Core-Satellite Investing: A Smarter Way to Build Your Portfolio

Let’s talk about investing. Not the kind where you throw your money into whatever TikTok is hyping this week, but an actual strategy... one that gives you the stability of a Belichick defense and the upside of Steph Curry pulling up from the logo. It’s called core-satellite investing, and if you’re serious about building wealth without checking your portfolio every 10 minutes, this might be your play.

What Is Core-Satellite Investing?

At its heart, core-satellite investing is a mix of set-it-and-forget-it stability and calculated, aggressive plays. The core of your portfolio is made up of low-cost, passive investments—think index funds or ETFs that track something like the S&P 500 and the TSX. These are your foundational players, your Luca Doncics (sorry Mavs fans), keeping your portfolio steady and growing over time.

Then, you have your satellites—smaller, actively managed investments meant to juice your returns. These are your upside bets: high-growth sectors, niche funds, or even individual stocks that have the potential to outperform the market. This is where you take some shots downfield, but within a structured game plan.

How It Works

A basic core-satellite portfolio might look something like this:

Want to tilt more toward growth? Load up on tech and emerging markets in your satellite positions. More conservative? Maybe lean on blue-chip and dividend funds. The key is that your core keeps you in the game while your satellites give you upside (if you play fantasy football you'll know the difference between your core players and your upside flex)

Why Core-Satellite Investing Works

It’s simple: this strategy balances cost, risk, and reward.

1. Cost Control

Passive investments (your core) are cheaper than active funds because they don’t require fancy managers making trades every day. That means lower fees, fewer tax hits, and more money compounding over time.

2. Risk Management

Nobody likes watching their portfolio swing 5% in a day because some hedge fund got spooked. Keeping a big chunk of your investments in a broad-market index fund smooths out the volatility and lets you sleep at night.

3. Performance Potential

This is the fun part. The goal isn’t to beat the market with your whole portfolio... that’s a losing game. Instead, your satellites give you a calculated shot at outperformance without blowing up your entire plan.

How to Build a Core-Satellite Portfolio

The beauty of this strategy? You can build it however you want. Here’s how to approach it:

1. Start with Your Core: Pick a low-cost index fund or ETF that tracks a broad market index (S&P 500, Total Market, or even a balanced global fund). This should make up at least 50% of your portfolio.
2. Add Satellite Positions: Depending on the size of your portfolio, choose 3-5 focused investments that you believe can outperform over time. This could be: growth sectors (AI, biotech, green energy), alternative assets (commodities, REITs) or high-quality active managers in specific areas
3. Rebalance When Needed: If a satellite position explodes in value, take some profits and move them back into your core. If a satellite tanks, reassess if it’s still a good investment or time to cut losses.
4. Don’t Overcomplicate It: You don’t need 25 different funds to make this work. Simple is better. Plus, it makes it easier to track your overall portfolio.

The Bottom Line

Core-satellite investing is the best of both worlds—you get the steady growth of long-term investing with the potential for big wins in strategic areas. It’s like building a championship team: a rock-solid foundation with a few star players that can take you to the next level.

So, whether you’re just starting out or looking to fine-tune your portfolio, this strategy gives you a game plan for success—and one that won’t have you glued to CNBC every morning.

Let’s get to work.