Overlay-Banners-Transition
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.

Transition Intro Icon


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.

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?

firm aum icon


$124B+

Overlay
AUM



Dedicated Investment Professionals icon


43

Dedicated investment
professionals



Experience Managing Overlay icon


30+

Years of overlay
experience  



As of 6/30/2022

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:

number 1


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.

number 2


Add transition overlay

We coordinate with other asset managers to align the timing of their physical position sales with Transition Overlay position purchases.  

number 3


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 icon

Risk mitigation

Learn more >>

Transition Overlay may help maintain market exposure and reduce performance risk by mitigating exposure gaps.

Flexibility icon

Flexibility

Learn more >>

Transition Overlay gives institutions maximum flexibility to accelerate manager changes.

Gap reduction icon

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

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.