Custom Beta is a suite of separately managed account strategies providing the benefits of passive investing along with tax and personalization advantages not available in ETFs.

Learn More About Custom Beta

Why Custom Beta

Custom Beta may offer distinct advantages over ETFs and mutual funds.

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.

Together, Parametric and Eaton Vance manage over $50 billion in Custom Beta portfolios on behalf of thousands of clients. Parametric and Eaton Vance are subsidiaries of Eaton Vance Corp., a leading global asset manager. Learn more about the support and experience that Parametric and Eaton Vance offer. >

Benefits of Passive Investing

Custom Beta portfolios provide the familiar benefits of passive investing in customizable separately managed accounts.

A graphic showing how Custom Beta provides a separately managed portfolio that includes a rules-based approach, broad market exposure, and low cost

Index-like
returns

Investors can easily create diversified portfolios designed to track a broad range of equity benchmarks and fixed-income maturity options.

Rules-based
approach

Equity portfolios do not engage in active stock picking that attempts to outperform a benchmark index.

Low cost

Custom Beta portfolio costs compare favorably with most index funds and ETFs.

Active Tax Management

Because they are separately managed, equity Custom Beta portfolios may offer distinct tax benefits.

Annualized after-tax excess returns (net)
of Custom Core™ vintage composite portfolios 2007-2015

A graph showing the annual 'tax alpha' of Custom Core™ Portfolios versus S&P 500

Source: Parametric. For illustrative purposes only. Past performance is not indicative of future results. Annualized after-tax excess returns are presented net of management fees and brokerage commissions, and reflect the reinvestment of dividends. Custom Core™ vintage composite returns are for the period 2007-2015; the inception date for the composites presented is 12/31/2006. It is not possible to invest directly in an index. For additional information about calculation methodology and after-tax performance, please refer to the disclosure at the bottom of this page.

Custom Core™ consists of tax-managed and indexed strategies. Tax-managed Custom Core™ and Centralized Portfolio Management strategies are offered by Parametric Custom Tax-Managed & Centralized Portfolio Management. Indexed Custom Core™ strategies are offered by Parametric Investment & Overlay Strategies. For a complete list and description of Parametric Investment & Overlay Strategies composites, please contact us 206-694-5575. Parametric is divided into two segments: Parametric Investment & Overlay Strategies and Parametric Custom Tax-Managed & Centralized Portfolio Management. For compliance with Global Investment Performance Standards (GIPS®), the Firm is defined and held out to the public as Parametric Investment & Overlay Strategies.

Investors can fund positions in kind

Realized taxable gains can be reduced by transferring existing securities to a Custom Beta portfolio. By contrast, investments in mutual funds and ETFs are typically made in cash and require the sale of existing securities. This may result in realized taxable gains at the time of transfer.

Capital gains aren't triggered by other shareholders

In mutual funds and ETFs, redemptions by some shareholders can trigger capital gains for all. Custom Beta portfolios avoid the costs and risks of coinvesting alongside others because they're separately managed.

Active tax management may improve outcomes

Equity portfolios are constantly evaluated for opportunities to realize capital losses to offset gains and reduce taxes.

Personalized Portfolios

Portfolios that reflect investor values and investment preferences.

Targeted
equity exposure

Choose from a broad selection of benchmark indexes or create a custom-built index to meet your needs.

Targeted
fixed-income exposure

Portfolios can be tailored to meet your maturity range and credit quality specifications.

Responsible
investing

Portfolios can be built to reflect your core values with a broad range of environmental, social and governance (ESG) screens and other custom-designed screens.

Custom
diversification1

Equity and corporate portfolios can be designed to your desired level of diversification by screening the portfolio for overconcentration risk. For example, you can offset large positions held outside your portfolio by underweighting those positions in a Custom Beta portfolio.

Factor
investing

Reflect your market outlook by incorporating themes such as dividend yield, quality, momentum and market capitalization, among others.

1 Diversification cannot ensure a profit or eliminate the risk of loss.

Implementation Examples

Explore how our team has partnered with advisors and their clients to address their unique challenges with personalized Custom Beta strategies.

Parametric Custom Core™

Managing tracking risk without triggering taxes
Situation

An investor disappointed with his underperforming active manager expressed to his financial advisor that he was interested in transitioning to an indexing approach. His main concern was that his portfolio had increased in value by approximately 15% and selling off securities could trigger realized capital gains – and a bigger tax bill.

Analysis

His financial advisor recommended Parametric Custom Core. The Parametric team ran a tax transition analysis, which showed a reduction in tracking risk on the pre-existing portfolio from 3.6% to just below 1.0% (tracking the S&P 500 Index).

Outcome

The investor successfully transitioned his existing securities into to a Parametric Custom Core portfolio with no net realized gains, allowing the portfolio to avoid a taxable event.

