Transition Overlay
Parametric’s Transition Overlay solutions allow investors to maintain market exposure seamlessly throughout transition events to reduce policy risk and increase expected return.
Institutional investors have periodic transition events that produce a gap in their portfolio exposures. These may result from manager terminations, large contributions, or asset-allocation changes. Transition Overlay seeks to help institutions maintain market exposure, lower performance risk, and increase expected returns during transition events.
Investing in an overlay program involves risk. All investments are subject to loss. Learn more.
Explore our suite of overlay solutions
Why choose Parametric?
How it works
Before implementing a Transition Overlay, we collaborate with our client to create a transition plan for manager changes, asset-allocation adjustments, exposure changes, and updated portfolio targets. We create a transition plan through a three-step process:
Plan
We work with the investor to determine which asset class exposures will be affected, select the most appropriate investment instruments, and discuss trade timing.
Add transition overlay
We coordinate with other asset managers to align the timing of their physical position sales with Transition Overlay position purchases.
Remove transition overlay
The transition ends when the new fund manager is funded. Parametric then sells the Transition Overlay position in tandem and completely removes the market exposure.
Intended benefits of Transition Overlay

Risk mitigation
Learn more >>
Transition Overlay may help maintain market exposure and reduce performance risk by mitigating exposure gaps.

Flexibility
Learn more >>
Transition Overlay gives institutions maximum flexibility to accelerate manager changes.

Gap reduction
Learn more >>
Transition Overlay gives investors exposure through long-settled redemptions such as hedge fund receivables.
Get in touch
Want to know more about our Transition Overlay solutions? Complete our contact form, and a representative will respond shortly.
More to explore
Consider New Ways to Invest Margin Cash and Capture Rising Yields


by Brian Barney, Managing Director, Institutional Portfolio Management and Trading; Chris Haskamp, Director, Investment Strategy, Government Securities
August 17, 2023
With Treasury yields on the rise, it’s time for institutions to reevaluate their cash positions. See the potentially improved efficiency of an overlay program.
What Is Overlay? A Look at Four Common Applications

by Antony Motl, Portfolio Manager
August 14, 2023
Can an overlay program help investors increase expected return and reduce tracking error relative to a targeted policy allocation? In this paper we delve into the most common overlay components to explore how such a framework allows for seamless integration with investment staff, underlying investment managers, and other stakeholders.
Enhancing Overlay Collateral Efficiency

by James Thorson, Portfolio Manager
July 31, 2023
Is there a more capital-efficient way to participate in a futures overlay program than posting cash? We explore how Treasury securities can come to the rescue.