A “Core-Satellite” approach to investing is one in which the “Core” (majority) of the portfolio is invested in low-cost, passively managed investments, such as Exchange Traded Funds (“ETFs”) or Index Funds.  The smaller “Satellite” component is typically reserved for less traditional more expensive actively managed investments, such as emerging markets mutual funds, equipment leasing programs, or non-Traded Real Estate Investment Trusts (“REITs”).  Because the majority of the portfolio is invested in low-cost investments, the resulting portfolio, as a whole, will likely be inexpensive, but still has the potential for benchmark outperformance due to the satellite allocation.

Last updated on November 14, 2009 by NA