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What Is Overlay? A Look at Four Common Applications

August 14, 2023

What are the specific advantages of cash overlay, rebalancing overlay, transition overlay, and currency overlay? Managing an institutional portfolio can come with many implementation challenges that can prevent it from performing to its full potential. An overlay program is highly customizable and can help alleviate portfolio inefficiencies. 

In this paper, portfolio manager Antony Motl discusses different overlay strategies. You’ll learn:

  • How overlay instruments can remove the effect of cash drag while maintaining daily liquidity
  • How responsive rebalancing overlay can be effective in a volatile market
  • How overlay programs can reduce policy-based tracking error
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Antony Motl, CFA

Portfolio Manager

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