There is a Q related to a Singapore Core-Satellite approach. The client’s benchmark is MSCI singapore Free Index. The three funds used in the approach all index to STI Index in Singapore. I chose the answer stating the benchmark is incorrect, but the answer was actually all correct. Does anyone remember what exactly the Q asks? Perhaps I miss-read the question. Much appreciate for any comment.
I chose incorrect as well…the reason being was because there was such a low % allocated to the indexed (core) portfolio. I learned that it doesn’t matter how much is allocated, it is still considered core satellite. Best, TheChad
It gave you the table, and asked whether they were following a core-satellite approach… one fund was obviously replicating the STI, other 2 deviated from the STI. I picked “incorrect” because I thought it more resembled an active strategy… thought core-satellite implied they opportunistically seek to add active not return, not plunge headfirst into active return. In that e.g., less than 1/3 of the fund was allocated to the fund w/zero tracking risk, if I remember right. But, they said “correct” because they said it resembled a core-satellite strategy.
On the 20% weight of the index fund, I also feel it is kind of low as the core. I guess since the other active 2 funds benchmarking to STI as well, so there is enough core weight. The mismatch benchmark part still looks very tricky to me.
this is true. I hadn’t thought of it that way. their answer makes more sense now.
Also got this wrong as I thought the ‘core’ had to make up the bulk of the portfolio, but I checked the text and it’s not apparently required.