Tactical asset allocation overlay

What is Tactical asset allocation overlay?

Tactical asset allocation overlay meaning Portfolio management technique which gains exposure to asset classes through derivatives rather than physical securities. Its economic exposure is typically much larger than the assets of the overlay portfolio, which are used to fund margin payments and close off positions. As a result, it is used as an overlay to a larger fund to adjust its asset allocation with the aim of taking advantage of short-term movements and opportunities in the markets.

 

reference: mercer.com