Eaton Vance Ladders

The benefits of professional bond management
Situation

An investor contacted his financial advisor with concerns that he may have overpaid for a municipal bond he purchased in the secondary market. His advisor reached out to the Eaton Vance Ladders team to find out if he could have saved his client money if the bond had been purchased through one of Eaton Vance’s managed municipal strategies.

Analysis

The Eaton Vance Ladders team researched the bond and discovered it been marked up multiple times since its original IPO and that the costs had been passed on to the investor. The team then outlined the kind of institutional pricing that could have been obtained through Eaton Vance.

Outcome

The investor transitioned into an Eaton Vance Ladders portfolio, which provided tax-exempt income, access to institutionally-priced municipal bonds and professional management.

Parametric Custom Core™

Human trafficking screen
Situation

An ultra-high-net-worth investor was seeking a tax-efficient way to diversify her portfolio, replace several underperforming managers and—most importantly—create a human trafficking screen.

Analysis

Her financial advisor proposed Parametric Custom Core. Parametric ran a detailed transition analysis that suggested a customized benchmark index and illustrated a tax-efficient, in-kind transition that wouldn’t trigger transaction costs.

Over the next four months, Parametric worked with MSCI (a research and analytics organization that develops benchmark indexes), the investor’s advisor and her family office manager to develop one of the world’s first human trafficking screens.

Outcome

The Human Trafficking Screen was implemented and is now being utilized by approximately 25 clients nationwide.

These implementation examples are based on the experiences of clients at the time of transition; it is unknown whether these clients achieved their specific investment objectives. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction and allocations described in the implementation examples above. While these examples illustrate successful client experiences, they are not representative of the experiences of all Eaton Vance or Parametric clients. The views and strategies described may not be suitable for all investors. Not all of Eaton Vance's or Parametric's recommendations have been, or will be, profitable. Eaton Vance and Parametric do not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision.

Equity

Parametric Custom Core

Parametric Custom Core™ seeks to provide the benefits of market-like returns while allowing for customization and a potentially lower tax bill — at a cost that compares favorably with most ETFs and index funds.

How It Works

Design Your Exposure

A wide range of licensed benchmarks

Custom-blended indexes


Customize

Tax management

Environmental, social and governance (ESG) screens

Sector/industry/security exclusions


Continuous Management

A dedicated, experienced team works to ensure portfolios stay aligned with their benchmarks

More than 20 years of offering Custom Core™ solutions

Support of more than 75 investment professionals managing $48 billion in Custom Core™ assets2





2 The $48 billion of Custom Core™ assets is comprised of $35 billion tax-managed Custom Core™ strategies offered by Parametric Custom Tax-Managed & Centralized Portfolio Management and $13 billion indexed Custom Core™ strategies offered by Parametric Investment & Overlay Strategies as of 9/30/16.

Fixed Income

Eaton Vance Ladders

Eaton Vance Ladders offer customized, professionally managed portfolios for municipal or corporate bonds. Laddered bond portfolios are designed to provide predictable income, portfolio diversification3 and the potential to reduce interest-rate risk.

How It Works

Design Your Exposure

TABS Municipal Bond Ladders (maturity ranges from 1-20 years)

Corporate Bond Ladders (maturity ranges from 1-10 years)


Customize

Select the credit quality4 and maturity ranges

Choose national or state-specific5 issuers for municipal bond ladders

Tailor portfolio to meet investor values and security exclusions


Ongoing Management

A dedicated team of 25 credit analysts with more than 300 years of experience

Institutional buying power and access to a global network of over 100 bond dealers

An industry leader with $10 billion in Ladders portfolios





3 Diversification cannot ensure a profit or eliminate the risk of loss.

4 Ratings are based on Moody’s, S&P or Fitch, as applicable. Credit ratings are based largely on the ratings agency’s investment analysis at the time of rating and the rating assigned to any particular security is not necessarily a reflection of the issuer’s current financial condition. The rating assigned to a security by a ratings agency does not necessarily reflect its assessment of the volatility of a security’s market value or of the liquidity of an investment in the security. If securities are rated differently by the ratings agencies, the higher rating is applied. Ratings of BBB or higher by Standard and Poor’s or Fitch (Baa or higher by Moody’s) are considered to be investment-grade quality.

