Implementation Solutions

Overlay Services

A tool for managing large pools of capital, derivative overlays help you to manage risk elements and improve your performance. We offer an overlay platform that supports a broad range of derivatives-based solutions including:

Policy implementation

We examine your portfolio in search of slippage-inefficiencies that lead to lower return and higher risk. Through the use of a derivatives overlay, we can correct the underlying source of slippage.

Beta management for portable alpha

We use derivatives to manage the beta (market) exposures associated with portable alpha strategies. We work with you to determine the best instruments to use for your particular strategy-typically futures, swaps or a combination of the two.

Liability-driven investing

Many investors recognise that they are exposed to interest rate risk, but do not have high confidence this exposure will add value. Hedging this risk through increased physical bond holdings may not be feasible or desirable given the investment opportunity cost.

A derivatives overlay allows you to gain interest rate exposure synthetically, while leaving most of your cash available for return-seeking strategies.

Additional applications:

  • Managing exposures - Efficiently manage multiple exposures at the total fund level.

  • Fund restructuring - Effect changes resulting from major shifts in your asset allocation or mergers of multiple plans, independent of the movement of physical securities.

  • Tactical asset allocation - Implement tactical tilts around a long-term policy target.

  • Currency overlays - Add or remove currency exposures.

  • Episodic cash flows - Manage contributions into and disbursements from your portfolio more efficiently.
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