North Dakota State Investment Board, Bismarck, which provides investment oversight for $16.3 billion in pension, insurance and legacy trust fund assets, has tapped one of its external money managers, Parametric Portfolio Associates, to establish a synthetic rebalancing overlay program due to market volatility caused by the coronavirus pandemic.
At this time, the equity overlay program accounts for $450 million in assets.
Similar action was taken by the board during the 2008-2009 global financial crisis, according to David J. Hunter, executive director and CIO of the North Dakota Retirement and Investment Office, which administers and implements actions of the State Investment Board.
Parametric was previously used to implement an overlay program for the investment board in 2008, which remained in place for a little over a year at the time, Mr. Hunter added.
"We just reinstated our prior equity overlay program (with Parametric)," he said.
Through the strategy, the SIB is essentially "shorting Treasuries to buy into equities," which is "a little bit easier to do with the overlay," Mr. Hunter said.
"You short Treasuries and you go long in the S&P 500, and by doing (the overlay) you don't have to sell securities," he added.