This year has offered a vivid reminder of how quickly market conditions can shift—from policy uncertainty, to a sharp geopolitical shock, to a focus on an AI-driven rally. As the themes of the day changed, the case for an overlay persisted.

Market volatility—and the feelings of uncertainty that follow—tend to frighten investors. Yet for investors with an overlay program, one approach to volatility is evergreen—rebalancing.

Here we consider an area that is less explored: the ability to implement systematic strategies like trend following within an overlay program. We see a natural opportunity for integrating overlay and trend strategies, given that both have similar architecture as predominantly rules-based derivatives strategies.

As regional misalignments risk significant performance deviations amid trade uncertainty, let’s look at how overlay management can potentially help to guide global equity portfolios.