Core & Satellite Investing

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Core & Sate l l i t e Inves t ing

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What Is Core Investing?

Table o f ContentsTHE

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Core Investing Assets

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What Is Satellite Investing?

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Satellite Investing Assets

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How To Implement Core & Satellite

Investing

The information contained in this article is general in nature and does not

consider your personal financial situation. The information is not a

recommendation or an offer to buy securities. You are advised to seek

professional financial advice prior to making any investment decisions.

The views expressed in this article may change at any time, such is the

nature of the investment markets.

| 03Core Satellite Investing

Disc la imer

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The "core" of your portfolio is typically invested in low fee products that

perform in line with the markets after fees.

Investors will receive close to market returns and close to market

volatility, but by design these products are unlikely to outperform.


What I s Core Inves t ing?

Core

The assets in the core are the mainstay of your portfolio, providing you

exposure to market returns at low cost. Most of your portfolio will be

invested here.

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What kind of assets would make up the core of your portfolio?


Core Inves tment Asse t s

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Australian large cap Exchange Traded Funds (EFTs)

Large managed portfolios of blue chip shares

Cash & enhanced cash-type investments

Low-risk property and infrastructure

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Your financial advisor or portfolio manager might also have some

suggestions for a secure investment that will suit your portfolio and meet

your financial needs.

The question is: how do we increase the return of your portfolio while

reducing the risks?

To increase the returns of your portfolio you can make smaller

investments in "satellites". These satellites will diversify your exposure

away from the "core" and may increase returns while reducing risk.

The satellites are small parts of your portfolio and so potential losses are

also small.


What I s Sate l l i t e Inves t ing?

Satellite

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The "core" and "satellite" portfolios work together to give you risk-adjusted

returns better than what you may have made by investing in the core

portfolio alone.

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Satellite 2

Satellite

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Satellite 4

What kind of investments might sit outside the core, but will also

provide diversification and higher risk-adjusted returns?

Here are a few suggestions that are worth looking into:


Sate l l i t e Inves tment Asse t s

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Smaller Company Funds

Hedge Funds

Geared Investments

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Satellites will often be managed actively and will rely on the skill of the

fund manager to achieve returns. They may not invest in stocks you

recognise and they may charge higher fees.

Correlation with your core portfolio will likely be low. Your satellite

portfolios may perform well when your core portfolios perform poorly.

Here are three factors to consider when looking to use core and satellite

investing:


How To Implement Core & Sate l l i t e Inves t ing

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Ideal core investments - what investments will provide security for

your portfolio?

Ideal satellite investments - what investments will provide extra

returns and diversification for your portfolio?

Weighting of your investments - how much of your assets do you

want to allocate to your core investments and to your satellite

investments?

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Are you going to explore core and satellite investing?

Glennon Capital was founded in 2008 by Michael Glennon. Previously,

Michael worked with some of the best institutional small company fund

managers in Australia, and in 2007, he was recognised for his

achievements and received the IMCA Money Management Fund

Manager of the Year (Small Cap) Award.

Michael founded Glennon Capital to offer specialist small company

investment management to high net worth individuals and family offices,

as well as through selective platforms for clients with less than $1 million

to invest in their portfolios.

Today, our flagship fund Glennon Small Companies Limited (ASX:GC1)

opens up the investment opportunity for all. GC1’s Initial Public Offering

was completed in August 2015 and is now a listed investment company

that is traded on the Australian Stock Exchange (ASX).

We are proud to be recognised for co-investing with clients in all

portfolios – an important feature which ensures that our values and

principles are aligned with those of our clients.


About Glennon Capi ta l

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Address

Level 17 25 Bligh Street Sydney NSW

(02) 8027 1000

Phone

Glennon CapitalEmail

[email protected]

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