Parametric Portfolio Associates, LLC is a company that says it was founded on the principle of discipline. The Seattle-based institutional financial advisor firm also offers services to registered investment advisors (RIAs) who work with individual clients. Assets at Parametric are held in client accounts belonging to individuals, high-net-worth individuals and various institutional investors. The firm employs a large team of financial advisors that provide wealth management and investment management services.
Parametric is a fee-based firm, meaning that it may earn compensation from third parties. While this is a potential conflict of interest, the firm is bound by fiduciary duty to act in the best interests of clients.
Parametric Portfolio Associates Background
Parametric has been in business for over 30 years, having opened for business in 1987. The firm's leadership team includes chief investment officers (CIO) Tom Lee and Jim Evans as well as head of investment management Tom Seto. The firm employs several financially certified advisors, such as certified financial planners (CFPs) and chartered financial analysts (CFAs).
Parametric Portfolio Associates Client Types and Minimum Account Sizes
Parametric's client base can be divided into two sections: institutional and individual. Institutional clients work with Parametric directly, and they include investment companies, pooled investment vehicles, pension plans, profit-sharing plans, charities, municipal and state governments, other investment advisors, insurance companies and businesses. Its individual clients, who work indirectly with the firm, are split between those with and without a high net worth.
Parametric Portfolio Associates requires a variety of different investment minimums, depending on the type of account you wish to open. These minimums range from $0 to $100 million.
Services Offered by Parametric Portfolio Associates
Parametric typically manages client portfolios according to the needs of the institutional or individual investor. It does this through these high-level services:
- Systematic equity portfolios
- Tax-managed core equity portfolios
- Centralized portfolio management
- Futures- and options-based overlay services
- Balanced asset allocations
- Managed currency and duration exposure
- Speciality index strategies
In 2013, Parametric divided into two segments in order to comply with the Global Investment Performance Standard (GIPS). They offer the following services:
- Parametric Investment & Overlay Strategies
- Systematic alpha strategies
- Systematic income
- Alternatives
- Non-tax-managed custom core
- Policy implementation overlay
- Parametric custom tax-managed & centralized portfolio management
- Global rules-based investment management services
Parametric Portfolio Associates Investment Philosophy
Parametric uses structured, mathematical and rules-based methods of analysis when it comes to choosing securities for client portfolios. It also relies on modeling and other financial technology to help determine the value of various securities.
Parametric doesn't particularly pursue a long- or short-term strategy, as the firm instead looks to prioritize the specific needs and goals of each client. The firm and its advisors take into account risks, expenses, taxes and other investing characteristics, all while attempting to maximize returns.
Parametric Portfolio Associates Fees
All client fees that Parametric charges are based on a percentage of their account's AUM. Each program that the firm offers adheres to a separate fee schedule, with riskier strategies charging higher rates. There are many different investment strategies you can use at Parametric, so it's important to be familiar with the fees and minimums associated with each.
What to Watch Out For
Parametric Portfolio Associates has several disclosures listed on its SEC-filed Form ADV. These are all regulatory in nature, with each being attributed to advisory affiliates of the firm.
Parametric is a fee-based firm as advisors can earn third-party commissions. They also collect performance-based fees from certain clients. These dynamics creates the potential for a conflict of interest. Despite this, the firm is still bound by fiduciary duty, meaning that it is legally obligated to act in clients' best interests.
Opening an Account With Parametric Portfolio Associates
To open an account at Parametric, you can go online and submit a form on its website or call (206) 694-5575. You can also find a regional wealth manager by using the firm's interactive map on their wesbite.
All information is accurate as of the writing of this article.
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