RT Journal Article
SR Electronic
T1 Overlay Speak
JF The Journal of Investing
FD Institutional Investor Journals
SP 22
OP 30
DO 10.3905/joi.2004.434548
VO 13
IS 3
A1 Lex C. Huberts
YR 2004
UL https://pm-research.com/content/13/3/22.abstract
AB A perception of high risk and intimidating technical terms may have kept some investors from considering derivatives programs such as overlays. This practical guide may mitigate such barriers to entry. Contrary to common perceptions, a risk-controlled use of derivatives is often quite non-threatening. Exposure can be quantified to translate all derivatives contracts into an equivalent investment in cash, bonds, and stocks. Numerical examples help the investor interpret overlay programs, absolute return strategies, and alpha transportation. The article concludes with a practical list of the key elements to consider in structuring an overlay program.