If you think options are a high-wire act best left to hedge funds, meet Alex Zweber.

The Parametric Managing Director has spent nearly two decades translating the careful, rules-based tools of institutions into ETFs that aim to do three things investors never stop wanting:

1. Grow capital
2. Generate steady income
3. Soften the ride

Zweber joined Bilal Little on the ETF Central podcast to share how Parametric, part of Morgan Stanley Investment Management, is packaging years of exposure management and derivatives expertise for a much wider audience.

Morgan Stanley Investment Management oversees about $1.7 trillion.

Within that umbrella, Parametric has grown into a $600 billion platform spanning custom equity, derivatives, and options-based strategies.

The ETF wrapper is new for the firm, but the playbook behind it is not.

From a derivatives desk to liquid alternatives

Zweber’s path began in 2006 at The Clifton Group in Minneapolis, where he sat on a derivatives desk building and hedging exposures for large institutions. He worked through the 2008 crisis, spent two years in London as an investment specialist for European clients, then returned to lead Parametric’s liquid alternatives effort from the strategy side.

His team designs systematic, rules-based portfolios that aim to hold up across environments, not just in a single market regime.

That design mentality shows up in how Parametric builds option overlays, manages risk without leverage, and evolves rules as markets change.

Parametric’s footprint explains why its ETFs feel different. Roughly half of the firm’s assets sit in custom equity and direct indexing.

A large block supports institutions with futures, options, currency hedging, completion portfolios, and other exposure tools.

About 20 billion targets options-based strategies that seek income or protection. The ETF lineup sits on top of this infrastructure rather than trying to reinvent the wheel.

Why the ETF wrapper and why now

Parametric launched its first branded ETFs in 2023. The wrapper expands access to capabilities that were historically reserved for pensions, endowments, and large advisory platforms.
Zweber frames the effort around three enduring investor goals.

1. First is growth for core equity exposure.
2. Second is income that investors can plan around.
3. Third is downside protection that helps people stay invested.

Instead of chasing a brand-new idea, Parametric looked at what already works in the market, mapped the trade-offs, and focused on execution that solves real flaws.

Growth without the stock-picking lottery

Zweber’s personal underdog is the Parametric Equity Plus ETF (PEPS).

It sits squarely in the large-cap bucket and is benchmarked to the S&P 500. The strategy starts fully invested in equities, then systematically sells call options to harvest the volatility risk premium.

Selling calls can dampen upside.

To keep total market exposure near a full beta of one, the portfolio uses derivatives to add back incremental exposure.

The engine becomes long equity plus a relative value trade. Sell what tends to be expensive in options markets and buy what is cheap in market exposure. The goal is to capture a durable premium without leaning on stock picking in one of the toughest places to find persistent alpha.

Zweber says the long-term ambition is an edge of about one to two percentage points over the index, net of the mechanics required to hold beta steady.

Income that respects taxes as much as yield

Income ETFs exploded during the zero-rate decade because investors were starved for yield. Rates have risen, yet demand for equity-coupled income remains. Zweber argues many products over-optimize a single variable.

Some chase double-digit distribution rates that are not sustainable because the net asset value erodes. Others swing from feast to famine from one month to the next. A third group ignores the after-tax reality of option premiums and portfolio turnover.

Parametric’s answer is the Parametric Equity Premium Income ETF (PAPI). The design target is high income that is also stable and tax aware. The construction starts with equities and a systematic covered-call overlay.

The differentiator lives in the tax design. Parametric works to defer taxes when possible, favor preferred rates like long-term gains and qualified dividends when taxes are due, and harvest losses inside the equity sleeve to offset gains generated by option premiums.

Think about a year when the call overlay realizes a gain. If the equity portfolio can realize offsetting losses without changing its risk profile, the distribution that might have been taxed at a less favorable rate can be neutralized.

The result is an after-tax stream that is more predictable and often more efficient.

Zweber calls tax design the easiest source of consistent value that does not depend on precise market timing. It is also measurable. When a manager treats tax as a first-order input, investors see the effect in real dollars.

Hedged equity for real-world decisions

Downside protection is an evergreen need. Institutions use it to protect funded status, defend covenants, or lock in outsized gains. Individuals use it to stay invested when markets feel stretched or to re-enter after a selloff without jumping straight into full risk.

Parametric’s hedged equity approach mirrors the institutional mindset.

The portfolio starts with a no-leverage rule. Options exposures are diversified by staggering expirations and strikes so the strategy does not live or die by a single calendar date.

The idea is simple. Reduce the size of drawdowns and smooth volatility while keeping equity exposure intact, so investors can stick with their plan.

A market that finally caught up to the idea

Options-driven ETFs focused on protection and income have grown from a niche to a sizeable slice of the market in just a few years. Demand surged from under ten billion not long ago to well over two hundred billion across defined-outcome, hedged equity, and income overlays in the United States, with more growth projected ahead. The reasons are clear.

Investors want tools that solve for risk, cash flow, and participation without turning the portfolio into a casino.

The ETF wrapper delivers access and transparency, while systematic rules reduce guesswork.

What actually sets Parametric apart

Zweber describes Parametric as a customization engine built to improve efficiency, enhance returns, and reduce risk across equity, fixed income, and derivatives.

The ETFs are simply a new door into that engine. The common threads are easy to spot. Strategies are rules-based rather than discretionary.

Risk controls are embedded at the design stage rather than bolted on later. The options book is diversified across time and structure rather than concentrated. Taxes are treated as part of the investment edge, not an afterthought.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.