What is a core-satellite investment strategy? (HK)
A core-satellite investment strategy is where an investor splits his capital allocation between a portfolio that serves as a foundation for his general wealth accumulation goals, and a conviction-based portfolio that is more focused and riskier. Usually, investors considering this strategy would use a diversified, broad market exposure portfolio such as our Global model portfolios as this is designed to give the highest probability of success, for their core allocation. This can then be supplemented by our Satellite portfolios that are more narrowly focused on specific assets, regions, sectors or themes.
Investing in a thematic or sector focused satellite portfolio on its own could potentially be riskier as it is less diversified. However, when used as a supplement to a core portfolio, the overall risk to their wealth accumulation goals can be balanced out while also providing the investor with the exposure to the asset, region, sector or theme that can potentially generate larger returns over the long-term from the secular trends or growth opportunities.