characteristics of the international equity asset class and then show how our approach seeks to address the associated challenges these characteristics pose.