Just like having a strong core is very important for building a healthy body, investing in a diversified passive core strategy, as a part of your total portfolio, is also very important. The new smallcase platform is built to help you achieve the same. On the new platform you can invest and track your core and satellites separately.
Building the core with All Weather Investing smallcase
Through the All Weather Investing smallcase, you can invest into gold, equities (stock market like returns) and fixed income (bank fixed deposit type returns) as a part of one single smallcase. This smallcase is designed to provide stable long-term returns and ensures that the core of your portfolio is strong, protected and growing.
The fixed Income portion of the All Weather smallcase always generates positive returns. The equities portion moves with the market to generate high long-term returns, while the gold portion protects your investment when the markets crash. Intelligent quarterly shuffling of your money in these asset classes through a rebalance ensures that your money is always in the right place at the right time.
A majority portion of your total investment should always be in the core – All Wweather Investing smallcase. It should be the first step towards starting your investment journey.
Building satellites with other smallcases
Satellites are the investments apart from the core. On the smallcase platform, satellites are the portfolios that are riskier than the core AWI smallcase, but also have the potential of offering greater returns.
You should be investing into satellite smallcases along with the core AWI smallcase to generate alpha–additional returns. These smallcases give you pure equity exposure. Satellites are also divided into two parts– slow moving satellites (moderately risk smallcases) and fast moving satellites (high risk smallcases).
Slow moving satellites
These are the smart beta smallcases with an objective to generate more returns than the market. These smallcases only consist of large-caps, which are the top 150 market cap stocks listed on NSE. They are riskier than the core AWI smallcase and move up or down with the benchmark equity indices like Nifty. But with more risk comes more returns. These smallcases are perfect for long-term equity investing to generate market-beating returns. Four smart beta strategies are available on the platform.
Your first satellite investment should always be in one of the smart beta strategies.
Fast moving satellites
These smallcases majorly consist of mid-cap and small-cap stocks. They help you take exposure to themes, ideas and sectors of your liking. You can also invest in them for the short- and medium-term. They help you take exposure to themes like tourism, GST Implementation and increasing rural demand, among others. These smallcases can generate high returns, but are very volatile in nature. Thus, you should look into investing in them only after you have built your core and have also invested in the slow moving satellites.
This is how you can use the core-satellite approach to build an investment portfolio with smallcases to create wealth over the long-term.
For more on building a core-satellite portfolio, check out the video below.
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