Rebalancing Overlay

Parametric’s Rebalancing Overlay solution allows investors to rebalance portfolio exposure quickly and cost-effectively, particularly in times of high volatility.

Portfolio drift results in exposures that differ from an investor’s target asset allocation, often leading to increased tracking error. Parametric's Rebalancing Overlay 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.

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 our suite of overlay solutions

Why choose Parametric?

$160Bn+

Overlay AUM

30+

Years of overlay experience

Dedicated investment professionals

As of 9/30/2025

How it works

We start by determining the appropriate overlay instruments that enable us to track underlying portfolio exposures. We then select the rebalancing methodology that best incorporates stated risk and the investor’s tracking-error tolerances.

We apply a systematic approach to rebalancing through a three-step process:

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