Understanding the Role of a Satellite Portfolio

I recently read your Mutual Fund story on Concentration vs Diversification and found it very insightful. Could you please share some examples of the types of investments that can be included in a satellite portfolio? - Radhika Patil [EasyDNNnews:PaidContentStart]

Editor Responds : In a core-satellite investment approach, the core portfolio typically consists of stable, diversified funds designed to deliver consistent long-term returns. The satellite portfolio, on the other hand, is meant to complement the core by capturing specific opportunities or higher growth potential. For instance, satellite allocations may include sectoral or thematic funds such as Banking, technology, or infrastructure, which can benefit from favourable sector cycles. Investors may also consider Mid-Cap or Small-Cap funds in the satellite portion to participate in higher growth segments of the market, though these tend to be more volatile. Some investors even use the satellite portion to take tactical calls, such as investing in international funds, thematic ideas, or emerging trends. However, since these investments can be more volatile, it is generally advisable to keep satellite exposure limited, typically around 20 to 30 per cent of the overall portfolio.

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