Parametric Portfolio Associates

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.

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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