Core Satellite & Alpha Beta Seperation

Hi All,

Can Core-Satellite be inclusive of a Alpha Beta Separation?

Is the only difference really that Alpha Beta Separation PMs have to use a combination of long and short?

Bumping this thread…

Unless somewhere it specifically states otherwise, Alpha Beta Separation can be used for Core-Satellite…

Core can be a Passive index & Enhanced Index providing the Beta (Market Exposure), w/ Low Fee

Satellite can be the active portion providing the Alpha, which in this case has No Beta (No Market Exposure), w/ High Fee

Alpha-beta separation has separated asset allocation provisions and manager selection. Core-satellite is not subject to this restriction.

Ya that what I am thinking here. Alpha Beta Separation can be Core-Satellite.

The keys between Alpha Beta Separation and Core-Satellite are that the Alpha focused managers have to be market neutral and the Core-Satellite can be all long only.

Also, I have only seen examples of Core-Satellite with 3 managers, not sure if this is a requirement.

Alpha Beta Separation could be across just 2 portfolios.

agree

but not sure whether it must be 3 managers for core satellite…

I dont think it matters the #of Managers… just that the Core is to represent 50% of the Portfolio…

No this this not correct, the core can be any amount it just has to have no active risk and no active return. Needs to be 0% tracking error.

You are right about the Core weight, my bad… But the core can include both a Passive Index and Enhanced Index… Enhanced Indexing Maximizes the Information Ratio, and has Strict Control of Tracking Error, but I dont think that the Tracking Error be 0%…?