Thomas George Miller#94

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What is currency overlay management and who uses it?

Currency overlay is a strategy where asset managers hedge forex exposure separately from core investments. For example, a pension fund invests in U.S. equities but uses overlays to neutralize USD risk. Specialized managers run overlay programs to optimize returns and reduce volatility. Benefits: separation of investment performance from currency risk. Risks: additional complexity and costs. For traders, overlays show that managing currency is a distinct discipline. It’s not just background noise—it’s a performance driver in global portfolios.