5 State-specific and state preference available in A- min. only.

OFFERING SOPHISTICATED, PERSONALIZED SOLUTIONS

Extensive resources to design, manage and service one-of-a-kind portfolios for discerning investors

Parametric Logo

Delivering Custom Core™ equity solutions since 1992


Over 75 investment professionals


More than $48 billion in Custom Core™ assets

Eaton Vance Logo

Managing fixed-income solutions since 1978


Dedicated team of 25 credit analysts with more than 300 years of experience


More than $10 billion in Ladders assets under management

Dedicated Support

Transition analysis report

Illustrates how current holdings would be transitioned to a Custom Beta portfolio

Sample portfolio report

Provides an example of potential portfolio holdings

Client service

Our commitment to clients begins with the portfolio design process and continues with ongoing access to the team through conference calls, performance reviews and in-person meetings













PARAMETRIC CUSTOM CORE™: Parametric Portfolio Associates LLC (Parametric) is an SEC-registered investment advisor and a majority-owned subsidiary of Eaton Vance Corp. Custom Core™ consists of tax-managed and indexed strategies. Tax-managed Custom Core™ strategies are offered by Parametric Custom Tax-Managed & Centralized Portfolio Management. Indexed Custom Core™ strategies are offered by Parametric Investment & Overlay Strategies. Parametric is divided into two segments: Parametric Investment & Overlay Strategies and Parametric Custom Tax-Managed & Centralized Portfolio Management. For compliance with Global Investment Performance Standards (GIPS®), the Firm is defined and held out to the public as Parametric Investment & Overlay Strategies.

Prior to 01/01/2016, the strategy was called Parametric Tax-Managed Core. Parametric is located at 1918 8th Avenue, Suite 3100, Seattle, WA 98101. For more information regarding Parametric and its investment strategies, to request a compliant presentation, the firm’s list of composite descriptions, or to request a copy of Parametric’s Form ADV, please contact us at 206-694-5575 or visit parametricportfolio.com.

VINTAGE COMPOSITES: When evaluating the performance of portfolios on an after-tax basis, traditional composite calculation and reporting may result in an inaccurate picture of what is actually happening on an account-by-account basis. Opportunities for tax management, such as gain/loss matching and loss harvesting are more plentiful in the first several years of a portfolio’s life than they are in later years. Lumping new accounts together with more mature portfolios results in underestimating the full benefits of tax management. An alternative to traditional composite reporting is to break the composite into vintage years, which better demonstrates how tax management performs over time and in various market conditions. Past performance is no guarantee of future results.

DISCLOSURES: This material may contain confidential and/or proprietary information, composite and/or account-specific portfolio holdings, and/or assumptions based on dissimilar period comparisons, and may only be relied upon for this report. No security or discipline is profitable all of the time and there is always the possibility of loss. Returns presented were generated using Parametric’s proprietary rules-based investment methodology as described in ADV Part 2A, are unaudited and may not correspond to any other published data. Parametric is not a tax consultant and does not provide tax advice. Clients should seek other professional assistance before investing. Investment risks may include but are not limited to: market, economic, political, interest rate, currency exchange, leverage, liquidity, credit quality, trading and client-specific restrictions. Information is subject to change without notice.

COMPOSITE CRITERIA: The inception date for the composites presented is 12/31/2006. The Custom Core™ S&P 500 strategy seeks large-capitalization U.S. equity exposure using the S&P 500 Index as the benchmark, which is comprised of the 500 largest-ranked U. S. companies. The Custom Core™ Russell 3000 strategy seeks exposure to the entire U.S. stock market. The Russell 3000 Index is an unmanaged, broad-based index which tracks the performance of the 3,000 largest U.S. companies based on total market capitalization. The Custom Core™ MSCI EAFE strategy seeks international equity exposure using the MSCI EAFE Index (Europe, Australasia, Far East), which is a free float adjusted market capitalization index that is designed to measure the equity market performance of developed markets excluding the U.S. and Canada. Benchmark are for reference only. Complete composite data is available upon request. Data reflect performance of all tax-managed accounts following this benchmark that are funded with cash and are free from client-directed investment restrictions. Because Parametric manages each account to reflect client-specific characteristics, accounts funded with securities and/or subject to restrictions will experience varying performance. Performance may be positively or negatively affected for individual returns. Deviations from the benchmark and other disciplines or funds provided herein may include but are not limited to factors such as: the purchase of higher-risk securities, overweighting or underweighting specific sectors and countries, limitations in market capitalization, company revenue sources and/or client restrictions. Derivatives trading and short selling may materially increase investment risk and potential returns. These risks may include but are not limited to margin/mark-to-market cash calls, currency exchange, liquidity, unlimited asset exposure and counterparty risk.

ACCOUNT CRITERIA: Accounts are fully discretionary. No minimum balance required. Accounts are included in a composite in first full month of management and excluded after the last full month of investment. Terminated accounts are retained in composites for the full period of investment.

