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Currency Overlay

Parametric’s Currency Overlay helps investors mitigate unintended currency risks within a portfolio, thus affording investors a more direct return on the underlying assets.

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Two components make up international investing returns: asset return and currency return. With Currency Overlay, investors can better manage the level of currency risk within the international portion of the portfolio. 

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 6/30/2022

How it works

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We determine the impact of currency exposure on the fund’s risk-return profile.

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We create a customized solution to meet each client’s unique currency exposure objectives. 

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Select instruments

We determine the appropriate currency instruments and portfolio-tracking methodology to manage the program.

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Once implementation is complete, we monitor currency exposure daily to determine the efficacy of the overlay and the need for position adjustments. 

Intended benefits of Currency Overlay

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Risk mitigation

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Hedging a portion of your portfolio’s currency exposure can mitigate unintended currency risks. 

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Currency Overlay seamlessly integrates within your entire overlay program.

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Currency Overlay can help you adjust your currency exposure to changing market dynamics. 

Get in touch

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

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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.

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