Custom Beta

The explosive growth in passive investing in recent years has been fueled by investors seeking market-like returns at a reasonable cost. But if your clients are looking for a more personalized approach — and the potential to reduce taxes on their investments — Custom Beta portfolios may offer a better way.

Custom Beta is a suite of separately managed account strategies that provide the benefits of passive investing along with tax and personalization advantages not available in ETFs. These portfolios may be funded with existing securities, allowing clients to avoid the potentially negative tax implications of selling securities and realizing capital gains.

Offered by industry leaders Parametric and Eaton Vance, Custom Beta portfolios provide:


Key benefits of
passive investing

A low-cost, rules-based approach that seeks market-like returns.

Tax advantages


Active tax management in equity portfolios offers the potential to enhance after-tax returns.

Personalized investing


Portfolios that can be tailored to an investor's unique values and investment preferences.

Learn More: Custom Beta FA Brochure

EQUITY

Parametric Custom Core™

  • Seeks to provide the benefits of market-like returns
  • Active tax management provides potential for enhanced after-tax returns
  • Customized to reflect client values and investment preferences:
    • Social/environmental filters
    • Screening to avoid overconcentrations
    • Sector/industry/security exclusions

 

Learn More: Parametric Custom Core Strategy Overview »

FIXED INCOME

Eaton Vance Ladders

  • Customized, laddered bond portfolios for municipal or corporate bonds offer:
    • Predictable income
    • Portfolio diversification
    • Potential to reduce interest-rate risk
  • Accommodate client preferences for credit quality, maturity ranges and national or state-specific issuers for municipal portfolios
  • Tailored to meet individual client values and security exclusions

 

Learn More: Eaton Vance Laddered Investing Brochure »


Option Overlay Strategies

Parametric's overlay strategies offer a way to enhance returns on your clients' existing assets. These strategies are designed to smooth out return characteristics, lower portfolio volatility or create an additional source of income — without making changes to the underlying portfolio.

DeltaShift

  • Actively managed covered call writing program for portfolios of concentrated single-stock positions
  • Designed to enhance risk-adjusted return and generate incremental cash flow in most market environments
  • Designed to maintain significant upside exposure in rising markets
 

Learn More: DeltaShift Strategy Overview »


Back to top

Portfolio DeltaShift

  • Actively managed call writing program implemented by selling call options on an index that correlates to the expected returns of a client’s diversified portfolio
  • Designed to enhance total return and reduce portfolio volatility
  • Seeks to achieve a total return equal to, or greater than, a client’s passively or actively managed portfolio
 

Learn More: Parametric Option Overlay Strategies Flyer »


Back to top

Risk-Managed Put Selling (RPS)

  • An S&P 500 Index put option spread selling strategy to generate tax-friendly premium with low volatility and defined risk
  • Seeks returns that are uncorrelated to fixed-income investments
  • Looks to take advantage of the general imbalance of natural buyers of equity index options over natural sellers
 

Learn More: Parametric Option Overlay Strategies Flyer »


Back to top

Option Absolute Return Strategy (OARS)

  • An S&P 500 Index put and call spread selling strategy to generate tax-friendly premium with low volatility and defined risk
  • Seeks returns that are uncorrelated to traditional investments
  • Looks to take advantage of the general imbalance of natural buyers of equity index options over natural sellers
 

Learn More: Parametric Option Overlay Strategies Flyer »


Back to top

Dynamic Hedged Equity (DHE)

  • Hedging program implemented by buying put options and selling call options on an index that correlates to the expected returns of a client’s diversified equity portfolio
  • Seeks to produce returns consistent with outright long exposure of the underlying index (net of fees) over multiple market cycles
  • Maintains a high level of liquidity and transparency by utilizing only exchange-traded options
 

Learn More: Parametric Option Overlay Strategies Flyer »


Back to top



Tools and Resources


Wealth Strategies Specialists

Contact your dedicated specialist to learn more about our suite of specialized strategies.

DOWNLOAD

Laddered Investing Interest Rate Scenario Tool

Explore how laddered portfolios may perform during a rising interest-rate environment.

Learn More

Concentrated Stock Position Calculator

Discover how diversifying can be a better option than a taxable sale of stock.

Learn More

Investment Tax Center

View the breakdown of how taxes could consume more than 50 cents of every dollar earned.

Learn More

Tax-Equivalent Yield Calculator

See how munis’ favorable tax status compares with taxable bonds of equal quality and maturity.

Learn More



* Parametric Custom Core is offered through Parametric Custom Tax-Managed & Centralized Portfolio Management. Eaton Vance Management is an affiliate of Parametric.

This information is intended solely to report on investment strategies and opportunities identified by Parametric and Eaton Vance. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Past performance is no guarantee of future results. The views and strategies described may not be suitable for all investors. Parametric and Eaton Vance do not provide legal, tax and/or accounting advice or services. Clients should consult with their own tax or legal advisor prior to entering into any transaction or strategy described herein.

Investing entails risk and there is no assurance that Eaton Vance or Parametric will achieve profits or avoid incurring losses.

1 Fund share values are sensitive to stock market volatility. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. In emerging countries, these risks may be more significant. No Fund is a complete investment program and you may lose money investing in a Fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.

2 Beta is a measure of the volatility of a security or an entire portfolio in relation to the market as a whole.

Investing entails risk, and each investment strategy listed is subject to specific risks, highlighted below.

Equity: Equity investment values are sensitive to stock market volatility.

Volatility: While certain funds have a targeted annual performance volatility range, their actual, or realized, volatility for longer or shorter periods may be materially higher or lower than the target range, depending on market conditions.

Taxes: Market conditions may limit the ability to generate tax losses or to generate dividend income taxed at favorable tax rates. The ability to utilize various tax-managed techniques may be curtailed or eliminated in the future by tax legislation or regulation.

Option strategy risk: The effectiveness of an option strategy is dependent upon a general imbalance of natural buyers over natural sellers of index options. This imbalance could decrease or be eliminated, which could have an adverse effect on a client portfolio.

Option overlay: An investor that sells an index call option incurs a liability in exchange for the up-front receipt of the option premium received. There is no guarantee that the investor’s portfolio will accurately track the index performance. This liability may result in the needed sale of assets. Participation in the program includes the purchase of put options or put spreads. There is no guarantee that the index put options included in the program will effectively protect the investor’s actual portfolio holdings. The actual performance of the investor’s portfolio may underperform the index and result in significant losses for the investor. The purchase and sale of options and the sale of investor assets may produce tax consequences for U.S. taxpayers. In the event of required asset sales, substantial capital gains taxes could be incurred. Discuss with your personal tax advisor how selling call options, purchasing put options or put spreads, and any potential sales of investor assets may affect your tax situation.

Advisory Services described here are offered through Eaton Vance Management, Parametric Portfolio Associates® LLC and Parametric Risk Advisors LLC. Investors should contact their financial advisor, as not all investments are suitable for all investors.

Past performance is no guarantee of future results.