Overlay services

Controlling investment exposures with flexible and capital-efficient overlay programs.



The challenge

Institutional investment portfolios often have components that do not work in harmony with each other - some are managed by in-house investment staff while others are outsourced to numerous specialty investment managers. Making a change to investment exposures or keeping them within a reasonable range of desired exposures can be a near insurmountable task. Oversight and implementation can be brought together however using an effective overlay programme.

Why Russell Investments for overlay services

Russell Investments has a global team of seasoned overlay specialists who will work alongside your team to understand your portfolio requirements and help engineer a solution aligned to your specific investment challenges. We can create an investment framework providing improved visibility into investment exposures, and the ability to efficiently control these exposures using our robust Overlay strategies.

With Russell Investments' Overlay services, you can expect:

By managing total fund liquidity with an equitisation 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.

Russell Investments’ Overlay Services include:

Cash equitisation

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.

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.

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 a market opportunity presents itself.

A comprehensive investment solution

Our global team of overlay specialists are experienced in tackling the more complex and challenging investment problems facing institutional investors using our proprietary technology and systems:

  • Proprietary system for aggregating account level data to enable overlay management
  • 24-hour agency-only global trading desk with specialisation by market segment
  • Proprietary quantitative systems for managing futures tracking error to customisable benchmarks
  • Seamless integration of physical and overlay trading via trade order management system for more complex solutions


An experienced, well-resourced global team


Portfolio managers with average experience of 15 years


€74 billion globally in derivative exposure on behalf of 3rd party clients

overlay specialists

18 dedicated global overlay specialists, including 11 CFA Charterholders


€2.3 trillion derivatives traded globally in 2020

Source: Russell Investments, As of 31 December 2020.

When operational realities limit flexibility in running your investment plan, let us help design an implementation framework that allows for more effective management of portfolio asset allocations, cash and currency exposures.


Industry leading

When you invest, it's good to know you're among the best. Russell Investments has been globally recognised for excellence in the investment industry.

We have a proven track record in investment implementation, with scale, client satisfaction, and innovative solutions, and more than 35 years of experience.

View our awards

trading and execution

In 37 out of 42 most recent quarters, Russell Investments Implementation Services, LLC has been ranked as a top-tier broker in Pensions & Investments’ Tradewatch report based on the quality of its trade execution (most recently in P&I’s March 2022 issue).

trading and execution

Russell Investments was named winner of “Fiduciary Management of the Year” at the 2022 European Pensions Awards. Chosen among seven finalists in this category, Pensions Age and European Pensions cited “With reference to impressive case studies, this firm demonstrated how it has boosted client funding levels, won new mandates, heightened its ESG focus, and launched new reporting and online tools”.

Explore more with these resources:

Implementing an Overlay programme

For questions, contact Jim:

Jim Leggate 

020 7024 6400

Learn more about our customised portfolio solutions

Transition management

We help clients manage their risks and investment performance when restructuring their portfolios or asset classes.

Trading and execution

Delivering client-centric, flexible solutions while employing the latest advances in technology to find liquidity pools that reduce transaction costs and manage risk.

Currency management

Our programme can result in a cost effective solution for a core component of your trading and risk management initiatives.

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Any opinion expressed, is not a statement of fact, is subject to change and does not constitute investment advice.

The value of investments and the income from them can rise and is not guaranteed. You may not get back the amount originally invested.

Past performance does not predict future returns, any forecast, projection or target is indicative only and not guaranteed in any way.

All data as of 31 December 2020 unless otherwise noted.

1 Source: Russell Investments. For Illustrative purposes only. Any forecast, projection or target is indicative only and not guaranteed in any way. Impact from 31 December 1978 to 31 December 2020. Based on a typical U.S. multi-asset portfolio consisting of 2.5% total cash (1.5% U.S. equity, 2.0% International equity and 1.5% fund cash) vs. a pro-rated target of 40% Russell 3000, 20% MSCI ACWI ex-U.S., 40% Bloomberg U.S. Aggregate.

2 Risk reduction as measured by decrease in tracking error between the portfolio with and without the Overlay programme relative to the Strategic asset allocation.

Source: Russell Investments. Based on a 10-year composite of Russell Investments’ policy implementation clients.