Core-satellite investing is a portfolio strategy that blends passive and active management to help reduce costs and risk while still aiming for returns that may outperform the market. The core is built from passive investments that track major market indices, such as the Standard and Poor’s 500 Index (S&P 500), providing stability.

Around it, “satellites” are added in the form of actively managed investments that offer the chance for additional gains. The approach is flexible, allowing investors to choose the specific indexes and active positions that best match their goals.