Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,913.455.3
Stock Analysis, IPO, Mutual Funds, Bonds & More

What are the core and satellite strategy of building a portfolio?

Transaction cost is low as core portfolio is not churned frequently and so is volatility of the overall portfolio. The liquidity needs can be met through the satellite portfolio.

ET CONTRIBUTORS|
Updated: Oct 14, 2019, 11.34 AM IST
0Comments
Getty Images
ff 18
Core portfolio is geared to meet the long-term goals.
1. In this approach, investors differentiate between two segments in their portfolio, core and satellite.

2. Core portfolio provides stability and long term appreciation. The satellite portfolio offers an extra risk-adjusted return that pushes up overall returns.

3. Core portfolio is geared to meet the long-term goals. It forms about 60-70% of the portfolio. Index, diversified equity or large cap equity and short-term debt funds make up this portfolio.

4. The satellite portfolio forms a smaller part of the portfolio and is tactically managed to benefit from economic and market conditions. Long-term gilt funds, sector specific funds are some examples.

5. Transaction cost is low as core portfolio is not churned frequently and so is volatility of the overall portfolio. The liquidity needs can be met through the satellite portfolio.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

Also Read

Raymond to demerge core lifestyle business

What are the core and satellite strategy of building a portfolio?

BJP core committee meets, to decide on Guv invite by evening

Raymond surges 20% on plans to demerge core lifestyle business

RBI’s panel suggests measures to strengthen core investment companies

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service