Investment Philosophy
Core-Satellite Approach
Low-cost indexing products (such as Index Exchange Traded Funds or Index Mutual Funds) represent the core of a portfolio, with active management through funds or individual security selection representing the ’satellite’ portion of the portfolio.
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Core Portfolio Methodology
The core portfolio methodology is to use low-cost indexation products with a focus on asset allocation to reduce the variance of portfolio returns. Reducing portfolio management fees will improve portfolio returns, all else being equal.
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Satellite Portfolio Methodology
Many investors will not have a Satellite portion in their portfolio whereas others will have as much as 40% allocated for active management predominantly in the form of specialized managed mutual funds or individual security selection (stocks, bonds, specialized ETFs, etc.).
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Near Term Withdrawal or Income Requirements
If there is a requirement of income from the portfolio beyond the interest and/or dividend income provided by the Core/Satellite portfolio, it is recommended that a portion of the overall portfolio that is required for this additional income be allocated to Cash and Cash Equivalents, or guaranteed Canadian Government Bonds only.
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