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Cash Overlay

Parametric’s Cash Overlay solution helps institutional 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.

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Most institutions don’t prescribe a portion to cash in their target allocation but do carry some level of cash exposure, which can be a drag on performance. A Cash Overlay solution can help mitigate that drag.

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.

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Why choose Parametric?

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Dedicated investment

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Years of overlay

As of 12/31/2022

How it works

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We identify sources of residual cash and desired market exposures.

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We determine the appropriate overlay instruments to meet the investor’s overall objectives. 

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We monitor cash through automated custodial data feeds and execute trades so we can ensure any overlay exposures are in line with cash balances.

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We continually evaluate any potential overlay program changes to ensure they remain appropriate for a plan’s objectives.

Intended benefits of Cash Overlay

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Minimized drag

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Cash Overlay helps eliminate the cash drag on operating and manager cash balances.

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Cash Overlay improves day-to-day liquidity and reduces transition costs. 

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Cash Overlay streamlines cash-flow management. 

Get in touch

Want to know more about our Cash Overlay solutions? Complete our contact form, and a representative will respond shortly.

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