What is the difference between these two methods? In both of these a large portion of the portfolio is assigned to a tracking index and the remainder to managers that will add alpha so I’m struggling to see how they are different
Thanks,
Alpha-beta seperation takes the beta in one market, and the alpha in another (by shorting it’s market and adding alpha funds/selection).
Core-satellite is simillar, but it doesn’t have to take the beta and alpha from different markets. You just assign the bulk to a core (market) portfolio, and the satellite portfolios are active funds.