Vanguard’s guide to core-satellite investing

Core-satellite—a powerful investment approach

In essence, core-satellite is a commonsense investment approach which combines the benefits of index funds (lower cost, broader diversification, tax efficiency and lower volatility) with actively managed funds or other direct investments offering potential for outperformance.

Core-satellite brings greater discipline and stability to an investment portfolio by:

  • Reducing reliance on ‘picking winners’ or chasing fund manager returns
  • Providing greater portfolio diversification
  • Potentially improving after-tax returns by taking maximum advantage of capital gains discounts
  • Reducing overall fund management and transaction costs

 

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