CoreSatellite Portfolio Management

The innovative approach that combines indexed and active management, to lower risk while enhancing growth potential The coresatellite portfolio approach combines the most powerful aspects of active and passive management into a flexible and marketproven investment strategy. Increasingly popular with major institutions and investment professionals worldwide, it enables portfolios to produce market returns while adding the potential to outperform popular market benchmarks through alternative investment vehicles. CoreSatellite Portfolio Management provides a comprehensive overview of both the theory and practice of the coresatellite approach. Combining insights from awardwinning professor and financial executive J. Clay Singleton with contributions from leading practitioners and consultants, it details:

• Performanceenhancing, costeffective core stock and bond strategies designed to provide efficient total market exposure
• Satellite investments such as small stocks, hard assets, highyield debt, and more that enhance returns without adding extraordinary risk
• Bestpractices for complying with rules and regulationssummarized from legal standards, professional organizations, and special evaluative studies

Coresatellite portfolios allow fiduciaries to enhance overall performance by adding value from active investment management without deviating from major market movements. CoreSatellite Portfolio Management provides authoritative insights and handson techniques for utilizing this extraordinarily effective approach. CoreSatellite Portfolio Management outlines a portfolio strategy that is ideal for fiduciaries looking to combine the best aspects of active and passive management into a single, successful portfolio management program. It provides a rational framework that efficiently organizes all investment possibilities, allowing clearcut and frank evaluation of the potential returns and risks of a portfolio. Coresatellite investing allots a percentage of a portfolio's assets to core investments like blue chip stocks (where prices are competitive and active management has little chance to add value), placing the remainder in satellite investment classes like small stocks or highyield bonds (where active management can measurably impact performance). The resulting coresatellite portfolio keeps pace with broader market averages, while providing the flexibility necessary to reach financial objectives by earning betterthanmarket returns. Chapters written by some of the top practitioners in investing today reveal how investment professionals can:

• Anchor a core component with stock index or exchange traded mutual funds, then round it out with bonds diversified across issuers, sectors, and quality
• Use the return and volatility of alternative asset classes like oil and gas to achieve superior performance
• Use holding analysis and returnbased style analysis to detect and remedy style drift when returns have been disappointing
• Measure portfolio performance and risk in innovative ways, including value at risk, the Stutzer Index, and others

Fiduciaries have the difficult responsibility of ensuring that the funds entrusted to them meet the risk and return objectives of both the donor and the beneficiary. CoreSatellite Portfolio Management shows how that responsibility can be met, by providing complete coverage of a coresatellite approach that utilizes stateoftheart asset allocation strategies, reduces costs, controls risk, and increases liquiditywithout sacrificing longterm return.