Bond.az — According to a UBS report, investors may want to supplement core portfolios with satellite strategies to manage risk, pursue tactical opportunities, and achieve long-term wealth goals.
Core portfolios remain the foundation of long-term investing, designed to support financial plans through various market cycles. The report favors diversified allocations across equities, fixed income, and alternative assets.
Investors can build satellite portfolios based on risk tolerance, investment horizon, and wealth objectives. For conservative investors, these may include assets aimed at reducing volatility during economic weakness, inflation, or geopolitical uncertainty.
Examples include government bonds, gold, inflation-linked debt, and put option strategies. The report notes that some investors hesitate to increase stock exposure amid Middle East conflict and AI-driven market rally uncertainty.
In such cases, satellite strategies provide flexibility. Growth-oriented investors may use satellite portfolios to pursue tactical opportunities beyond core holdings, including exposure to specific regions, sectors, or themes.
The report highlights Asian equities as a potential regional allocation. Alternative assets like private equity, private credit, hedge funds, and infrastructure are also cited for diversification.
Endowment-style investors may allocate 20% to 40% of total wealth to alternatives. Both core and satellite portfolios require periodic review and rebalancing.
