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Overlay

Parametric’s Overlay solutions form a comprehensive portfolio management solution designed to help investors increase expected return and reduce tracking error relative to a targeted policy allocation.

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The scope of an overlay program can be narrow or broad depending on each investor’s objectives and constraints. This framework allows for seamless integration of overlay with investment staff, underlying investment managers, and other stakeholders. Overlay solutions are highly customizable; investors may choose one or more components to alleviate specific portfolio shortfalls and inefficiencies.


Investing in an overlay program involves risk. All investments are subject to loss. Learn more.

Derivatives such as futures, swaps, and other investment strategies have certain disadvantages and risks. Futures require the posting of initial and variation margin; therefore, a portion of risk capital must be preserved for this purpose rather than being allocated to a manager. Liquid futures may not exist for published benchmarks, which may result in tracking error. Also, some intraperiod mispricing may occur. Swaps require periodic payments, may be less liquid than futures, and may have counterparty or credit risk.  Some investment strategies require a cash investment equal to the desired amount of exposure.

Explore more overlay solutions

WINNER 2021 CIO Industry Innovation Award

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Cash Overlay

Cash Overlay allows institutions to eliminate performance drag by aligning closely to a plan’s strategic asset allocations while still being able to access cash assets when needed.



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Currency Overlay

Applying Currency Overlay to a portion of a portfolio’s international holdings helps mute currency risk, allowing investors to more directly access asset returns.



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Rebalancing Overlay

Asset class exposures occasionally deviate from policy targets and tactical preferences, potentially resulting in unwanted exposures and increased tracking error. Rebalancing Overlay brings portfolios back to the desired allocations set out in an institution’s investment policy objectives. 



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Transition Overlay

Through the use of derivatives, Transition Overlay seeks to help institutions maintain market exposure, lower risk, and increase returns during manager transition or asset-allocation adjustments.



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Additional Overlay solutions

Parametric also offers a wide range of other overlay solutions, including portable alpha, custom synthetic exposures, completion portfolios, liability-driven investing (LDI), and hedging strategies.

Why choose Parametric?

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$124B+

Overlay
AUM



Dedicated Investment Professionals icon


43

Dedicated investment
professionals



Experience Managing Overlay icon


30+

Years of overlay
experience 



As of 6/30/2022

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.

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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. 

Intended benefits of overlays

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Risk mitigation

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Overlay programs provide investors with risk controls, portfolio governance, and access to risk specialists.

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Enhanced returns

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Overlay programs can increase expected returns and reduce tracking error and transaction costs.

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Comprehensive reporting

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Detailed reporting gives institutional investors insights for oversight and governance. 

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Increased efficiency

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Overlay offers institutions greater liquidity and flexibility in managing their portfolios.

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.



I acknowledge that I am a qualified investor and that I have read, understand, and agree to the above conditions.

Get in touch

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