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International Equity

Parametric's International Equity is designed to efficiently capture the long-term returns of developed international equity markets while avoiding both the return risks of active management and the concentration risks of mainstream international equity indexes.

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International Equity seeks to outperform the MSCI EAFE Index by 1% to 2% over three to five years. International Equity emphasizes broad exposure with diversification among countries, economic sectors, and individual securities. Central to this investment approach are long-term strategic country and sector allocations, disciplined rebalancing, and broadly diversified individual holdings. Our transparent, repeatable process provides greater insights into your holdings.

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Why choose Parametric?

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Total firm

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Years of equity

As of 6/30/2022

Engineered and disciplined approach

Parametric believes that broadly diversifying, avoiding concentrations, and portfolio rebalancing are all key aspects to managing risk and driving thoughtful investment decisions. By diversifying at the country and sector levels, then emphasizing low-beta names within each country-sector combination, Parametric builds a portfolio designed to balance the benefits of diversification with the market conditions present in the international equity markets.

How it works

Parametric’s International Equity Strategy uses a rules-based portfolio construction approach that consists of these steps: 

We weight countries equally within tiers defined by size and liquidity constraints, reducing concentration of the largest countries and overweighting smaller ones.
Once a country target exposure is determined, we set sector target weights in each country in an attempt to move closer to an equal representation from each economic sector while taking practical liquidity considerations into account.
We screen out high-beta names within each country-sector combination in favor of low-beta combinations. The result is a broadly diversified portfolio of 800 to 1,200 names.
Over time, we systematically rebalance the portfolio, bringing exposures back in line with target weights and redeploying capital into underweight areas.

Intended benefits of International Equity

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Lower volatility

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While developed non-US equities may demonstrate heightened volatility, they do so against a backdrop of rising prices. Managing this volatility by diversifying is a key aspect of the investment philosophy. 

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Consistent exposure

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Our process reduces exposure to concentrated areas of international markets, reweighting away from large countries to create a more diversified portfolio. 

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Long-term growth capture

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Our International Equity Strategy relies on a rules-based approach, coupled with a rebalancing discipline, to reduce concentrations and emphasize diversification in pursuit of its capital appreciation objective.

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Transparent, repeatable outcomes

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Top-down portfolio construction doesn’t rely on market forecasts or behavioral biases. Our implementation focuses on disciplined rebalancing, resulting in a “buy low/sell-high” methodology.

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This Material Is Intended for
Institutional Investors Only

By clicking Agree, you acknowledge that you have read the terms detailed below. You also confirm that you are a qualified institutional investor or a consultant to qualified institutional investors and wish to proceed. Parametric does not provide legal, accounting, or tax advice or consulting service.

The information on this area of the Parametric Portfolio Associates® LLC (“Parametric”) website is intended for qualified institutional investors and their consultants. This information is not intended for accredited investors in any jurisdiction outside the United States in which the distribution or sale of Parametric investment services is not authorized.

It is published for informational purposes only and does not purport to address the financial objectives, situation, or specific needs of any investor. If you do not qualify, the information shown on this site (which may include information about our investment strategies and products, market commentary, and composite performance) may not be relevant or appropriate for you. Certain solutions discussed in these materials will be subject to minimum investment amounts and other restrictions that apply. There can be no assurance that any investment product or strategy will achieve its investment objectives or that there will be any return of capital. Performance may be volatile, and investors could lose all or a substantial portion of their investment.

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