Overlay

Parametric's Overlay solutions form a comprehensive portfolio management platform that enables institutional investors to optimize their portfolios and remain aligned with strategic policy objectives.

The Parametric difference

Our overlay solutions use diligent execution and creativity to help solve client challenges.

Potential benefits of overlay

Improve returns

Our cash overlay, rebalancing and execution options tailored to your goals and designed to minimize transaction costs and increase portfolio returns.

Increase portfolio flexibility

We customize implementation programs that may enhance liquidity and address persistent or episodic risks without disruption.

Enhance risk management

We give strategic advice on exposure management and hedging solutions with a suite of tools to help address and manage specific portfolio risks.

Overlay solutions at Parametric

Efficiency solutions

Core overlay solutions that mitigate policy implementation challenges

Cash equitization

Helps investors mitigate performance drag by eliminating unwanted cash held for operational purposes, such as benefit payments or capital calls, or residual cash within manager portfolios. It seeks to improve day-to-day liquidity, while reducing transition costs to streamline cash-flow management.

Portfolio rebalancing

Portfolio drift results in exposures that differ from an investor’s target asset allocation, often leading to increased tracking error. Rebalancing brings portfolios back in line with the policy in a disciplined framework that removes uncertainty and behavioral implications that can lead to inaction or the wrong action, particularly in times of high volatility.

Transition overlay

Institutional investors have periodic transition events that produce a gap in their portfolio exposures. These may result from manager terminations, large contributions or asset-allocation changes. Transition overlay seeks to help institutions maintain market exposure, lower performance risk, and increase expected returns during transition events.

Exposure solutions

Advanced overlay applications that aim to address specific investor asset allocation goals

Currency overlay

Mitigate unintended currency risks within your institutional portfolio, seeking to afford investors a more direct return on the underlying assets with seamless integration and adjusting to changing market dynamics.

Portfolio completion

Portfolios may become concentrated because of individual security or asset class performance, leading to unintended risk in one or many asset classes. Completion strategies aim to strategically shift exposures to the desired risk position.

Portable alpha

Seeks to enhance risk-adjusted returns by separating and optimizing alpha and beta, enabling more precise control over portfolio exposures. Through flexible overlay implementation, investors may preserve access to skilled alpha sources while efficiently reallocating beta to preferred markets, potentially improving capital efficiency and overall portfolio construction.

LDI

Seeks to help pension plans manage assets in concert with their liabilities by funding future liabilities while balancing the resulting risk exposures on a total plan basis. Through customized bond portfolios, overlays and dynamic glide path implementation, investors can potentially more precisely manage interest rate and funding risk while maintaining flexibility as plan needs change.

Hedging and risk mitigating solutions

Seek to help investors manage downside risk and express tactical or strategic views through customized structures and systematic approaches. By combining traditional hedging instruments with flexible overlay-based trend strategies, investors may enhance portfolio resilience with uncorrelated return potential and greater implementation efficiency.

There is no guarantee that the investment objectives will be met. Investing in an overlay program involves risk. All investments are subject to loss. Learn more.

Access to dynamic, wide-ranging instruments:

Futures

Options

Bilateral OTC swaps

ETFs

Equities

Fixed Income

MORE WAYS TO INVEST

Cross-asset portfolio solutions

Our Cross-asset portfolio solutions offer institutional investors even more control of their portfolios though a comprehensive, flexible, and customizable platform. We built a full beta management toolkit and employ an investment team focused on outsourced implementation and exposure management.

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How it works

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Customized solutions

We take the time to understand each institution’s objectives and policy challenges, then design a custom overlay solution to address these challenges and establish the appropriate program parameters. Our team of derivative investment experts have access to dynamic, wide-ranging instruments including futures, options, swaps, ETFs, equities and fixed income.

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Analytics

We use proprietary technology to validate portfolio data and generate custom analytics. Our overlay team evaluates and confirms these analytics and makes the necessary adjustments after approval and verification from the portfolio management team.

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Detailed reporting

We generate comprehensive program reporting published on a secure client portal, providing institutional investors with increased oversight and governance. Comprehensive performance metrics measure returns by asset class and overlay component.

Why clients continue to choose Parametric: