There are two elements of investment management that go hand in hand with yin and yang: risk management and return enhancement. Good investors realize you must have both of these elements represented in a portfolio, and if you have too much of one, relative to the other, your portfolio can become unbalanced.

Overlays can be used to balance the yin and yang of your portfolio in a number of different ways. This paper shares the following three strategies for using overlays:

1. The first strategy is using an overlay to implement asset allocation shifts, which is focused on risk management;
2. The second strategy is using an overlay for currency management, which has elements of both risk management and return enhancement;
3. Lastly, using an overlay to implement passive rebalancing and tactical positioning, which is focused on return enhancement.