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Equity Derivatives and Structured Products Glossary
      
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A strategy to change the exposure of a Portfolio using derivatives, while leaving the securities in the Underlying Portfolio unchanged. This has the advantage of cost and flexibility, as Portfolio managers can adjust Portfolio Risk more quickly and cheaply with derivatives than by liquidating Portfolio holdings. Another reason might be tactical – the adjustment may only be desired for a brief period of perceived market threat. A third reason might be to transform a Portfolio Risk; an International Fund manager may wish to segregate the Currency aspect of a Portfolio and can do so with a Currency overlay programme.

See also Asset allocation
Posted by  Privatebanking.com
 
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