We design, model and manage customized overlay solutions that can shape a client’s portfolio risk profile and improve the risk/return profile of their investments.

We help clients optimize portfolio beta and eliminate uncompensated or unwanted risk across a broad range of risk types – from currency, to credit, to interest rates, to equity – and manage more than $60 billion in derivative notional value in overlay portfolios.

Our solutions are built upon an experienced derivative trading platform and quantitative research expertise. Our in-house derivative operations are an end-to-end solution, with dedicated front, middle and back offices that provide:

  • strong market relationships and long standing portfolio manager expertise
  • a sophisticated understanding of derivatives combined with in-depth quantitative research
  • a highly scalable straight-through-processing infrastructure
  • an experienced legal team for negotiating derivative agreements
  • counterparty credit and liquidity risk management expertise
  • valuation, settlements and collateral management services.

Benefits

  • Increased precision in risk management: Overlay strategies can provide additional precision in reducing different portfolio risks – with minimal impact to a portfolio’s underlying asset allocation
  • Yield enhancement: Overlay strategies can boost returns without incurring additional portfolio risk.
  • Lower transaction costs: Transaction costs using physical securities can be substantial. Derivatives can provide a more efficient portfolio rebalancing tool.
  • Hedging – without impact on return-seeking portfolio: Overlays let an investor increase interest rate hedging, with little impact to the plan’s return-seeking asset allocation.
  • Tail risk management: Overlays can reshape the risk profile by adding downside portfolio protection.

Latest insights

Currency risk management for foreign fixed income investments

Benchmark replication using equity futures

Currency risk management for foreign equity