Overlay services

macrotrader · Post by **macrotrader** » Tue Feb 09, 2010 4:34 pm

Who does provide overlay strategies? Banks and or hedge funds? I am looking for a service provider in equities.

london · Post by **london** » Tue Feb 09, 2010 8:58 pm

Do you mean futures overlay strategies?

If this is what you had in mind, they also get called 'global macro overlay' or 'global tactical asset allocation'.

The asset management groups of the big banks market them with varying degree of success to institutional clients (GSAM, DEAM, MSIM, etc). From a hedge fund perspective, I believe it would be considered the same as a geared or a partially funded portfolio.

The premise is an ability to add value in multiple asset classes, so you might be limiting yourself by specifying equity only.

Then again, you might be asking about something completely different. If so, ignore the above.

Tradenator · Post by **Tradenator** » Wed Feb 10, 2010 12:39 am

Fund managers will run them for you. I worked with an "equitisation overlay" carved out of a GTAA process many moons ago, but it wasn't very good in the end. You could also view a CTA like an overlay, assuming the account is notionally funded.

sharpend · Post by **sharpend** » Wed Feb 10, 2010 2:35 am

Russell

Barclays

First Quadrant

FX-Concepts

Bridgewater

that sort of crowd

macrotrader · Post by **macrotrader** » Wed Feb 10, 2010 8:41 am

Many thanks. Yes, I mean an equity future overlay strategy (maybe fixed income as well). I have an equity portfolio which I want to hedge with equity index futures x% of the time.

What kind of strategies are these firms selling? What I have in mind is a mechnical trading system, not a trader making proprietary decisions. The service provider would explain in general terms how his system works and send me a signal every day, saying to buy, sell or hold, as well the next buy/sell targets. Ideally I would pay the provider only a small management fee + a performance fee.