Systematic asset management firm Parametric has some USD230 billion under management in a variety of strategies and solutions all based on a scientific and disciplined approach to investing.
Tom Lee (pictured), Managing Director, Investment Strategy and Research at the firm explains that it is an affiliate of the USD469.9 billion global asset manager Eaton Vance, and was originally spun out of Pimco in 2003.
“We are systematic and we have disciplined strategies, rules based in nature, and backed by research,” Lee says. The system is implemented in a disciplined manner based on that model and there are no active portfolio trading managers.
Parametric’s capabilities include overlay strategies, such as residual cash equitisation, portfolio rebalancing and currency hedging, as well as advanced solutions in the form of option hedges and diversification and downside protection in portfolio construction.
Lee observes that the major themes dominating the market today are the slowdown in global growth, impediments to trade which stem from the US and China trade war on tariffs and also from the ongoing Brexit debate and also uncertainty about US monetary policy.
“Markets are always full of uncertainty, but these are the themes that are playing out and we are also heading into another election cycle in the US,” Lee says.
“Our systematic approach removes emotion which often has a negative impact on the outcome. It forces you to check your emotion at the door and stick with the process.”
Lee believes that investors want an understanding of what is driving the investment process within his firm. “We are willing to explain our process and investors have a higher degree of certainty of what to expect, so there are fewer surprises.”
Investors come from all types of investor group, institutional, high net worth and retail, with Parametric offering 40 Act Funds as well as UCITS funds in Europe.
“There is anxiety within the US as we are in year 10 of a bull market and everyone is expecting or fearing a pull back and people have been talking about that for a while now,” Lee says. “There is also a fear of inflation returning for investors, a return to some higher inflation. I have been hearing about rates rising for a long term and we have had a relatively long low period of interest rates for some time.
“No matter when we go back in history, we are always dealing with uncertainty. It’s the nature of investing.”
