Core & Satellite Strategies
Efficient portfolio construction involves creating a diversified portfolio that attempts to maximize return potential for a given level of risk. One way to add value is through a core and satellite approach.
How it Works
In a core and satellite approach, capital is divided between different types of investments to seek additional return opportunities:
Core strategies provide efficient exposure to asset classes that are broadly representative of the market (much of this market representation comes in the form of equity and interest rate risk). While implementation strategies vary, we believe that a combination of active, structured or passive strategies provide a solid core for most investors.
Satellite strategies generally deliver higher levels of active alpha (returns derived from skilled active management) or exotic beta (exposure to risk factors with low correlation to global markets) and may enhance expected returns. Examples include REITS, Commodities, High Yield Bonds and Emerging Markets.