Overlay Shares Q3 2025: All Seven Funds Positive, Overlay Alpha Delivers
The quarterly fund review from Liquid Strategies — how the put spread overlay strategy contributed +1.09% alpha across the entire ETF family, with OVF Foreign Equity leading at 26.80% YTD.
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The third quarter of 2025 delivered a strong market rally across asset classes — and Overlay Shares captured it. All seven ETFs in the fund family posted positive returns, with the proprietary put spread overlay strategy adding a meaningful +1.09% of additional alpha across every fund. Here’s the full breakdown.
The Overlay Shares Strategy
Overlay Shares is built on a unique investment philosophy. The core strategy utilizes put spread writing on the S&P 500 to generate additional income across all funds. This active management approach is applied across seven diverse ETFs spanning both equities and fixed income — designed to deliver consistent alpha regardless of the underlying asset class.
The Seven Funds
The Overlay Shares family consists of seven ETFs covering every major asset class:
| Fund | Ticker | Exposure | Expense |
|---|---|---|---|
| Large Cap Equity | OVL | US Large Cap | 0.79% |
| Small Cap Equity | OVS | US Small Cap | 0.83% |
| Foreign Equity | OVF | International | 0.83% |
| Core Bond | OVB | Investment Grade | 0.79% |
| Municipal Bond | OVM | Municipal | 0.83% |
| Short Term Bond | OVT | Corp 1–5yr | 0.80% |
| Hedged Large Cap | OVLH | Hedged US Large Cap | 0.85% |
Q3 2025 Market Context
The third quarter delivered a broad market rally. Here’s how the major indices performed:
Interest rates declined during the quarter, providing a strong tailwind for valuations. Credit spreads remained near historic lows, and the resulting low volatility environment created ideal conditions for the overlay strategy’s put spread writing approach.
Overlay Strategy: +1.09% Alpha
This demonstrates the consistent value of active management through the overlay approach — generating income that supplements the underlying asset class returns.
Equity Fund Performance
| Fund | Q3 2025 | Benchmark | Since Inception |
|---|---|---|---|
| OVL Large Cap | +9.07% | S&P 500: +8.12% | 16.77% ann. |
| OVS Small Cap | +10.10% | Russell 2000: +12.39% | 9.59% ann. |
| OVF Foreign Equity | +6.56% | — | 26.80% YTD |
| OVLH Hedged | +5.88% | S&P 500: +8.12% | 14.18% YTD |
Star Performer: OVF Foreign Equity
International diversification was the standout story this quarter. The OVF Foreign Equity fund achieved an exceptional 26.80% year-to-date return, with Q3 contributing another impressive 6.56%. This underscores the value of geographic diversification in a well-constructed portfolio.
OVL Large Cap: Consistent Alpha
OVL continues to demonstrate the power of the overlay strategy. Its Q3 return of 9.07% outpaced the S&P 500’s 8.12%, and the annualized return since inception stands at an impressive 16.77%.
OVLH Hedged: Built for Uncertainty
The OVLH Hedged Large Cap fund returned 5.88% in Q3 — slightly trailing the S&P due to the cost of hedging. But with a 14.18% YTD return, it demonstrates that downside protection doesn’t have to mean sacrificing meaningful upside participation.
Bond Fund Performance
| Fund | Q3 2025 | Benchmark Q3 | YTD |
|---|---|---|---|
| OVB Core Bond | +2.96% | Agg: +2.03% | — |
| OVM Municipal | +3.67% | Muni: +3.00% | 2.10% |
| OVT Short Term | +2.58% | Corp ST: — | 5.55% |
The bond funds continued to outperform their benchmarks, with OVB Core Bond delivering nearly 50% more return than the Bloomberg Aggregate Index in Q3. The overlay strategy’s contribution is especially valuable in fixed income, where even modest alpha makes a meaningful difference.
Q3 Performance Summary
Risk Outlook: Stagflation Concerns
While Q3 delivered strong results, the team at Liquid Strategies identifies stagflation as the most significant forward-looking risk.
Slower economic growth would pressure corporate profits and equity valuations. Higher inflation could force interest rates sharply higher, negatively impacting both stocks and bonds simultaneously.
In this environment, OVLH becomes a particularly relevant tool. It offers upside participation alongside downside protection through laddered hedges, plus overlay income — making it the recommended solution for protection-minded investors navigating uncertainty.
Important Disclosure: Past performance does not guarantee future results. This content is for informational purposes only and does not constitute investment advice. Please read the prospectus before investing. Overlay Shares ETFs are managed by Liquid Strategies, LLC.
