Skip to main content

Core and Satellite Investment Method



How It Works?

The core and satellite portfolio management is a popular form of investment strategy with money managers and their clients.

 

The core component of your financial portfolio, which is the larger portion of your portfolio, comprises investments that are in line with you long-term financial goals. The goals could include retirement savings, child's education, marriage, etc.

 

The satellite part, or the smaller portion, is invested in risky assets to boost the overall returns of your portfolio. If the economy encounters a rough weather, the core portfolio acts like an anchor to your portfolio. And when the good times start kicking in again, the satellite portion adds zing to your overall portfolio.

Asset Allocation

Asset-allocation in the core portfolio depends upon various factors like the investor's risk appetite, age, financial goals, time horizon for each goal and liquidity needs. But, broadly-speaking, here's how it works.

 

If you are a low-risk investor, you can look at a debt-equity ratio of 80:20.

 

If the size of your core portfolio is less than . 10 lakh, then the equity component of your core portfolio can comprise equity-linked debentures. For a moderate-risk investor, the equity component can be increased to 60% and the balance 40% can be put in debt. In the debt component, you can look at PPF, debt mutual funds, arbitrage funds and monthly income plans (MIPs).


If the size of your core portfolio is around . 30-40 lakh, you can look at a small property, which can be lease to earn some money from the rentals. Real estate could be coupled with debt equity split of 40:60.

 

If the size of your portfolio is around . 80 lakh to a crore, you can even look at leasing out a commercial property over and above the routine debt-equity exposure.


The satellite portion can accommodate small-cap/mid-cap funds, sectoral funds or global funds, which are highly risky in nature. Hence, you should not hold onto these investments beyond a year. The idea is to earn impressive returns and exit with profits.

 

 

 

 

Popular posts from this blog

NPS - How much to Invest?

  Though the deduction offered under Section 80CCD (1B) is `50,000 , it is not advisable to put the entire amount at one go. It is best to stagger your investments across several months, much like the SIP strategy in a mutual fund. However, don't make too many small contributions. There is a transaction charge of 0.25% or `20 (whichever is higher) on every contribution. If you invest `500-1,000 every month, you pay `20 per contribution, which works out to 2-4%. Invest at least `5,000-10,000 at one go. Remember, at most `2,500-5,000 of this will go into equities if you have chosen the maximum 50% allocation to stocks. The rest will flow into corporate bonds and gilt funds as per your desired allocation. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver ...

Mirae Asset India-China Consumption Fund

Mirae Asset India-China Consumption Fund     Mirae Asset India-China Consumption Fund is the first of its kind fund that focuses on the consumption theme in Asia's two biggest economies India and China. It offers a flavor of both Indian and Chinese consumer stocks in a single portfolio $ . We are delighted to share that we have declared a dividend as below.   Scheme/Plan Quantum of Dividend (per unit) NAV of Dividend option as on March 11, 2015 (per unit) Record Date Face Value (per unit) Mirae Asset India -China Consumption Fund – Regular Plan – Dividend Option Rs. 2.00/- per unit (subject to availability of distributable surplus as on the record date) Rs. 18.302/- Wednesday, March 18, 2015 * Rs.10.00/- Mirae Asset India-China Consumption Fund is the first of its kind fund that focuses on the consumption theme in Asia's two biggest economies India and China. It offers a flavor of both Indian and Chinese consumer stocks in a single por...

Shriram Transport Finance FD

Shriram Transport Finance Co. Ltd (STFC) is self explanatory. They have decided to revise the Interest rates on "Shriram Unnati" Fixed Deposit w.e.f. 1 st April'15 . The revised interest rates applicable will be as given below:   Tenor Rate (p.a.)* 12 months 9.00% 24 months 9.50% 36 months 9.75% 48 months 9.75% 60 months 9.75%   *Senior citizens will get an additional rate of 0.50% per annum. This is only an advanced information, enabling us to inform our investors and advise them to take maximum advantage of current interest rates applicable till 31 st March,15.   Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under S...

EPF or NPS - Why not both?

  In the Budget, Jaitley also empowered the corporate employees to choose between the EPF and the NPS. The details are awaited but this could be a big change in the way Indians save for retirement. However, your employer must be ready to shift to the NPS as well. Should you shift to NPS if it is allowed? Experts say you should opt for both . NPS offered by corporates now is additional to the EPF , so the same structure should continue in future also. However, much will depend on the rules and whether employers and the Labour Ministry will embrace the change.     Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by inv...

Comparison of Tax Saving Funds

Comparison of Tax Saving Funds As on 11.02.2015             Scheme Name 1M  3M  6M  1Y  [%]              Rank [%]              Rank [%]              Rank [%]              Rank Reliance Tax Saver (ELSS) Fund(G) 0.99   51/59 7.52   33/57 14.34   22/55 88.54   1/54 IDBI Equity Advantage Fund-Reg(G) 2.44   30/59 10.1   17/57 25.85   1/55 85.12   2/54 Axis LT Equity Fund(G) 5.26   4/59 11.8   3/57 19.44   9/55 72.16   3/54 SBI TAX Advantage Fund-I(G) 6.28   2/59 10.28   15/57 8.08   48/55 71.13   4/54 SBI Tax advantage Fund-II(G) 4.44   6/59 6.44   43/57 9.52   42/55 68.87   5/54 ICICI Pru R.I.G.H.T Fund(G) 3.47   12/59 9.52   21/57 17.44   11/55 67.21   7/54 Birla SL Tax Relief '96(G) 3.19   17/59 ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now