Core & Satellite

As a core-satellite strategy (including core-satellite approach, English: core - core ) is called in the portfolio management division of a portfolio to a broadly diversified core investment ( " Core" ), which will provide a basic return with sufficient certainty, and several individual investments ( "Satellite" ) with higher risk and return potential, which are appended to enhance returns.

The satellite investments represent only a small proportion of the total portfolio; they are usually actively managed sub-portfolios which cover selected areas, they should deliver above-average returns contributions and act due to low correlations diversifying with the core investment.

For the enrichment and diversification of the core portfolio, for example, satellite investments such as Geographical regions, asset classes or management styles / strategies are.

The core-satellite strategy is applied in the investment management practice.

The core-satellite approach as an extension of portfolio theory

The return and risk adequate structuring of the investment portfolio is a core task in asset management to address them, the Modern Portfolio Theory ( MPT) by Harry Markowitz is widely used. For their application, however, often result to unilaterally structured portfolios. With the core-satellite approach as a further development of the MPT, it is possible to integrate strategic investments, regulatory restrictions, or even individual needs of private investors in the optimization of the investment strategy.