Why use of overlays to control risk is a top-down approach?

官网practice

不明白为什么Fund A 中 the use of overlays to control risk is a top-down approach.

这里的overlay是什么？ currency overlay to hedge FX risk？

什么是top down？

如果讲义有这个知识点的话，麻烦贴一下

谢谢

Fund NameFund Description

Fund AThe fund primarily invests in the stocks of companies with poor earnings performance that are out of favor with the market and appear to be influenced by investor behavioral trends. Stocks are selected on the basis of company analysis by Grasmere’s analysts. The fund uses sector overlays to control risk.

Q. Based on the descriptions in Exhibit 1, which fund is least likely to use a combination of a top-down and a bottom-up strategy?

1. Fund A
2. Fund B
3. Fund C

Solution

A is incorrect because Fund A uses a combination of the bottom-up and top-down approaches. The selection of stocks based on company analysis is a bottom-up approach, whereas the use of overlays to control risk is a top-down approach.