Overlay services

By managing total fund liquidity with an equitization overlay you can expect increased returns by 10-15bps.¹

Systematic rebalancing with overlays can typically reduce tracking error by 70%.²

Access to a global, multi-venue 24-hour trading desk for best execution and local execution expertise.

Gain additional resources and implementation expertise through our global team of 18 specialists.

Cash equitization

Cash is necessary for liquidity purposes. Our solution converts cash exposures to equity and/or bond exposures using derivatives, adjusting for total cash holdings on a daily basis. Our turnkey management service adjusts exposures and handles all downstream aspects of managing those positions.

Policy implementation

Many institutional portfolios are managed to a Strategic Asset Allocation (SAA) but, as time passes these exposures drift in relation to each other. A disciplined rebalancing plan helps to keep such risks under control. With daily oversight of portfolio positioning, our Policy Implementation service can manage exposures to asset classes in the SAA via overlay transactions effectively solving cash drag and rebalancing policy issues at the same time.

Dynamic de-risking

Dynamic de-risking solutions are effective strategies employed with investors that manage surplus risk where the goal is to improve the size of the assets in relation to the liabilities. This includes pension plans managing assets relative to their long-term promise to beneficiaries.

A common form of such a mandate is often referred to as a glide-path portfolio, as asset allocations glide down in risk level as this goal is achieved over time. An overlay strategy provides a cost effective and timely implementation of the new target exposures and achieves the desired asset allocation when market opportunity presents itself.

Beta transformation

The mix of asset classes (or betas) in the SAA do not always coincide with the most fertile excess return (or alpha) opportunities.  Undesired asset classes can be reduced, and desired asset classes can be added, all using an overlay program.

Downside protection

Most institutional investors need to maintain exposure to risk assets over the long term in order to meet aggressive expected return targets. However, not all investors can weather the full downside risk of a major correction that could take years to recover from. Russell Investments offers risk management tools designed to reduce the frequency and/or magnitude of drawdowns in portfolio value resulting from significant market declines. Our Portfolio Managers can tailor solution parameters to align with each client’s specific needs.