Here’s how to follow core and satellite investment strategy for your portfolio

Kirtan Shah, CEO and Co-founder of SRE Wealth says that such a strategy divides the risk and return of the investor.

  • Money9
  • Publish Date - September 27, 2021 / 02:20 PM IST



Core and satellite strategy reduces the risk in your mutual fund investments and helps in increasing returns. In this investment strategy, the investor’s portfolio is divided into two segments. One is ‘core’ and the other is ‘satellite’. Kirtan Shah, CEO and Co-founder of SRE Wealth says that such a strategy divides the risk and return of the investor. The core part of the portfolio remains that in which the investor does not take risks and the satellite part consists of such investments where he/she invests a little aggressively. It is also called Bucketing Strategy which increases the amount of investment while protecting the portfolio.

The core portion of the portfolio remains large and the satellite portion is small in comparison. The core portfolio gives long-term returns and takes care of adjusting the satellite risk. According to Kirtan, investments are made in core and satellite according to the risk appetite of the investor. A conservative portfolio will have a 70% core investment consisting of debt and corporate bonds and a 20% satellite portion will be invested in equity funds. But at the same time, there will be equity-linked investments in both the core and satellite of the aggressive portfolio. But aggressive portfolios will be able to diversify their satellite portion more with international funds or thematic funds.

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