CALCULATION METHODOLOGY: Account performance is calculated using the time-weighted, daily-linked total return methodology, and reflects the reinvestment of dividends, interest, gains and other income. Composite returns are market value-weighted using beginning-of-month valuations. Returns are calculated net of management fees, using the internal rate of return, include brokerage commissions, but exclude all other fees and expenses. The “net of fees” return reflects the deduction of a 0.45% annual management fee - the highest paid by any client in this composite.

AFTER-TAX PERFORMANCE: When calculating after-tax returns, Parametric applies the client’s individual tax rate (which may include federal and state income taxes), if provided by the client. If the individual tax rate is not provided by the client, Parametric applies the highest U.S. federal tax rates. For short-term gains, the highest U.S. federal marginal income tax rate is 39.6% plus the 3.8% net investment income tax, for a combined rate of 43.4%. For long-term gains, the highest U.S. capital gains tax rate is 20% plus the 3.8% net investment income tax, for a combined rate of 23.8%. These assumed tax rates are applied to both net realized gains and losses in the portfolio. Applying the highest rate may cause the after-tax performance shown to be different than an investor’s actual experience. Investors’ actual tax rates, the presence of current or future capital loss carryforwards and other investor tax circumstances will cause an investor’s actual after-tax performance to be over or under Parametric’s estimates presented here. In periods when net realized losses exceed net realized gains, applying the highest tax rates to our calculations illustrates the highest after-tax return that could be expected of the portfolio, and assumes the maximum potential tax benefit was derived. Actual client after-tax returns will vary. As with all after-tax performance, the after-tax performance reported here is an estimate. In particular, it has been assumed that the investor has, or will have, sufficient capital gains from sources outside of this portfolio to fully offset any net capital losses realized, and any resulting tax benefit has been included in Parametric’s computation of after-tax performance.

Benchmark after-tax returns are computed using a single-security shadow benchmark. Performance of this shadow benchmark is simulated using each of the investor’s actual investment flows and its cost basis. The shadow benchmark’s capital gains realization rate is based on the average turnover rate of the pretax benchmark for each year. Benchmark after-tax returns are hypothetical and may not be relied upon for investment decisions.

MSCI and MSCI Index names are service marks of MSCI Inc. (MSCI) or its affiliates. Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of the Russell Investment Group. Standard and Poor’s (S&P) S&P 500® is a trademark of the McGraw-Hill Companies, Inc. The strategy is not sponsored, guaranteed or endorsed by MSCI, Russell, S&P or their affiliates. MSCI, Russell and S&P make no warranty or bear any liability as to the results to be obtained by any person or any entity from the use of any such Index or any data included therein. Please refer to the specific service provider’s website for complete details on all indexes. Parametric makes no representation or endorsement concerning the accuracy or propriety of information received from any other third party.

Eaton Vance Management (EVM or the Company) is an SEC registered investment adviser with its headquarters located in Boston, Massachusetts. Since 1924, the Company has provided a full range of investment products to corporations, public agencies, labor unions, hospitals, charitable and educational organizations, individuals and various qualified investment plans. It supplies investment advisory services through several SEC registered investment advisers and a trust company — EVM, Boston Management and Research (BMR), Eaton Vance Investment Counsel (EVIC), and Eaton Vance Trust Company (EVTC). The Company is defined as all four entities operating under the Eaton Vance brand. Eaton Vance Management claims compliance with the Global Investment Performance Standards (GIPS®).

EATON VANCE LADDERS: Municipal securities are subject to the risk that legislative changes and local and business developments may adversely affect the yield or value of the strategy’s investments in such securities. Municipal securities are subject to credit risk, which is the risk that the issuer could default on interest or principal payments. Municipal securities are subject to interest-rate risk. Rising interest rates could reduce the value of the bonds in the portfolio, thus adversely affecting the value of the overall investment. Municipal securities are subject to the risk that legislative changes and local and business developments may adversely affect the yield or value of the strategy’s investments in such securities. Municipal securities are subject to credit risk, which is the risk that the issuer could default on interest or principal payments. Municipal securities are subject to interest-rate risk. Rising interest rates could reduce the value of the bonds in the portfolio, thus adversely affecting the value of the overall investment. Corporate laddered investments in corporate debt obligations are subject to the risk of nonpayment of principal and interest. Changes in economic conditions or other circumstances may reduce the capacity of the party obligated to make principal and interest payments on such instruments and may lead to defaults. Such nonpayments and defaults may reduce income distributions. The value of a debt obligation also may decline because of concerns about the issuer’s ability to make principal and interest payments. In addition, the credit ratings of income securities may be lowered if the financial condition of the party obligated to make payments with respect to such instruments changes of the party obligated to make payments with respect to such instruments changes.

Laddered strategies are offered by Eaton Vance Management, an SEC-registered investment advisor. Eaton Vance Management and Parametric are affiliated investment advisors.

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

 

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