Natixis Funds: Core-Satellite strategies

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Core-Satellite strategies

The approach of combining core holdings with "satellite" holdings has grown in popularity as investors pursue more specific goals and expect more from their investments. Learning more about the core-satellite approach is the first step in deciding if it�s a strategy you would like to pursue.

Understanding core holdings

For mutual fund investors, a core holding is generally a fund with a strong performance history bought to be held for a long time. The fund investment objective of a core holding generally aligns with an investor�s major financial goal, such as "monthly income" or "long-term growth." Index funds, broadly diversified stock or bond funds, and diversified portfolios that include a mix of equity and fixed-income holdings are good examples. Core holdings may have a style bias, such as a growth or value investing strategy, but they focus on long-term performance.

Understanding satellite investments

Satellite holdings generally represent only a small percentage of an investor�s portfolio, but are there for a specific purpose. Most commonly, a satellite position complements core holdings, seeking extra return from a more aggressive investment. For mutual fund investors, this is usually a fund that specializes in a narrow market sector or investment style. For example, funds that invest exclusively in international small company stocks, real estate securities, or high-yield bonds might be good satellites for core holdings in large company American stocks or U.S. government bonds. Concentrated portfolios – those that place big bets on a relatively small number of holdings – may also be good choices for satellites.

The core-satellite approach

The core-satellite approach is really just another way of thinking about allocating money among asset classes. It combines a broad market portfolio component (the core or traditional asset allocation) with a variety of concentrated, actively managed components (satellites).

Factoring in your risk profile, short-term financial goals, and the changing market environment, this approach has the potential to deliver greater portfolio diversification with lower volatility than a traditional strategy alone. Of course, this technique does not guarantee returns and does not guarantee against loss in a declining market.

A quality core-satellite strategy can help in two ways – by improving return potential, and by lowering the overall risk profile of your investments. Your financial advisor can help you select satellite investments that complement your core holdings.

What it means for you

Should you consider a core-satellite strategy? Many investors find it attractive because it allows them to take advantage of the long-term benefits of core investing while also gaining modest exposure to sectors with the potential for more dramatic returns. The key to success in implementing a core-satellite structure in your portfolio depends on two main factors: your risk tolerance and the satellite investments� ability to generate market-beating returns. Properly implemented, a core-satellite strategy may result in a better designed portfolio with lower risk, and most likely better long-term performance. Your financial advisor will be able to help determine whether a core-satellite portfolio structure is appropriate for you.

For more complete information, including a prospectus, please contact your financial advisor. You may also view a current prospectus online, order literature through our site, or contact an Investor Service Representative at 800-225-5478. Investors should consider a fund's objective, risks and expenses carefully before investing. This information, and other information, can be found in the fund's prospectus. Please read the prospectus carefully before investing. Other expenses, including sales charges, apply to a continued investment in the fund and are described in the fund's current prospectus.

The mutual funds referred to in this website are offered and sold only to persons who are eligible to purchase U.S. registered investment funds and are offered by prospectus only.