How To Complement Your Core Portfolio With Satellite Investments

what are satellite investments

Now that you’ve got your core portfolio all set up, it’s time to use satellite investments to pursue themes and opportunities outside your core. Whether you’ve selected Syfe’s ready-made Core portfolios or built your own, your satellites should complement them.

Here are some ideas on how to use Syfe Select for your satellite investments.

Add exposure to specific themes

In general, core portfolios are meant to be globally diversified across different assets classes like stocks and bonds. Because of this, your core portfolio would probably not include significant exposure to themes like healthcare, sustainability, or disruption.

If you want exposure to those themes, you could add thematic ETFs as your satellite holdings. Thematic ETFs are an easy way to add certain exposures to your portfolio without the risks of trying to pick specific stocks. 

Thematic ETFs on Syfe Select

Syfe Select offers a broad range of thematic ETFs such as:

  • Invesco Solar ETF (TAN). Targeted exposure to solar energy companies
  • Global X Lithium & Battery Tech ETF (LIT). Access to the world’s largest lithium battery makers for electric vehicles

View the full list of thematic ETFs here.

Add exposure to certain regions

Although the US is the world’s largest economy, we shouldn’t be limiting our investments to just the US. There are regions elsewhere in the world that offer the potential for growth and enhanced diversification.

For example, emerging markets account for about two-fifths of global gross domestic product. According to Morgan Stanley, sustained EM growth could come from “manufacturing, commodity prices, economic reforms, and the rise of major new internet service industries and companies outside China.”

China’s regulatory crackdowns have affected share prices, but this also means Chinese equities, especially tech stocks, are now relatively cheap compared to their valuation and future long-term growth. 

Europe is another region to consider. It’s home to some of the most well-known companies in the world, including Nestlé, LVMH, Unilever and Volkswagen. Many investment banks now expect European stocks to outperform the US as the euro zone recovery gathers steam.

Regional ETFs on Syfe Select

If you’re interested to add exposures to these regions, Syfe Select provides many regional ETFs such as:

  • iShares Core MSCI Emerging Markets ETF (IEMG). Exposure to emerging market companies
  • iShares MSCI Brazil ETF (EWZ). Targeted access to the Brazilian stock market
  • iShares MSCI China A ETF (CNYA). Exposure to domestic China stocks
  • KraneShares CSI China Internet ETF (KWEB). Access to Chinese internet companies
  • iShares Core MSCI Europe ETF (IEUR). Top five country holdings include UK, France, Switzerland, Germany and Netherlands

View the full list of regional ETFs here.

Add exposure to certain asset classes

Bonds are usually seen as a cushion for volatility. But you can also use them as a way to make your cash work harder. 

For instance, you could construct a satellite portfolio around investment grade and high yield bonds from around the world. Diversifying across different maturities and credit qualities, you could create an income portfolio that seeks to generate a yield above what’s available on your cash savings.

Alternatively, you may add real estate and commodities as satellite investments to boost your overall portfolio diversification.

High yield bonds, real estate and commodities on Syfe Select

Syfe Select holds a range of ETFs across different asset classes. Beyond equities, here’s a snapshot of what you can invest in:

  • iShares Fallen Angels USD Bond ETF (FALN). Exposure to high yield bonds that were previously rated investment grade.
  • iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB). Access to emerging market government bonds.
  • iShares iBoxx $ High Yield Corporate Bond ETF (HYG). One of the most widely used high yield bond ETFs.
  • Vanguard Global ex-U.S. Real Estate ETF (VNQI). Broad exposure across international REIT markets.
  • SPDR Gold Shares (GLD). Access to gold.

View more ETFs here.

Satellite investments are customisable to your needs 

One key advantage of using Syfe Select for your satellites is how you can customise it to the particular needs of your core portfolio. 

It all boils down to your own investment ideas. Once you’ve done your research and identified opportunities you want to pursue, use Syfe Select to express those views.

There’s no minimum investment or lock-in period, so you enjoy full flexibility in structuring your satellites. 

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