In a core-satellite portfolio, what percentage of the portfolio's value is typically indexed as the passive core?

• A. 50-60%
• B. 60-70%
• C. 70-80%
• D. 90-100%

Answer: (C)

In a core-satellite portfolio, the passive core provides broad, low-cost market exposure, while the satellite sleeve adds active or tilting options to try to enhance returns. The typical balance is that about 70-80% of the portfolio is indexed in the passive core. This range keeps a strong foundation of diversification and cost efficiency from the core, while leaving roughly one-fifth to one-third of the portfolio for active ideas, sector tilts, or specialized exposures in the satellite portion to attempt to add value. If the core were much smaller (like 50-60%), you’d lose substantial diversification and cost benefits, limiting the stability the core provides. If the core were too large (approaching 90-100%), there’s little room left for active ideas, reducing potential upside from the satellite strategies. So the 70-80% range hits a practical balance between core stability and freedom to pursue alpha through satellites.